An IOU ( abbreviated from the phrase "I owe you") is usually an informal document acknowledging

debt Debt is an obligation that requires one party, the debtor, to pay money Loan, borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Co ...

. An IOU differs from a

promissory note A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the ''maker'' or ''issuer'') promises in writing to pay a determinate sum of ...

in that an IOU is not a negotiable instrument and does not specify repayment terms such as the time of repayment. IOUs usually specify the debtor, the amount owed, and sometimes the

creditor A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some propert ...

. IOUs may be signed or carry distinguishing marks or designs to ensure authenticity. In some cases, IOUs may be redeemable for a specific product or service rather than a quantity of

currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...

, constituting a form of

scrip A scrip (or ''wikt:chit#Etymology 3, chit'' in India) is any substitute for legal tender. It is often a form of credit (finance), credit. Scrips have been created and used for a variety of reasons, including exploitative payment of employees un ...

California Registered Warrants

Also referred to as "IOUs" by the U.S. state of

California California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...

, the term " Registered Warrants", which specify a future payment date, is meant to differentiate these IOUs from regular, or “normal” payroll warrants which permit the holder to exchange their warrant for cash immediately. For both types of warrants, redeeming them may be delayed until funds are available. Because of this uncertainty, warrants are not negotiable instruments. Registered Warrants were issued in July 2009 due to a temporary inability of the state of California to redeem its warrants. Warrants are issued as payment to state employees, private businesses, local governments, taxpayers receiving tax refunds, and owners of unclaimed money.

References

External links

Debt Personal finance {{Finance-stub