Difference Between Promissory Note to Order and Not to Order

The main difference between a promissory note to order and a promissory note not to order is in their transferability. The promissory note to order can be transferred to a third party by endorsement. Meanwhile, for its part, the promissory note not to order can only be transferred to a third party by transfer of credit.

Before we begin to explain in detail the difference between a promissory note to order and a promissory note not to order, we must define the two concepts. So we have the following:

• Definition of promissory note to order: A promissory note to order is a formal payment commitment that indicates an amount to be paid within a specified period. It can be transferred by endorsement.
• Definition of promissory note not to order: A promissory note to order is a formal payment commitment that indicates an amount to be paid within a specified period. It can only be transferred by transfer of credit.

Once both concepts are defined, we can see how the difference lies in the words "endorsement" and "credit transfer". So, let's see the difference between one and another concept.

Difference between endorsement and assignment of credit

The difference between endorsement and assignment of credit is legal. In other words, they are two similar forms of transfer established by law, but not the same. To appreciate their difference, we will divide one and the other according to the following sections:

• Nature
  • Endorsement: This is a unilateral concept .
  • Assignment of credit: This is a bilateral concept.
• Purpose
  • Endorsement: Its objective is to transmit credits to the order and nominative
  • Assignment of credit: Its objective is to transmit the rights of a contract or any legal act.
• Requirements
  • Endorsement: It is enough to include it in the same document as the promissory note.
  • Assignment of credit: It must be recorded on a separate page.
• Responsibility
  • Endorsement: In the endorsement, unless it indicates "without my responsibility" the initial beneficiary (endorser), responds to possible insolvencies of the signatory that may harm the new beneficiary (endorser).
  • Assignment of credit: Unless otherwise stated, the initial beneficiary (assignor), is not responsible for possible insolvencies of the signatory.

Difference between promissory note to order and not to order

In short, the difference between the promissory note to order and not to order is found in the way it is transmitted. Put very simply, endorsing (promissory note to order) requires no paperwork and can be done quickly without prior consent.

Meanwhile, to assign a credit (I will not pay to order) there must be prior consent and notice to all parties. Including the person who agrees to pay (signer).

From the two previous processes, different legal responsibilities arise. Each case, as described, will have some responsibilities or others as indicated.