Re: SOL info.
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Posted by poor lawyer
(24.88.34.92) on August 20, 2002 at 21:32:52:
In Reply to: Re: SOL info. posted by JJ on August 20, 2002 at 20:17:30:
Generally, a "promissory note" is an unconditional promise by one person to pay a certain sum of money to another, made in writing. A "contract" is a mutual agreement between two or more parties, in which at least one of the parties promises to perform (or refrain from performing) a certain action or actions. A written contract is a contract made in writing. The main difference is that a contract requires consideration from both (or all) of the parties. Everybody has to do or give up something. The consideration doesn't have to be part of the contract, it can be given as an incentive to enter the contract, but everybody has to give some consideration. It would take a long time to really hash this out. A promissory note doesn't require consideration from anybody. It is just a promise, in writing, to pay so much money. Usually, however, there is consideration involved. And often, a promissory note is made as part of an overall written contract. Confused? Maybe a few examples: A mortgage is a promissory note (although it is secured by real estate). An installment loan is a promissory note. And, a loan to purchase furniture is a promissory note (even if the loan is secured by the furniture). An agreement for person A to buy furniture and person B to sell furniture is a contract. An agreement for person A to buy a house and person B to sell the house is a contract. So in the furniture buying situation, you had a contract (written or not) to buy and sell furniture. You promised to buy it and he promised to sell it. And as part of this contract, you promised to execute a promissory note to the seller. You completed the contract...you bought the furniture, he sold it to you, you executed the promissory note. Not paying on the note would not be a breach of the contract. Not paying on the note is a breach of the promissory note. There are also differences in what you can sue for, depending on if its a note or a contract. On a note, all you can sue for is whatever money is still due and owing...thats it. On a contract, there are a whole bunch of different things that can be asked for if its breached. Sometimes you can ask that the breaching person fully perform the contract. Other times it will be just for money. The amount of money due on a contract will vary depending on the circumstances and what promises were made. The amount of money due on a promissory note is how much of the note is unpaid...period. For example, A and B contract for A to buy a house and for B to sell it to him, and for A to give B a mortgage (promissory note) on the house. A decides prior to closing that he doesn't want to buy the house. B can sue A for specific performance, i.e. he can ask the court to make A buy the house from him. Alternatively, he could sue A for damages. This would not be the amount of the sale price (why should B get the house and the total price?). It would be the amount that is the difference between the sale price and the actual value of the house. If they actually do buy and sell the house, then B has a promissory note form A (the mortgage). A must make payments to B on the note. Half way through the payment plan, A stops paying. A has not breached the contract, they already bought and sold the house. But A has breached the promissory note (mortgage). B can now sue A for the amount that is unpaid on the promissory note (mortgage). Does that clear it up...even a little? poor lawyer, esq.
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