Promissory Note in Pakistan

FORMAL DEMAND PROMISSORY NOTE

DOCUMENT ID: PN-PK-202X-001
EFFECTIVE DATE: [Effective Date]
VERSION: 1.0
GOVERNING JURISDICTION: Islamic Republic of Pakistan (Specifically subject to the territorial jurisdiction of the courts of [Insert City, e.g., Karachi/Lahore/Islamabad], Pakistan)

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1. STATUTORY & LEGAL COMPLIANCE NOTICE

CRITICAL LEGAL ADVICE DISCLAIMER: This Promissory Note is drafted to conform with the substantive and procedural requirements of the Negotiable Instruments Act, 1881, and the generally applicable contract law principles codified under the Contract Act, 1872 of the Islamic Republic of Pakistan.

1. Stamp Duty Act, 1899 Compliance: Under Pakistani law (specifically Schedule I of the Stamp Act, 1899, as amended locally in respective provinces of Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan), promissory notes are subject to mandatory provincial stamp duty. Failure to affix and properly cancel the requisite fiscal stamp renders this instrument inadmissible in evidence under Section 36 of the Stamp Act, 1899, until the requisite duty and penalty are paid. The Maker is solely responsible for ensuring proper stamping prior to or contemporaneously with execution.
2. Execution Formalities: To ensure summary procedure availability under Order XXXVII of the Code of Civil Procedure, 1908 (CPC) where applicable, or standard recovery suits, this instrument must be executed with strict adherence to identity verification of the Maker and Payee.

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2. PARTIES & RECITALS

FOR VALUE RECEIVED, the undersigned Maker unconditionally promises to pay to the order of the Payee the Principal Sum detailed below, strictly in accordance with the terms and conditions of this Promissory Note.

• Maker (Debtor): [Maker Full Legal Name / Company Name], having its principal place of residence / registered office at [Maker Principal Address], holding National Identity Card (CNIC) No. / National Tax Number (NTN) / Corporate Incorporation No. [Maker Identification Number].
• Payee (Creditor): [Payee Full Legal Name / Company Name], having its principal place of residence / registered office at [Payee Principal Address], holding CNIC / NTN / Incorporation No. [Payee Identification Number].
• Principal Sum: [Amount in Figures, e.g., PKR 5,000,000] ([Amount in Words, e.g., Five Million Pakistani Rupees only]), hereinafter referred to as the "Principal Amount."
• Currency: Pakistani Rupees (PKR) [or specify foreign currency if legally permitted under exchange control regulations of the State Bank of Pakistan].

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3. EXHAUSTIVE OPERATIVE CLAUSES & LEGAL TERMS

SECTION 1: PROMISE TO PAY AND PRINCIPAL AMOUNT

1.1 For value received, the Maker hereby unconditionally, jointly, and severally (if multiple Makers) promises to pay to the order of the Payee the Principal Amount of [Amount in Words] ([Amount in Figures]), together with any accrued interest, default charges, and legal enforcement costs as specified herein. 1.2 This Promissory Note represents an absolute, unconditional, and primary obligation of the Maker and is not subject to any set-off, counterclaim, recoupment, or condition precedent whatsoever, except as explicitly set forth herein.

SECTION 2: INTEREST RATE AND PAYMENT TERMS

2.1 Interest Rate (If Applicable): The Principal Amount outstanding under this Promissory Note shall bear interest at the rate of [Insert Interest Rate, e.g., 15% per annum / Zero Percent (0%)] calculated on the basis of a 365-day year and the actual number of days elapsed. 2.2 Repayment Schedule:

• Option A (Demand Note): The Principal Amount, together with all accrued and unpaid interest, shall be payable in full immediately upon demand made in writing by the Payee to the Maker.
• Option B (Installment/Bullet Note): The Principal Amount shall be paid in [Number] consecutive [monthly/quarterly] installments of [Installment Amount] each, commencing on [First Due Date], with the final balloon payment due on [Maturity Date]. 2.3 Mode of Payment: All payments under this Promissory Note shall be made in lawful currency of the Islamic Republic of Pakistan via direct bank transfer to the designated bank account of the Payee provided below, or via cross-cheque/pay order drawn in favor of the Payee:
• Bank Name: [Bank Name]
• Branch Code: [Branch Code]
• Account Title: [Account Title]
• IBAN: [PKXXBANK0000000000000000]

SECTION 3: DEFAULT AND LATE CHARGES

3.1 Events of Default: The occurrence of any of the following shall constitute an immediate "Event of Default" under this Promissory Note:

• (a) Failure of the Maker to pay any principal or interest installment within [Number, e.g., 5] days of its due date.
• (b) Filing of any bankruptcy, insolvency, winding-up, or reorganization proceedings by or against the Maker.
• (c) Attachment, execution, or distraint levied upon any material assets of the Maker.
• (d) Breach of any representation, warranty, or covenant contained herein. 3.2 Default Interest & Liquidated Damages: Upon the occurrence of an Event of Default, the entire outstanding Principal Amount and all accrued interest shall, at the sole option of the Payee and without notice or demand, become immediately due and payable. Furthermore, overdue amounts shall accrue default profit/interest at the maximum rate permitted by applicable Pakistani law or [Insert Rate, e.g., 2% per month], whichever is lower, from the date of default until paid in full.

SECTION 4: ACCELERATION OF DEBT

4.1 The Payee may, at any time during the existence of an Event of Default, declare the entire unpaid balance of the Principal Amount and all accrued interest to be immediately due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Maker.

