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IOU — I Owe You
IOU Full-Form refers to I Owe You. IOU is a commonly used informal document that acknowledges debts. The main difference between an IOU and a promissory note is that the IOU cannot be used as a negotiable instrument. Additionally, it also does not contain any specified terms of repayment like the time period of repayment. An IOU document consists of the name of the debtor, creditor and the amount owed by the debtor. These documents are authenticated by the presence of a sign or other distinguishing designs or marks.
Certain times, IOUs can be redeemed for a service or product, thereby constituting a script form. A script is basically a term used for denoting a legal tender. In India, it is referred to as chit. Scripts are used for paying the employees that work under the truck system. It is also used in the local commerce when there was unavailability of regular currency, for instance, in military bases; wartime occupies countries, coal towns, etc. In California, an IOU is called a ‘Registered Warrant. A registered warrant consists of a payment date in the future time period. This detail makes the IOUs different from normal or regular payroll warrants.
A regular payroll enables the immediate exchange of warrant with cash in terms of the holder. However, the redeeming of both kinds of warrants may get delayed due to unavailability of funds. Due to the presence of this uncertainty, warrants are not used as the negotiable instruments. During the budget crisis in California between the years 2008 and 2011, the registered warrants were used. These are used as the payments to the taxpayers that receive tax refunds, private businesses, and owners of unclaimed cash, local governments and state employees.