A promissory note is a flexible tool, in which, one party makes an unconditional written promise for paying a fixed sum of money on the other party, either on a fix or a unfixed future time or on the demand of the payee by following the terms and conditions of the promissory note.
A promissory note does not need any specific words of agreement, because, lawful effect is an unqualified promise of payment. The aim of a party is to pay also so the party uses the promissory notes. Like a bill of exchange, promissory note cannot be written on any third party taking the lender’s cash.
A simple promissory note must enclose the following necessary material in it. Date of the creation of the note, which is actually the signature date. It must hold the complete identity names of both of the parties in order to make no dispute. It should contain the addresses of both of the parties, the payee and the receiver. If the receiver wants to take interest on the note then it should also be stated on it.
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The dates of payments should be mentioned on the promissory note for the payment of interest and for full payment. Late payment should also be announced. Terms and conditions of the fines should be mentions on the promissory note in order to take the payment. The promissory note should contain the required information for payments, repayments or the details of the installments that should be paid. Promissory note should be checked, read, verified and then signed by the borrower and the loan officer.
When the promissory note is made, the relation between the two parties is material free. This promissory note can be prepared by any person. Usury laws can be applied on some cases for the benefit of the borrower and the lender, which is totally depending upon the laws of the state where the note is being made.
In order to make your dealings dispute free, you should have to describe the terms and conditions of the promissory note as deeply as possible. This part of the agreement will consist of any law suits impossible against the borrower in support of his ability to pay off the money to the money lender.
Promissory notes are loan evidence but most of the people mix it with the term loan contract. These notes are not at all loan contracts because loan contract is totally different from promissory note including all terms and conditions of loan agreements. To make your dealing secure with your party, terms and conditions of this loan agreement must be clear so that there must not be any conflict between parties. Basic purpose of writing this note is that both parties must understand that given money is a loan and it must be repaid. Signing this agreement would be a promise that you will certainly secure your deal with other party which you have made deal with. Surely, you can get most out of this document.
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