The Borrower and the Lender is referred to individually as “Party” and collectively as the “Parties”
This Agreement (the “Promissory Note”) is entered into and made valid upon signature by both Parties (the “Effective Date”)
The Lender agrees to a loan to the Borrower for the sum of [Insert Amount of money as loan], (the "Principal Sum") with interest at the rate of [Insert interest rate denoting a percentage] per annum (the "Interest") on the unpaid principal in accordance with the terms and conditions set forth below:
The following events constitute default of this Promissory Note and upon their occurrence, the entirety of any remaining amount due shall become immediately payable:
Should the Borrower default on completing any obligation contained within this Promissory Note, including, but not limited to, if any of the circumstances in the Default provision occur, the Lender may declare the entire amount remaining due immediately. Any and all costs or expenses incurred by the Lender in enforcing the obligations of this Promissory Note as a result of the Borrower’s default, including any legal fees or costs, will be added to the remaining amount due and must be paid immediately by the Borrower.
Borrower: [Insert e-mail address of the borrower]
Lender: [Insert e-mail address of the lender]
This Promissory Note will inure to the benefit of and be binding upon the respective successors, assigns, heirs, executors and/or administrators of the Borrower.
Headings to this Promissory Note are for convenience only and shall not be construed to limit or otherwise affect the terms of this Promissory Note.
A Promissory Note is different than a loan agreement because it only binds one party, the Borrower, to actions (such as payment) or consequences (such as if the Borrower doesn't pay), but it doesn't bind the lender to anything. In fact, lenders don't even sign Promissory Notes - only borrowers do.
Often, Promissory Notes are used in place of more formal loan agreements when the loan is being made informally between friends or family members. Promissory Notes can even sometimes be used between very small businesses.
How to use this document: This document can be used in any situation where an individual or business is borrowing money from another individual or business but is best used in situations where money is being loaned somewhat informally, between family and friends. This is because the Promissory Note is only signed by one party, the Borrower, and it does not bind both parties to an agreement.
In this document, the basic details of the loan will be entered, such as the amount and when the total amount is due. It also includes, of course, the identifying details of both parties: the name and address of the individual borrower and lender, or the business name and business address of a company borrower or lender.
This Promissory Note will also include a determination of the biggest issue with the loan - whether or not interest will be charged.
A Promissory Note is a short, succinct document for a loan.
Applicable Law: Promissory Notes are governed by Article III of the Uniform Commercial Code (the "UCC") [For US Law].