The Promissory Note is not a proof for existing loan agreement

In practice, very often borrowed money is provided without a written contract, but against the issuance of a promissory note by the debtor for the given amount.

According to the Supreme Court of Cassation, however, the promissory note establishes and can serve as evidence only of the obligation of its issuer (the debtor) to pay the amount specified therein and the maturity and method of its payment. However, It cannot serve as evidence of other causal relationships between the parties, even if it were issued as security for the same.

The reasons for this are:

  • that the law does not require the promissory note to state the causal relationship with its essential elements;
  • the obligation to pay established by the promissory note may arise on different legal grounds;
  • no statutory presumption or fiction is providing that the issuer's obligation to pay arises only if the amount is conveyed to him by the creditor, nor that the record is issued solely as security for a loan agreement;
  • the promissory note does not have the character of a receipt within the meaning of Article 77 (1) of the Obligations and Contracts Act;

Given this, the irregular promissory note alone cannot serve as evidence of a loan agreement concluded between the parties and that the amount under this contract has been handed over by the lender to the borrower. 

An irregular promissory note may serve as evidence of a loan agreement concluded between the parties and that the amount is handed over to the issuer only if it explicitly states the grounds for the delivery of the amount.

In other cases, proof of the conclusion of the loan agreement and delivery of the amount must be carried out by other legally admissible means of evidence.