Chris Blank is a freelance writer and research consultant with over 20 years of experience. Blank specializes in socio-political analysis, news, popular culture, and travel. His work has been published both online and in print publications. He holds a Master of Arts in Sociology and a Juris Doctor. A promissory note is a written promise to repay a debt due. Like a promissory note, this document recognizes a legally binding relationship between two parties – a lender and a borrower. Wondering how to draft a contract for the money owed? It is important to review the terms of the contract and determine the responsibilities of each party involved. Read 3 min Start your promissory note by specifying the date of signature of the note, your legal name as a lender and the legal name of the borrower, your address and telephone number – as well as that of the borrower – and the amount of the loan. For example, you might write: “On January 10, 2013, I, John H. Doe, residing at 111 Oak Lane, My Town, My State, telephone number 111-111-1111, promised to repay in full the amount borrowed of $10,000 (ten thousand dollars and no cent) plus interest to Jane A. Smith, residing at 555 Walnut Drive, Her Town, Her State, phone number 555-555-5555. When most people think of a promissory note, the idea of a handwritten towel comes to mind. Because of the way promissory notes have been portrayed in Hollywood, it doesn`t have the best reputation for being a legally binding document.

However, a promissory note can be a solid binding document when used as a refund agreement. As long as there is a lender and a borrower in a transaction, a promissory note can be used to determine the terms of repayment. If the person who owes the debt does not sign the document for the money owed, write it down and sign it yourself. You will also need to provide evidence to prove the existence and legality of the debt. B e.g. a cancelled cheque or an electronic transfer receipt. Attach the proof of guilt to the legal document. Send a copy of the signed document with attached proof by registered mail to the debtor. In the promissory note, you want to indicate whether the conditions are negotiable.

From this statement, it should be clear whether the borrower or lender has some flexibility in lending or repaying the money. The payment request letter can be used to make a written claim for the money owed to you. This letter contains a formal notice that payment is due and that legal action will be taken when payment is made. Read more Promissory notes are legally binding on both the borrower and the lender. Has a friend, relative or colleague borrowed money from you? Read our article on smart strategies to help you get your money back. Legal Templates provides a free IOU template for everyday situations where you want a written record of borrowed or borrowed money. Gather the information needed to meet any legal requirements. The promissory note must identify the lender and borrower, the amount of the loan, the interest rate of the loan, the terms of repayment and the due date of the repayment. Look for your state`s usury laws to find out the maximum legal interest rate you can charge the person who owes you money.

You cannot execute a promissory note in court if the interest rate on the promissory note exceeds the legal limit. When lending money to someone, it is important to create a legal document describing how the borrowed money will be repaid. This is also the case if you lend money to a friend, colleague or relative. This legal document, called a promissory note, is a written instrument that contains a promise by one party to pay another party a certain amount of money upon request or on a specific future date. [1] X Search Source Your promissory note must contain several important provisions, including the amount due, the interest rate and the maturity date. [2] X Research Source Follow the steps in this article to create a clear, concise, and legally enforceable promissory note. If you`re considering lending money to a friend or family member, there are other more formal options than this form, including a promissory note or loan agreement. Learn the difference between a promissory note form, a promissory note and a loan agreement. List the amount of money owed. If applicable, specify the purpose for which the money is due. Specify the date the debt was created.

The first step in creating a contract for a loan is to decide what type of payment plan will be offered. One option is to provide an installment loan for which no interest will have to be paid. In this situation, the person borrowing the money must repay the amount borrowed in equal payments over the period specified in the contract. For a promissory note to be legally binding, the signatures of both the lender and the borrower are required. And in some states, a notary and a witness are required to sign the promissory note to be valid. Check with your state to make sure you know the laws. In the next paragraph, note the penalties or fees you charge if the borrower makes the late payment. You could write, “If I, John H. Doe, do not repay the loan by December 31, 2013, I agree to pay an additional penalty of 10% of the loan amount with the original loan amount.” Drop a few lines and enter signature lines for your name, the name of the borrower and the name of a witness. Leave room for the notary under the signature lines to witness the signing of the promissory note. There are five important elements that must be included in a legal document to show the money owed: the amount of money owed, who owes the money, to whom the money is owed (and/or why the debt was created), the date the debt was created, and the date it should be repaid. With this evidence and proof that the debt actually exists, it is possible to establish the legal right to collect a debt.

Without this document, the lender or borrower may be frustrated if the other party does not keep their promise to give money or repay money. .