Promissory Note - Payable on Demand
What this document covers
A Promissory Note - Payable on Demand is a legal document through which one party (the borrower) promises to pay a specific sum of money to another party (the lender) upon demand. This form is unique because it allows the lender to request repayment at any time, making it a flexible option for both parties. Unlike other loan agreements, this promissory note does not impose a penalty for early repayment, offering added convenience for the borrower.
Key parts of this document
- Identification of the borrower and lender, including their addresses.
- The amount of money being borrowed and the interest rate applicable.
- Terms of repayment, indicating it is due upon demand.
- Statement regarding no pre-payment penalty.
- Consequences of default, including the option for the lender to demand full payment after 10 days.
- Waiver of certain legal rights, ensuring clarity on the obligations of the borrower.
When this form is needed
This form is useful in situations where an individual or business needs to borrow money and the lender requires a simple, straightforward repayment option. Use this Promissory Note when you want to formalize a loan without complex repayment terms or when you anticipate the need for flexible repayment to accommodate changes in financial circumstances.
Intended users of this form
This form is suitable for:
- Individuals looking to borrow money from friends or family.
- Business owners needing a quick loan from investors or partners.
- Lenders who want to document the terms of a loan clearly and legally.
- Anyone seeking a simple agreement without pre-payment penalties.
How to prepare this document
- Identify the parties involved by filling in the names and addresses of both the borrower and the lender.
- Enter the loan amount in both written words and numerals for clarity.
- Specify the interest rate applicable to the loan in a percentage format.
- Review the default terms and ensure you understand your obligations.
- Both parties should sign and date the document, acknowledging their agreement to the terms.
Notarization guidance
This form does not typically require notarization to be legally valid. However, some jurisdictions or document types may still require it. US Legal Forms provides secure online notarization powered by Notarize, available 24/7 for added convenience.
Mistakes to watch out for
- Not specifying the correct interest rate or leaving it blank.
- Failing to sign the document or not having both parties present to sign.
- Leaving out essential details like addresses, which can lead to disputes.
- Not understanding the terms of default and potential consequences.
Why complete this form online
- Convenient access and easy downloads at any time.
- Edit and customize the template to fit specific needs before printing.
- Reliable templates drafted by licensed attorneys to ensure legal compliance.
- Quickly obtain a legally binding agreement without needing to draft one from scratch.
Form popularity
FAQ
A demand note means that the balance owed does not have to be repaid until it is 'demanded' by the lender and the note does not have a specific end date listed.A promissory note, in contrast, can have the option for payment to be 'on demand' or at a specified date.
However, in California, the lender is not required to produce a Promissory Note to conduct a non-judicial foreclosure (also known as a Trustee's Sale).The Promissory Note is the debt instrument, just like an IOU. The person holding the original is the one the borrower has to pay.
The date of the letter. The names of the borrower and lender. The original amount of the loan. The date of the promissory note and any reference number or account number it contains. The payment schedule that was agreed upon.
All Promissory Notes are valid only for a period of 3 years starting from the date of execution, after which they will be invalid. There is no maximum limit in terms of the amount which can be lent or borrowed. The issuer / lender of the funds is normally the one who will hold the Promissory Note.
Promissory Notes In addition to the amount and the signature, any interest charged for the amount may also be stipulated in the note, as well as the name of the payee. If a promissory note has a date on it and the date has passed, that note can also be considered to be payable on demand.
The rule is merely a permissive one, permitting the use of an adhesive stamp on promissory notes payable on demand when the amount or value exceeds Rs. 250/-. The rule does not lay down that such a promissory note shall be stamped with adhesive stamp of the requisite value.
Full names of parties (borrower and lender) Repayment amount (principal and interest) Payment plan. Consequences of non-payment (default and collection) Notarization (if necessary) Other common details.
A written, signed, unconditional promise to pay a certain amount of money on demand at a specified time.The individual who promises to pay is the maker, and the person to whom payment is promised is called the payee or holder. If signed by the maker, a promissory note is a negotiable instrument.
