We’ll prepare a promissory note to create a legally binding “IOU” from the issuer of the note to the noteholder.
You can provide for interest to accrue on the debt, just as with a loan agreement.
The debt can be set to be repayable on a specified date, after a specified amount of time or on-demand by the noteholder.
A promissory note is like a cheque in that it can be endorsed onwards by the noteholder, in which case the debt is transferred along with the note.
Promissory notes can be extremely convenient when used as a form of consideration instead of actual payments of cash, especially when used in corporate reorganisations (ie, to reflect the flow of funds around the group without actual transfers of cash needing to be made).