Promissory Note (PN)


A Promissory Note (PN) is a signed document that represents a written promise to pay a specified sum to a designated person or bearer at a specified future date or upon demand.

A Bill of Exchange (B/E) is a written order directing a person to make a specific payment to a named payee.

Both PN and B/E are independent payment undertakings (debt obligations) between parties, codified in various legal systems worldwide, and have a rich history of court interpretations.


PN’s are instruments issued directly by the payor to the payee i.e., there is no additional drawer. B/Es are often referred to as 3-name paper as they are drawn by one party on, and accepted by, another for the benefit of a third party, the ultimate payee or beneficiary. Both instruments may be guaranteed by a bank or other party by adding its endorsement.

Legal framework

Both instruments, Promissory Notes (PN) and Bills of Exchange (B/E), are independent debt obligations codified under English law, specifically the Bills of Exchange (BoE) Act 1882, which has evolved through court interpretations and contains essential terms like principal amount, interest rate, maturity date, and issuer’s signature. Similar definitions are found in legal systems influenced by the 1930 Geneva Convention.

A recent amendment to English law—the Electronic Trade Documents Act (ETDA) with effect from September 2023 allows electronic systems to create irrevocable payment undertakings, transferable to a specified party with no defence against payment to the transferee, who becomes the holder in due course under the BoE act.


PN’s and B/E’s are used around the globe in paper and digital forms. It is expected that the English law change referenced above allowing possession and control of a digital asset will expand the usage of PN’s and B/E’s.

Key standards

The ITFA Digital Negotiable Instruments (DNI) Initiative has developed an electronic payment undertaking (ePU) standard to fully digitise B/E and PN.

Major differences between standards

There are no major differences between different standards for PN’s and B/E’s and they have the same international standard as outlined above.


There are a multitude of platforms around the world that are dealing with PN and B/E type instruments like Payment Undertakings using mostly similar languages as outlined above.


The principal obstacles encountered by the market have been legal and not technical. The change in English law and the alignment with the UNCITRAL Model Law in Electronic Transferable Records (MLETR) in the Commonwealth countries and other trading nations will increase the adoption of PN’s and B/E and their usage in existing or new platforms around the globe.