There are a lot of manners of securing of the agreements with the business partners and the blank promissory note is one of them.
Issuance of the blank promissory note is the simplest form of securing of receivables, which does not generate any additional costs. In simplification, having the promissory note and a legally valid order for payment issued on its basis, we may conduct enforcement proceedings in relation to the whole property of the business partner being our debtor.
In what situations should we apply the security in the form of the promissory note? This form of transaction securing may be applied when we plan to establish cooperation with a new business partner, in relation to which we do not know whether they will perform the agreement, i.e. pay the receivables resulting from invoices in a timely way.
Certainly it would be the best not to sign the agreement at all if we are not convinced about the financial stability and reliability of the future customer. Nevertheless, the situation on the market makes us conclude risky transactions in the hope for achievement of profit and improvement of the current condition of the company. It is worth limiting the risk through establishment of a security that may be inter alia the blank promissory note.
The blank promissory note is issued as a security of all liabilities that may occur in connection with realisation of the agreement. The most frequently used practice is inclusion in the agreement of a provision on securing of all claims that may result therefrom with the blank promissory note issued upon signing of the agreement. The promissory note is usually accompanied by the promissory note declaration, which accurately describes the conditions and the principles, according to which the creditor will be able to complete the promissory note. The provisions determined above may also be included in the content of the agreement itself. The issuer of the promissory note should set the signature thereon in our presence. The persons who may represent the entrepreneur are authorised to issue the promissory note on behalf of the entrepreneur. In case of entrepreneurs running one-person business activity on the basis of the entry in the business activity record, the entrepreneur themselves sets the signature on the promissory note. In case of companies, signatures are set by the persons who in compliance with provisions in the National Court Register are authorised to representation of the company.
We should remember that the promissory note is a security. The condition for exercising of the rights from the promissory note is its possession, of course in the original.
How will we use the promissory note issued by the business partner? In case of a delay in payment of the receivables resulting from invoices, we will be entitled to complete the promissory note in compliance with the provisions of the promissory note declaration and we will then call the issuer for payment. If the issuer of the promissory note fails to make the payment, we may file a petition for issuance of the order for payment from the promissory note, attaching the original of the promissory note. The orders are issued by the court without setting of the trial date. The order for payment becomes enforceable immediately after expiry of the time limit granted for satisfaction of the claim. After obtaining of the declaration of enforceability, regardless of raising of any accusations by the defendant, we may conduct the enforcement proceedings in relation to the property of the debtor. In case when the defendant raises any accusations, the court may suspend execution of the order upon application of the defendant. Upon its issuance, the order for payment constitutes the security title, enforceable without declaration of enforceability. Not waiting for the declaration, we may establish a security on the property of the debtor.
It should be remembered that regardless of a lot of advantages that have been described, the promissory note is worth as much as the property of its issuer. So, obtaining of the court ruling does not close the case. Recovery of the receivables will be possible only on condition of existence of the property, in relation to which the enforcement proceedings will be conducted. Therefore, it is important to check the business partner earlier, still before applying the security in the form of the promissory note, to make sure that it is not only a document that has no coverage.
It is worth using the security in the form of the promissory note as on its basis we will obtain the order for payment relatively quickly and we will be able to conduct the enforcement proceedings, even in case when the debtor raises any accusations.
Published on: 24 October 2016