What is an unconditional written promise to pay a sum of money to another called?

An unconditional written promise to pay a specific sum of money to another party is known as a promissory note. This financial instrument serves as a formal agreement where one party (the maker) promises to pay the specified amount to another party (the payee) either on demand or at a set future date. The key characteristic that defines a promissory note is its clear terms that detail the amount to be paid, the payment date, and the parties involved, all of which are crucial for its validity.

In contrast, a loan agreement often encompasses a broader range of terms and conditions, including details about collateral, interest rates, repayment terms, and other obligations, rather than being solely a promise to pay a sum. A bill of exchange is primarily a negotiable instrument that orders one party to pay a fixed amount to another party on demand or at a predetermined time, but it is distinct from a promissory note as it involves three parties: the drawer, the drawee, and the payee. Lastly, a security agreement typically outlines the terms under which personal property is used as collateral for a loan, and does not constitute a direct unconditional promise to pay a monetary sum.

Thus, identifying the definition and characteristics of a promissory note