A loan promissory note is a written promise. The promise should be related to repay a debt under specific terms. The time is usually specified, it can be paid in a series of payments or upon demand.
There are certain features, which must be contained in the document. For example, the amount of money, the interest rate and the time the money is to be repaid. The other issue which should be included, is the mode of payment. For example, it can be weekly, daily or monthly.
There are certain legal terms which are in a promissory document. There is the promisee, this is the person who issues out the cash and is given the document. There is also the promisor, this is the person who borrows money and promises in writing that he or she is to pay at the indicated time.
In any legally binding contract there has to be a consideration. In this case, the consideration to the promisee is the document and the promise that the money will be returned. To the promisor the consideration is the amount of debt he or she will receive.
The debt which is exchanged for this note, should be minimal. This is because in legal terms it is an unsecured obligation and in case a person becomes bankrupt the secured debts are paid first. There is also the issue of late fees although it is not a must in all documents. The late fees also has a limit which cannot be exceeded according to the usury laws.
Late fees are like a fine for being late to pay as per the contract. The loan promissory note is a simple document to create and thus people should use it when engaging in financial matters. There are cases when this document is declared voidable due to lack of some features.
There are certain features, which must be contained in the document. For example, the amount of money, the interest rate and the time the money is to be repaid. The other issue which should be included, is the mode of payment. For example, it can be weekly, daily or monthly.
There are certain legal terms which are in a promissory document. There is the promisee, this is the person who issues out the cash and is given the document. There is also the promisor, this is the person who borrows money and promises in writing that he or she is to pay at the indicated time.
In any legally binding contract there has to be a consideration. In this case, the consideration to the promisee is the document and the promise that the money will be returned. To the promisor the consideration is the amount of debt he or she will receive.
The debt which is exchanged for this note, should be minimal. This is because in legal terms it is an unsecured obligation and in case a person becomes bankrupt the secured debts are paid first. There is also the issue of late fees although it is not a must in all documents. The late fees also has a limit which cannot be exceeded according to the usury laws.
Late fees are like a fine for being late to pay as per the contract. The loan promissory note is a simple document to create and thus people should use it when engaging in financial matters. There are cases when this document is declared voidable due to lack of some features.
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