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.
Guam Checklist — Items to Consider for Drafting a Promissory Note: When drafting a promissory note in Guam, it is crucial to include certain key elements to ensure its validity and enforceability. This checklist highlights the essential items to consider when creating a promissory note specific to Guam's legal requirements. 1. Date: Begin by writing the date when the promissory note is executed. Use the standard format of month, day, and year (e.g., January 1, 2023). 2. Parties: Clearly identify the parties involved in the promissory note, including their full legal names and addresses. This includes the lender (creditor) and borrower (debtor). 3. Principal Amount: State the principal amount being borrowed by the borrower. This should be clearly stated in both numerical and written form (e.g., "$10,000" and "ten thousand dollars"). 4. Interest Rate: Specify the interest rate that will be applied to the principal amount. Ensure that the interest rate complies with Guam's usury laws, which set the maximum limit. 5. Repayment Terms: Provide a detailed description of the repayment terms, including the frequency of payments (monthly, quarterly, etc.), the due date of each payment, and the total number of payments. 6. Late Payment Penalties: Consider including provisions for late payment penalties if the borrower fails to make timely payments. Specify the amount or percentage to be charged as a penalty and how it will be calculated. 7. Collateral: If the promissory note is secured by collateral, describe the type of collateral being used and provide relevant details, such as its estimated value. 8. Default and Remedies: Clearly outline the consequences of default by the borrower, including any remedies available to the lender, such as acceleration of the debt or repossession of collateral. 9. Governing Law: State that the promissory note will be governed by and interpreted in accordance with the laws of Guam. 10. Signatures: Both the lender and borrower should sign and date the promissory note. Consider including a provision for witnesses or notarization to further validate the document. Types of Guam Checklist — Items to Consider for Drafting a Promissory Note: 1. Simple Promissory Note: This type of promissory note includes the basic elements mentioned in the checklist above. It is suitable for straightforward loan transactions without complex terms or collateral. 2. Secured Promissory Note: This type of promissory note includes provisions for securing the loan with collateral. It provides additional protection for the lender in case of default by the borrower. 3. Variable Interest Rate Promissory Note: In situations where the interest rate may change over time, this type of promissory note is used. It allows for flexibility in adjusting the interest rate based on market conditions or other agreed-upon factors. By following this checklist and considering the specific types of promissory notes available, individuals can create legally sound and effective promissory notes suitable for their borrowing or lending needs in Guam.
