Hi, I was looking for confirmation that the attached Promissory Note is a lawful document as noted in the Banking Act Section 39, subsection 8, and complies with the Bill of Exchange Act 1909. If the wording is non compliant, could suggestions be made on what would need to be amended or added to the document to comply with the relevant acts.
VIC Promissory Note
- Thread starter Bert1474
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TLDR: If you want to pass these around as part of a sovereign citizen/freeman on the land/other pseudo-legal belief system: Don't do it. We're not going to have a discussion about that here as it would breach the Community Guidelines.
At their heart, promissory notes are dressed up versions of another type of document - an I.O.U. They are a formalised promise to pay, which only need a few things be 'valid':
- Certainty as to who the payer/promiser is;
- Either a clear identification of who the payee/promisee is, or a clear statement that the payee may be the 'bearer' of the note;
- Indication that it is payable on demand, on a specific date, or a date which is capable of being determined on the face of the note;
- The sum of money it relates to;
- Whether any interest is payable on the sum of money; and
- The signature of the payer/promiser.
In essence, a cheque is a form of promissory note (albeit a particular type, covered in its own part of the Bills of Exchange Act).
For the older types around, you could liken the catchphrase of Wimpy from Popeye to a verbal promissory note: "I'll gladly pay you Tuesday for a hamburger today." It's a promise to pay in the future for something that can be quantified today.
There are a variety of problems with promissory notes which can make them unsuitable:
- If they're too complex. Once you start adding conditions they're no longer a promissory note and become something else, like a loan agreement.
- Their use is regulated - depending on the use. Want to trade in promissory notes? If there's any form of charge involved, that could make it a form of regulated credit, for which a license is needed (although there is an exemption from this in the case of authorised deposit-taking institutions under the National Credit Code).
- Their worth is only as good as the paper it’s written on. Just because someone promises to pay, it doesn't mean that they can. What if the note is rejected? What if they don't have the funds to pay it? Consider a cheque. If you use it in the valid format, the bank will pay it out - so long as there is sufficient money in the account. That might have been the case when the cheque was written, but may no longer be the case when it is presented for payment. There are no guarantees; cheques can 'bounce'. That's why a lot of places don't take cheques. You can sue on a bounced cheque, but it's still a hassle. Promissory notes are going to be less secure. They operate on a basis of trust between the parties. What about security? Well, then you're straying into it being a loan and not a promissory note because you're attaching conditions.
So, looking at your given example....
- Does it meet the criteria for a promissory note? It looks like it. Low bar to get over though.
- Is there too much? Maybe. That would take further consideration of all the factors surrounding it. For example - the 'negotiable instrument to be financially traded on' - could be a big red flag.
- Would I accept it? No. And there's no requirement for anyone to accept a promissory note.
- Then there is the big kicker: "Underwritten by: The One People's Public Trust, 1776...." For a start, The One People's Public Trust (TOPPT for short) is an 'entity' which appears to be attached to the pseudo-legal beliefs in and around sovereign citizens. Those beliefs are delusional and incorrect and, importantly, discussing them is a breach of the Community Guideline of this forum - so we're not going there.
That aside, the TOPPT is not an Australian registered entity that I can see. So ‘enforcing’ payment against them is going to be difficult to impossible from Australia. It would be worse than accepting a cheque drawn on a foreign bank which doesn’t exist in Australia.
More importantly, as far as I can see, TOPPT is not an entity with a financial services licence – an AFSL - (or an authorised representative of such a licensee). While issuing promissory notes is excepted from requiring an AFSL, I would expect that underwriting a promissory note is an activity that requires an AFSL. Providing a financial service without a licence will get you hit with the regulatory hammer.
At their heart, promissory notes are dressed up versions of another type of document - an I.O.U. They are a formalised promise to pay, which only need a few things be 'valid':
- Certainty as to who the payer/promiser is;
- Either a clear identification of who the payee/promisee is, or a clear statement that the payee may be the 'bearer' of the note;
- Indication that it is payable on demand, on a specific date, or a date which is capable of being determined on the face of the note;
- The sum of money it relates to;
- Whether any interest is payable on the sum of money; and
- The signature of the payer/promiser.
In essence, a cheque is a form of promissory note (albeit a particular type, covered in its own part of the Bills of Exchange Act).
For the older types around, you could liken the catchphrase of Wimpy from Popeye to a verbal promissory note: "I'll gladly pay you Tuesday for a hamburger today." It's a promise to pay in the future for something that can be quantified today.
There are a variety of problems with promissory notes which can make them unsuitable:
- If they're too complex. Once you start adding conditions they're no longer a promissory note and become something else, like a loan agreement.
- Their use is regulated - depending on the use. Want to trade in promissory notes? If there's any form of charge involved, that could make it a form of regulated credit, for which a license is needed (although there is an exemption from this in the case of authorised deposit-taking institutions under the National Credit Code).
- Their worth is only as good as the paper it’s written on. Just because someone promises to pay, it doesn't mean that they can. What if the note is rejected? What if they don't have the funds to pay it? Consider a cheque. If you use it in the valid format, the bank will pay it out - so long as there is sufficient money in the account. That might have been the case when the cheque was written, but may no longer be the case when it is presented for payment. There are no guarantees; cheques can 'bounce'. That's why a lot of places don't take cheques. You can sue on a bounced cheque, but it's still a hassle. Promissory notes are going to be less secure. They operate on a basis of trust between the parties. What about security? Well, then you're straying into it being a loan and not a promissory note because you're attaching conditions.
So, looking at your given example....
