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Simple English definitions for legal terms
approved indorsed note
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A quick definition of approved indorsed note:
An approved indorsed note is a written promise to pay money from one person to another. It's like an IOU. Sometimes, another person will sign the note to make it more secure. There are many different types of notes, like ones that require small payments and a big final payment, or ones that are backed by property. Notes can also be used to buy things, like a house or a car.A more thorough explanation:
An approved indorsed note is a type of promissory note that has been endorsed by a third party to provide additional security. A promissory note is a written promise by one party to pay money to another party or to bearer. It is a two-party negotiable instrument, unlike a draft which is a three-party instrument.
For example, if John owes money to Jane, he can give her a promissory note stating that he will pay her back by a certain date. If Jane wants additional security, she can have a third party, such as a bank, endorse the note. This means that the bank is also liable for the payment if John fails to pay.
Other types of promissory notes include:
- Accommodation note: A note that an accommodating party has signed and thereby assumed secondary liability for.
- Balloon note: A note requiring small periodic payments but a very large final payment.
- Demand note: A note payable whenever the creditor wants to be paid.
- Mortgage note: A note evidencing a loan for which real property has been offered as security.
- Unsecured note: A note not backed by collateral.
These examples illustrate the different types of promissory notes that exist and the various ways in which they can be used to secure a loan or debt. It is important to understand the terms and conditions of a promissory note before signing or endorsing it.
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