While the concept of the promissory note has more than likely been around since the dawn of hard currency, the promissory note itself dates back to the early 10th century...
The promissory note has changed very little over time.
A promissory note is basically a simple type of agreement. Or at least, it should be in most cases. The idea still remains the same, which is: one party makes a written oath to repay a debt to another party for prior monetary value received. A modern day promissory note has several basic legal elements, which includes the parties; the person who owes the debt (called the payee) the lending party (called the maker) which is the sum to be repaid, along with the terms and conditions of repayment.
In addition, there's the interest rate (if it is applicable) and the maturity date. Today's more refined promissory note encompasses even more. Most will have a governing law clause or legal provision. Usually most will have an “acceleration clause” whereby the specified repayment terms speed up (in the event where the entire sum becomes due) in a special happening, in most cases when the maker forgoes a payment.
HOW CAN A PROMISSORY NOTE BE USED?
A promissory note form (or legal document) is a detailed and written personal promise to repay money to somebody else.
A promissory note can be used to create a legal and binding agreement when lending money or even financing the sale of personal items and real property. A promissory note’s payment can be scheduled to fit your specific needs and requirements. It's a matter of simply setting out the terms and conditions of the loan in an “unsecured promissory note” or a secured promissory note.
Important things to consider are:
"How much is going to be loaned, the amount of interest and rate (if any at all), the rate of repayment you wish to schedule", and the security interest. You can even have the entire amount become due and payable on a certain date. Promissory notes you will find at http://www.promissory-note.org/ are set-out in plain English so that you can insert the specific terms and conditions for the promissory note by simply filling in the blank spaces.
Misconceptions About Promissory Notes
There are a few borrowers who believe that a promissory note which is signed and dated with a private person lender is somehow much less enforceable than say a promissory note signed with a bank. This is completely untrue! There is absolutely no difference whatsoever in the enforceability of a promissory note no matter whom the lender is, and this is an important thing to remember. Once the promissory note is duly signed and dated it is legally binding, and the failure of a borrower to perform under the terms and conditions of the promissory note is legal grounds for default and foreclosure of the loan.
The Functionality Of A Promissory Note
The functionality of a promissory note is to outline in detail the specific amount and terms of a loan and in addition, to provide signed evidence of the receipt of the loan proceeds, and the actual commitment by the borrower to repay the loan completely. In the case of a commercial bank loan, the note will also include a detailed "repayment amortization schedule" and will outline the total amount of interest including the principal payments over the life of the loan.
How A Promissory Installment Note Works
Typically a promissory installment note includes the terms of the loan, the amount of the loan, what the loan is actually for, the rate of interest rate, late payment fees, the frequency and amount of installments, etc. However, the law will uphold certain...
How To Avoid Costly Mistakes With A Promissory Note
Promissory Notes can sometimes be misleading in their simplicity, and if you're about to get involved in or create a promissory note you should be aware of a few simple but crucial steps to take in order to avoid any legal ramifications...
Facts About Promissory Notes And The Law
When you borrow an amount of money and pledge to pay it back then you've created an oral and binding legal obligation. In most cases it's formalized in writing spelling out in detail the terms of payment. Such a legal document is generally known and referred to as a "Promissory Note" and is...
