Promissory notes to pay bills are being promoted by “sovereign citizens” or “Free-men-of-the-land” – But will they truly settle the alleged debts?

A promissory note represents a promise by the maker (issuer) to pay a specified sum of money to the payee (recipient) or to their order or bearer.

In Australia, the Bills of Exchange Act 1909 (the Act), establishes rules regarding the form and content of promissory notes. As well as their transferability and enforcement.

The Act does not mandate that parties must accept or honour promissory notes unless there is a valid agreement or legal requirement to do so.

While there isn’t a specific statute dedicated solely to promissory notes, the legal framework governing promissory notes is primarily based on the Act, as well as common law principles.

Structure of Promissory Notes

1. In Writing:
While no mandate exists for handwritten notes, promissory notes must be documented in tangible forms, be it paper or electronic.

2. Unconditional Promise to Pay:
The note should contain an unequivocal commitment by the issuer to pay the specified sum to the recipient, leaving no room for ambiguity.

3. Specific Sum of Money:
Clarity is paramount, with both words and figures specifying the exact amount promised for payment.

4. Identification of Parties:
Clear identification of the issuer and recipient is necessary, ensuring transparency in the transaction.

5. Date of Issuance:
Including the issuance date aids in determining maturity and any associated terms like interest rates.

6. Payment Terms:
While not mandatory, outlining payment terms such as maturity date and interest rates is common practice.

7. Transferability:
Generally negotiable, provisions for transfer and negotiability should be included in the note.

8. Stamp Duty:
Depending on jurisdiction, stamp duty might be applicable, necessitating compliance with relevant regulations.

Factors Influencing Acceptance by Businesses:

1. Policy or Contractual Provisions:
Internal policies or contractual agreements may dictate acceptable payment forms, potentially leading to refusal of promissory notes.

2. Risk Assessment:
Businesses may refuse notes if they perceive the issuer as a credit risk or doubt their ability to honour the commitment, mitigating potential losses.

3. Legal or Regulatory Compliance:
Compliance with legal and regulatory obligations could prompt businesses to refuse acceptance to avoid contraventions or compliance risks.

4. Preference for Immediate Payment:
Some businesses prioritize immediate payment for goods or services over deferred payments offered by promissory notes, aligning with cash flow management objectives.

5. Discretionary Decision:
Ultimately, businesses retain discretion in payment acceptance, considering factors like financial position, risk tolerance, and operational practices.

Reasons to Refuse Promissory Notes

1. Contractual Agreements:
Contracts delineating payment terms may exclude promissory notes, justifying refusal based on contractual obligations.

2. Commercial Law:
Principles outlined in relevant statutes may guide businesses in recognizing customary and legally enforceable forms of payment.

3. Payment Terms and Policies:
Internal policies may restrict payment methods, thereby justifying refusal in line with business practices.

4. Risk Management:
Businesses may refuse notes to mitigate credit risks associated with non-payment or default by issuers.

5. Legal and Regulatory Compliance:
Compliance with laws and regulations governing commercial transactions could necessitate refusal to ensure adherence to legal requirements.

6. Discretionary Business Decision:
Strategic or operational considerations may influence refusal, aligning with broader business objectives.

Businesses must ensure refusal aligns with legal, regulatory, and contractual obligations, maintaining fairness and compliance in payment practices.

Don’t believe all you read or hear from “freedom-fighters” in “common law” groups. Make sure you have 100% knowledge about what you are doing, before jumping in at the risk of losing your home or other major assets.

Understanding the issuing of promissory notes and the considerations guiding their acceptance is vital for people looking for a “quick fix” to settle any alleged liabilities.