Is a promissory note cash?

[indio007]

Anyone know positively if a promissory note is considered "cash"???

[quasimodo]

A promissory note is not "cash".
However, "cash" (FRNs) is a promissory note.

TITLE 12 > CHAPTER 3 > SUBCHAPTER XII > § 411

§ 411. Issuance to reserve banks; nature of obligation; redemption

Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized. The said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.

[emphasis Mine]

[gldskr]

A promissory note is cash only to the extent that it is accepted by a third party. It is the acceptance that makes it "cash", this does not diminish, however, that it is still a note.

Once traded, the underlying contract becomes a derivative, in essense, cash. The reality of present day financial alchemy.

gldskr

[Shoonra]

A promissory note is not cash. It is a promise to pay cash. If the cash is not forthcoming then the promissory note takes on many of the qualities of a bounced check.

[psholtz]

Originally Posted by indio007

Anyone know positively if a promissory note is considered "cash"???

The Federal Reserve permits member banks to deposit promissory notes in their accounts (w/ the Fed), thereby expanding their reserves, as if that note were hard "cash"..

And, as has been pointed out, cash (FRNs) are a form of promissory note.

[indio007]

It seems kind of odd to me that only a federal reserve note is the only "cash" ...when it is not even a promise to pay but merely "a tender of payment"

http://www.canlii.org/eliisa/highlight.do?text=1966-67+%28Can.%29%2C+c.+88%2C+ss.+12+&language=en&sear chTitle=Federal&path=/en/ca/scc/doc/1977/1977canlii36/1977canlii36.html


This is a supreme court of canada case but the same principals apply to the USA and the our current money system.

It basically says a promise to pay is not the same as an offer to pay.


A promissory note is an unconditional promise in writing made by one person to another. With that in mind, the court said.

I confess my inability to appreciate how there can be any substance in the assertion that an inconvertible note issued by a bank and being legal tender involves the same liability of a bank as is incurred by a merchant who makes and gives a promissory note.

Despite the fact that paper money has become practically inconvertible and no longer evidences a debt, such notes must, for reasons of accounting, appear on the


liability side of the balance sheet of the bank or other institution of issue. There should be no misapprehension, however, of the legal nature of the notes. The “debtor” has disappeared.

The cite is quote elaborative as to the nature of central bank notes .

[farmer_giles_of_ham]

The notes are issued to evidence debt, as a matter of account and in fact. These are convertible with the originally issued debt. There are as many notes in existence, unit-for-unit, as there are debts.

[indio007]

Originally Posted by Shoonra

A promissory note is not cash. It is a promise to pay cash. If the cash is not forthcoming then the promissory note takes on many of the qualities of a bounced check.

A promissory note is more like cash than current bank notes.
FED notes are tender of payment. A mere offer. Conditional on top of that.
While a promissory note is a promise to pay. Unconditionally.

The fact is this, that there is nearly no way out of a promissory note and there a multiplicity of ways out of a offer of contract.
Which is more like cash?

[Shoonra]

FRNs are a tender of payment. That means they are the actual handing over of the money. This is not the same as an offer and there is nothing conditional about it.

A promissory note is only a proise to hand over FRNs at some future date. Not a tender of payment but an expression of ongoing debt.

[fulltitle]

Without Prejudice.
Someone or someone seem to be confusing contractual law with commercial law: confusing concepts related to offer and acceptance vs. accounting principles or commercial instruments which may be shadows or offshoots of an extant contractual arrangement.

What cash is or isnt might be relative to the venue. When playing Monopoly, the Monopoly money is cash. In the federal U.S., FRNs are 'cash' but one might be wise to consider that the cash comes from somewhere or arises from something perhaps directly or indirectly from something along the lines of a pledge or a promise to pay of some sort.

If A agrees with B that A's lawn mowing endeavors are worth one hundred silver dollars--thats an agreement...AFAIK commercial law doesnt even creep in. Now if A promises to pay B one hundred silver dollars in the contract on some piece of paper now that would be a promissory note of sorts.

Is a promissory note cash? That was apparently the question. A promissory note until its is delivered from the maker to the payee is said to be inchoate (or incomplete) and amounts to pretty much nothing. However once it is delivered to the payee then it could be refused, rejected or accepted by the payee. So the answer to your question is: it depends.

In a credit based monetary system, the fixation on 'cash' might be detrimental when really the fixation might be best on credit. Seems with credit system one is either begging for credit or giving it. Which are you up to?