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.
Oregon Checklist — Items to Consider for Drafting a Promissory Note A promissory note is a legally binding document that outlines the terms and conditions of a loan agreement between a lender and a borrower. In Oregon, there are specific considerations that need to be addressed when drafting a promissory note to ensure its enforceability and compliance with state laws. Here is a detailed description of the essential items to include in an Oregon checklist for drafting a promissory note: 1. Identify the Parties: Clearly state the full legal names, addresses, and contact information of both the lender (referred to as the "Payee") and the borrower (referred to as the "Maker") involved in the loan transaction. 2. Define the Loan Amount and Terms: Specify the exact amount of money lent and the terms of repayment, including the interest rate, repayment schedule, due dates, and the agreed-upon penalties for late or missed payments. 3. Include Default and Acceleration Provisions: Describe the events that would constitute a default, such as non-payment for a specific number of days, bankruptcy, or breach of other obligations. Also, mention the consequences of default, such as acceleration of the debt or pursuing legal action. 4. Address Prepayment Options: Determine whether the borrower has the option to make early repayments without incurring penalties or if prepayment fees apply. 5. Establish Security Provisions: If the loan is secured by collateral, provide a detailed description of the collateral, such as real estate, vehicles, or other assets, and describe the process of handling the collateral in the event of default. 6. Include Usury Provisions: In accordance with Oregon law, ensure that the interest rate specified in the promissory note does not exceed the state's maximum legal rate. 7. Draft Governing Law and Jurisdiction Clauses: Specify that Oregon law governs the interpretation, enforceability, and resolution of any disputes related to the promissory note. Also, mention the appropriate jurisdiction where any legal actions should take place. 8. Provide for Attorney's Fees and Costs: Address whether the prevailing party in a legal dispute related to the promissory note can recover attorney's fees and costs incurred in the process. 9. Include Severability Clause: State that if any provision of the promissory note is found to be invalid or unenforceable, it will not affect the validity or enforceability of the remaining provisions. 10. Include Additional Provisions: Depending on the specific circumstances of the loan agreement, additional provisions may be necessary. These could include clauses related to late fees, modifications, waiver of rights, and more. Different types of Oregon checklists for drafting promissory notes may arise based on the specific loan type or purpose. For example, student loan promissory notes, personal loan promissory notes, or business loan promissory notes may each have their own unique considerations. Additionally, the checklist may vary if the loan involves a line of credit or a balloon payment structure. Therefore, it is essential to tailor the checklist according to the particular loan transaction to ensure compliance with Oregon's laws and protect the rights of both the lender and the borrower.
