Difficulty: Hard

Average Score: 38%

Who's required to sign a promissory note?

Rationale

The borrower only is required to sign a promissory note.

A promissory note is a financial instrument that represents a promise to pay a specified amount of money at a certain time. In a typical loan agreement, it is the borrower who signs the note, acknowledging their obligation to repay the lender.

A (Both the borrower and the seller) YOUR ANSWER

This choice suggests that both parties are required to sign the promissory note. However, the seller typically does not sign this document since the promissory note is solely a commitment from the borrower to repay the loan, not an agreement between the borrower and seller.

B (The borrower only) CORRECT

This is the correct answer, as only the borrower is obligated to sign the promissory note. The borrower’s signature indicates their acceptance of the terms of the loan and their commitment to repay it. The seller's role is separate and does not involve signing the promissory note.

C (The borrower, the seller, and the trustee) YOUR ANSWER

While this choice includes multiple parties, it incorrectly implies that all three are required to sign the promissory note. In reality, the borrower is the only party required to sign, while the seller may be involved in the transaction but does not sign the note, and a trustee's role is usually related to ensuring that the terms of the loan are upheld.

D (The seller only) YOUR ANSWER

This choice incorrectly states that only the seller is required to sign the promissory note. In reality, the seller does not have a financial obligation represented in the note, which is strictly between the borrower and the lender.

Conclusion

In summary, a promissory note is a legal document that binds the borrower to repay a loan and is solely signed by the borrower. The seller and other parties may be involved in the broader transaction, but they are not required to sign the promissory note itself, making it clear that the borrower's signature is the essential requirement for this document.

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