A promissory note is a written promise to pay a debt. An unconditional promise to pay on demand or at a fixed or determined future time a particular sum of money to or to the order of a specified person or to the bearer.
Delaware Checklist — Items to Consider for Drafting a Promissory Note When drafting a promissory note in Delaware, it is essential to include various key elements to ensure its validity and enforceability. Here is a comprehensive checklist to consider when creating a promissory note in Delaware: 1. Identify the Parties: Clearly state the names and addresses of both the lender (payee) and borrower (maker) involved in the transaction. Additionally, include any relevant details such as company names or legal entities. 2. Define the Loan Amount: Specify the principal amount being borrowed. Ensure it is mentioned clearly in both numerical and written form to avoid any confusion. 3. Determine the Interest Rate: Establish the interest rate that will apply to the loan. State whether it is a fixed or variable rate and calculate the interest based on an annual percentage rate. 4. Establish the Repayment Terms: Set the repayment schedule that the borrower must adhere to. Include details such as the frequency of payments (monthly, quarterly, etc.), due dates, and the total duration of the loan. 5. Outline Late Payment Penalties: Clearly define the consequences of late or missed payments. State the penalties or fees that the borrower will incur if payments are not made on time. 6. Specify the Collateral (if applicable): If the loan is secured, identify the collateral being used to secure the loan. Provide a detailed description of the collateral, its value, and any additional obligations pertinent to its maintenance. 7. Include Default Clauses: Clearly describe the events that would constitute default under the promissory note. This may include failure to make payments, bankruptcy, or breach of any other agreed-upon terms. 8. Address Governing Law: Specify that the promissory note is governed by Delaware law. This ensures clarity regarding the interpretation and enforcement of the note. 9. Determine Jurisdiction and Venue: Identify the court or jurisdiction where any disputes or legal actions arising from the promissory note will be heard. Provide the specific venue details for clarity. 10. Obtain Signatures: Ensure that both the lender and borrower sign the promissory note to acknowledge their agreement. If applicable, include spaces for additional witnesses or notary public signatures. Different Types of Delaware Checklist — Items to Consider for Drafting a Promissory Note: There are no specific types of checklists for drafting a promissory note exclusive to Delaware. However, variations in the terms, conditions, or specific clauses within the promissory note can be customized based on the type of loan or the parties involved. For example, a checklist for a personal loan might differ from one designed for a commercial loan or a loan secured by real estate.
