Legal Protection for Creditors of Promissory Notes in Case of Debtor Default: A Comparative Study between Indonesia and Singapore

A promissory note is a negotiable instrument governed by the Commercial Code in Indonesia and the Bills of Exchange Act 1949 in Singapore. This research conducts a comparative legal study concerning the legal protection afforded to creditors of promissory notes in cases of debtor default. This research aims to analyze the legal protection afforded to promissory note holders in cases of debtor default under Indonesia and Singaporean law. The objective of this study is to examine the legal basis for the use of promissory notes and the extent of protection granted to creditors when the debtor fails to pay at maturity. Using normative legal research methods, the study applies a statute approach, a comparative approach, and a conceptual approach. The results show that the legal framework in Indonesia still contains several weaknesses. A significant limitation of Indonesian law is the unavailability of collateral arrangements, which stands in contrast to the Singaporean legal system that accomodates the use of tangible assets as collateral security, thereby affording creditors enhanced legal protection. Moreover, the regulatory framework in Indonesia remains ambiguous with regard to installment payments; while one provision renders promissory notes invalid if paid by installment, another permits partial payment by the debtor. Based on the findings, this study recommends comprehensive reform of Indonesia’s legal framework governing promissory notes. It also encourages parties to exercise caution when using promissory notes as credit instruments. The research highlights the importance of clear legal standards to ensure effective creditor protection and legal certainty in financial transactions involving promissory notes.