Legal Definitions - note of hand

A note of hand is simply another term for a promissory note. It is a written, unconditional promise by one party (known as the "maker") to pay a specific sum of money to another party (known as the "payee") either on demand or at a specified future date. Essentially, it serves as a formal IOU that legally obligates the maker to fulfill the payment as agreed.

Here are some examples to illustrate how a note of hand might be used:

• Example 1: Personal Loan Between Individuals

  Imagine Sarah lends $5,000 to her friend, Mark, to help him cover an unexpected car repair. To ensure clarity and a formal record of the debt, Sarah asks Mark to sign a document stating that he promises to pay her back the $5,000 by a specific date, say, six months from now, with a small agreed-upon interest rate. This signed document, detailing the amount, the repayment terms, and the due date, is a note of hand. It legally binds Mark to repay Sarah.

• Example 2: Small Business Transaction

  A small bakery, "Sweet Treats," needs to purchase a new commercial oven from a supplier, "Kitchen Innovations." The oven costs $10,000, but Sweet Treats doesn't have all the cash immediately available. Kitchen Innovations agrees to sell the oven on credit, provided Sweet Treats signs a document promising to pay the full $10,000 in monthly installments over the next year. This written agreement, outlining the payment schedule and the total amount due, functions as a note of hand, securing the debt for Kitchen Innovations.

• Example 3: Private Sale of Property

  Consider a situation where a grandparent sells a piece of undeveloped land to their grandchild for a reduced price. The grandchild doesn't have the full amount upfront, so they agree to pay the grandparent $20,000 over five years in annual installments. They draft and sign a document that clearly states the grandchild's promise to pay the grandparent $4,000 each year for five years until the total is paid. This formal, written promise to pay the specific sum over time is a note of hand, making the financial arrangement legally clear between them.