- Does it meet the criteria for a promissory note? It looks like it. Low bar to get over though.
- Is there too much? Maybe. That would take further consideration of all the factors surrounding it. For example - the 'negotiable instrument to be financially traded on' - could be a big red flag.
- Would I accept it? No. And there's no requirement for anyone to accept a promissory note.
- Then there is the big kicker: "Underwritten by: The One People's Public Trust, 1776...." For a start, The One People's Public Trust (TOPPT for short) is an 'entity' which appears to be attached to the pseudo-legal beliefs in and around sovereign citizens. Those beliefs are delusional and incorrect and, importantly, discussing them is a breach of the Community Guideline of this forum - so we're not going there.
That aside, the TOPPT is not an Australian registered entity that I can see. So ‘enforcing’ payment against them is going to be difficult to impossible from Australia. It would be worse than accepting a cheque drawn on a foreign bank which doesn’t exist in Australia.
More importantly, as far as I can see, TOPPT is not an entity with a financial services licence – an AFSL - (or an authorised representative of such a licensee). While issuing promissory notes is excepted from requiring an AFSL, I would expect that underwriting a promissory note is an activity that requires an AFSL. Providing a financial service without a licence will get you hit with the regulatory hammer.
I agree sovereign citizens are trying to use promissory notes or bills of exchange, as legal tender as a way of escaping a pre-existing contractual arrangement.
Does not work the way they think.
If a contract already exists, types of payments are likely already agreed by both parties when they enter into the agreement. Changes to essential terms of the contract MUST be by agreement.
Promissory notes can be used between private parties rather than a formal loan agreement but they are still rare.
Does not work the way they think.
If a contract already exists, types of payments are likely already agreed by both parties when they enter into the agreement. Changes to essential terms of the contract MUST be by agreement.
Promissory notes can be used between private parties rather than a formal loan agreement but they are still rare.
Don't accept them as payment for anything.
Their only functional use is as wrapping paper.
They are not what Americans (and Sov Citz etc) call "legal tender".
A person can choose to, but is not, and cannot be obliged to accept one in lieu of money.
Their only functional use is as wrapping paper.
They are not what Americans (and Sov Citz etc) call "legal tender".
A person can choose to, but is not, and cannot be obliged to accept one in lieu of money.
Thanks for your reply Rod, the main reason for my query on the attached Promissory Note, is that I am aware that in the Banking Act and the Bills of Exchange Act, it is considered Australian Currency/Legal Tender. My main focus surrounding my query, was to find out whether it could be used to legally pay bank debt, as they understand and use this financial product every day? And if it was possible/legal to do so, and a Bank refused the Note (hence refusing legal tender), what options are available to the note writer to have the banks comply with their licensing as an ADI? What I have learnt is that if legal tender is presented for a debt, that it cannot be rejected by the credit provider. I understand that for private use, most citizens would not understand what to do with the note, but most banks certainly do, even though they pretend not to recognise it as a financial instrument.
What people who ask questions like this are usually really asking is
To which the answer is "No".
Correct, for the purposes of section 39 of the Banking Act, which allows for the making of regulations under the Act. I might have missed it, but I don't see anywhere that considers promissory notes as Australian Currency for general purposes. I also can't see any mention of promissory notes being 'legal tender' anywhere. That's a bit deceptive though, because aside from Australian banknotes (s36 of the Reserve Bank Act) and coins (Part IV of the Currency Act), I also can't see any references to other forms of payment being 'legal tender'. Coins are, of course, limited amount-wise.
Yes, it can be. But they have to accept it, and they cannot be required to do so. Even if they were considered legal tender, the RBA website at Legal Tender states
"It appears that a provider of goods or services is at liberty to set the commercial terms upon which payment will take place before the ‘contract’ for supply of the goods or services is entered into. For example, some vending machines, parking meters and road toll collection points indicate by signs that they will not accept low denomination coins. Some road toll collection points indicate that they will not accept any cash at all. If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment.
However, refusal to accept legal tender in payment of an existing debt, where no other means of payment/settlement has been specified in advance, conceivably could have consequences in legal proceedings; for example, the creditor may be unable to enforce payment in any other form."
Most debt instruments will nominate a means of payment.
You've learnt wrong. There is an argument to state that a credit provider cannot refuse to accept legal tender in a manner they have agreed to accept by contract. However, the debtor cannot mandate the form of payment.
Thanks for the response again, the section that stipulates Australian currency in the Banking Act is covered under section 39, subsection 8 of the act, pg 140. Also, the reserve bank states in its "What is Money" education piece, on pg 4 under the "What is legal tender?" is where I get the information that if legal tender is presented, that it could not be refused. I have tried to get clarity from APRA, and the RBA with no luck, both advised on getting independent legal advice. Being the regulators for the currency of this country, I would have expected that they would have all the information and advice to impart, but not the case at all.
Attachments
Yes, as I referred to. You'll notice the beginning words of ss39(8): "In this section". That's a clear indication that the definition is restricted in use, and not a general definition for wider use.
The education piece has told you what legal tender is: banknotes and coins - with the added constriction of limits for coins. Legal tender can only be refused if (a) it is in coins and above the limit, or (b) there is a prior notice declining to accept it, while giving an acceptable alternate means of payment. The most common for (b) is stating you can pay by credit/debit card because cash is not accepted. This happened a lot during COVID, and happens all day every day around the country with the new style parking meters which do not accept coins. And, of course, for many years parking meters only accepted coins and not banknotes.
The long and the short of it is - promissory notes are not Australian currency for general purposes, they're not legal tender, and you cannot force anyone to take one.
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