SECTION 5: COSTS OF COLLECTION AND LEGAL EXPENSES

5.1 If this Promissory Note is placed in the hands of legal counsel for collection, or if it is collected through any judicial proceeding (including summary suits under Order XXXVII CPC, execution proceedings, or arbitration), the Maker agrees to pay all reasonable costs of collection, including actual attorney’s fees, court costs, stamp duties, filing fees, and associated legal expenditures incurred by the Payee.

SECTION 6: WAIVERS AND CONSENTS

6.1 The Maker, and any endorsers, sureties, guarantors, and joint-debtors of this Promissory Note, hereby severally waive presentment for payment, demand, protest, notice of protest, notice of dishonor, and diligence in collection. 6.2 No release of any security for the debt evidenced hereby, and no extension of time for the payment of this Promissory Note, or any installment hereof, granted by the Payee to the Maker or any other party, shall release, discharge, or modify the liability of the Maker or any guarantor.

SECTION 7: REPRESENTATIONS AND WARRANTIES

7.1 The Maker represents and warrants that:

• (a) It has full legal capacity, power, and authority to execute, deliver, and perform its obligations under this Promissory Note.
• (b) This Promissory Note constitutes a legal, valid, and binding obligation of the Maker, enforceable against the Maker in accordance with its terms.
• (c) The execution and delivery of this Promissory Note do not violate any applicable laws of Pakistan, or any contract, corporate charter, or agreement to which the Maker is a party.

SECTION 8: GOVERNING LAW AND JURISDICTION

8.1 This Promissory Note shall be governed by, construed, and enforced in accordance with the substantive laws of the Islamic Republic of Pakistan, without regard to its conflict of laws principles. 8.2 The Maker hereby irrevocably submits to the exclusive original jurisdiction of the competent courts located in [Insert City, e.g., Lahore], Pakistan, for any legal action, suit, or proceeding arising out of or relating to this Promissory Note.

SECTION 9: MISCELLANEOUS PROVISIONS

9.1 Severability: If any provision of this Promissory Note is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, and the remaining provisions shall remain in full force and effect. 9.2 Amendments: No modification, amendment, waiver, or discharge of any provision of this Promissory Note shall be valid unless executed in writing and signed by both the Maker and the Payee. 9.3 Successors and Assigns: This Promissory Note shall be binding upon the Maker and the Maker’s heirs, legal representatives, successors, and permitted assigns, and shall enure to the benefit of the Payee and its successors and assigns. 9.4 Entire Agreement: This Promissory Note constitutes the entire agreement between the Maker and the Payee with respect to the subject matter hereof and supersedes all prior oral or written negotiations, commitments, and understandings.

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4. EXECUTION & FORMAL SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Maker has executed this Promissory Note under seal as of the Effective Date first written above.

FOR MAKER:

Signature: _____________________________________
Printed Name: [Maker Authorized Signatory Name]
Title: [Title / Role, e.g., Sole Proprietor / Director]
Company / Entity Name: [Maker Legal Name]
CNIC / Registration No.: [Maker CNIC / Reg. No.]
Date: [Date of Execution]

WITNESS 1:
Signature: _____________________________________
Printed Name: [Witness 1 Full Name]
CNIC No.: [Witness 1 CNIC Number]
Address: [Witness 1 Address]

WITNESS 2:
Signature: _____________________________________
Printed Name: [Witness 2 Full Name]
CNIC No.: [Witness 2 CNIC Number]
Address: [Witness 2 Address]

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FOR PAYEE (Acknowledgment of Receipt of Note):

Signature: _____________________________________
Printed Name: [Payee Authorized Signatory Name]
Title: [Title / Role]
Company / Entity Name: [Payee Legal Name]
CNIC / Registration No.: [Payee CNIC / Reg. No.]
Date: [Date of Acceptance]

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5. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Document Customization: Open this document in Microsoft Word or Google Docs. Replace all bracketed placeholders (e.g., [Maker Full Legal Name], [Amount in Figures], [City]) with accurate, verified data corresponding to the transaction. Remove all instructional brackets.
2. Stamp Duty Adjudication (Mandatory in Pakistan):
   • Calculate the applicable stamp duty based on the provincial Stamp Act rules corresponding to the province where execution takes place (e.g., Punjab Stamp Rules, Sindh Stamp Act).
   • Purchase the designated non-judicial stamp paper from a licensed stamp vendor or pay the stamp duty through e-stamping (e.g., Board of Revenue Punjab/Sindh e-Stamping portal).
   • Print the text of this Promissory Note directly onto the non-judicial stamp paper or securely attach the stamp paper to the front of this document, ensuring proper cross-signing/cancellation by the Maker as required by Section 12 of the Stamp Act, 1899.
3. Signatory Verification: Inspect the original CNIC of the Maker and any corporate authorization documents (such as a Board Resolution under Section 134 of the Companies Act, 2017, or a valid Power of Attorney) if the Maker is a corporate entity. Ensure two independent adult witnesses sign and provide their correct CNIC numbers.
4. Digital Execution (Optional): If executing via digital signature platforms (e.g., DocuSign, Adobe Sign, or local Pakistani electronic transaction frameworks under the Electronic Transactions Ordinance, 2002), ensure audit trails are captured, though physical execution on stamped paper remains the gold standard for debt recovery litigation in Pakistan.
5. Record Retention: The Payee must retain the original physical stamped Promissory Note in a secure vault or bank safe deposit box. Possession of the physical original instrument is paramount for instituting summary suits under Order XXXVII of the Code of Civil Procedure, 1908.