Document background
A Commercial Promissory Note is a fundamental financial instrument in Hong Kong business transactions, governed by the Bills of Exchange Ordinance (Cap. 19) and related commercial legislation. It is typically used when one party needs to provide a formal, written promise of payment to another party in a commercial context, such as in trade financing, business loans, or commercial debt arrangements. The document must include specific elements to be valid under Hong Kong law, including an unconditional promise to pay, a specified sum, identified parties, and clear payment terms. Commercial Promissory Notes are particularly valuable in business transactions as they can serve as negotiable instruments, allowing for transfer to third parties, and can be used as security for other financial arrangements. They offer a more formal and legally robust alternative to informal IOUs while being more streamlined than full loan agreements.
