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Sample Demand Promissory Note Template

Personal loan agreement

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jeff.cunningham2015
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44 views3 pages

Sample Demand Promissory Note Template

Personal loan agreement

Uploaded by

jeff.cunningham2015
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

State of Rev.

133ED6A

PROMISSORY NOTE
Amount: $ [Principal amount] Dated: , 20

FOR VALUE RECEIVED, the undersigned [Name of borrower(s)],


(collectively “Borrower”), hereby promises to pay to the order of
[Name of lender(s)], (collectively “Lender”), the principal sum of $ (the “Principal Amount”)
including interest in accordance with the terms set forth below.

1. Payment. The Principal Amount together with any accrued and unpaid interest and all other charges,
costs and expenses, is due and payable on: (Check one)

☐ , 20 .
☐ demand of the Lender.

All payments under this Note are applied first to any accrued interest and then to the Principal Amount.

2. Payment Schedule. (Check one)

☐ This Note shall be payable in installments equal to $ . The first payment is due on
, 20 and due thereafter in equal consecutive installments every: (Check one)

☐ Month
☐ Quarter
☐ Year
☐ Other:

☐ This Note shall NOT be payable in installments.

3. Security. (Check one)

☐ This is a secured note. Borrower agrees that until the Principal Amount of this Note together with
any interest is paid in full, this Note will be secured by [Collateral],
and Borrower hereby grants to Lender a security interest in and to such property.

☐ This is an unsecured note.

4. Interest. (Check one)

☐ The Principal Amount shall bear interest at the rate of $ per annum, accruing daily.
Notwithstanding, the total interest charged on the Principal Amount shall not exceed the maximum
amount allowed by law and Borrower shall not be obligated to pay any interest in excess of such amount.

☐ The Principal Amount shall NOT bear interest.


5. Late Fee. (Check one)

☐ If Borrower fails to make a payment due under this Note within days after the due date, Borrower
agrees to pay to Lender a late payment fee of: (Check one)

Promissory Note (Rev. 133ED6A)


☐$ .
☐ % of the amount then due.

☐ A late payment fee will NOT be charged.

6. Acceleration. (Check one)

☐ In the event Borrower is more than days late with a payment, Lender in its sole discretion may
demand that the entire balance of the unpaid principal amount of this Note and any accrued and unpaid
interest be immediately due and payable in full.

☐ This note will NOT be accelerated if a payment is late.

7. Prepayment. (Check one)

☐ Borrower has the right to prepay all or any part of the Principal Amount of this Note at any time
without prepayment penalty or premium of any kind. Borrower must provide days prior written notice
to
Lender of the prepayment and the amount of the prepayment. (☐ If Borrower pays all of the Principal
Amount, together with any accrued interest, on or before , 20 , Lender will give a discount
of $ of the outstanding Principal Amount due.)

☐ Borrower may NOT prepay the note.

8. Costs and Fees. Upon the occurrence of a default by Borrower, Borrower shall pay to Lender all costs
of collection, including reasonable attorney's fees.

9. Waiver. Borrower and all sureties, guarantors and endorsers hereof, waive presentment, protest
and demand, notice of protest, demand and dishonor and nonpayment of this Note.

10. Guaranty. located at , ,


(“Guarantor”) promises to unconditionally guarantee to Lender, the full payment and performance by
Borrower of all duties and obligations arising under this Note. Guarantor agrees that this guaranty shall
remain in full force and effect and be binding on Guarantor until this Note is satisfied.

11. Assignment. Borrower may not assign its rights or delegate its duties under this Note without Lender’s
prior written consent.

12. Joint and Several Liability. The obligation of each Borrower under this Note shall be joint and
several.

13. Amendment. This Note may be amended or modified only by a written agreement signed by Borrower
and Lender.

14. Notifications. Any notice or communication under this Note must be in writing and either personally
delivered, sent by overnight courier service, certified or registered mail, postage prepaid, return receipt
requested or by facsimile or electronic email transmission.

15. Governing Law. This Note shall be governed by and construed in accordance with the laws of the
State of .

16. Miscellaneous. This Note will inure to the benefit of and be binding on the respective successors and
permitted assigns of Lender and Borrower. Lender shall not be deemed to have waived any provision of

Promissory Note (Rev. 133ED6A)


this Note or the exercise of any rights held under this Note unless such waiver is made expressly and in
writing. Waiver by Lender of a breach or violation of any provision of this Note shall not constitute a waiver
of any other subsequent breach or violation. In the event that any of the provisions of this Note are held to
be invalid or unenforceable in whole or in part, the remaining provisions shall not be affected and shall
continue to be valid and enforceable as though the invalid or unenforceable parts had not been included in
this Note.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first stated above.

SIGNATURES

Borrower Signature Borrower Full Name

Borrower Signature Borrower Full Name

Guarantor Signature Guarantor Full Name

Lender Signature Lender Full Name

Lender Signature Lender Full Name

Promissory Note (Rev. 133ED6A)

Common questions

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The assignment clause restricts the borrower's ability to transfer their obligations under the promissory note without prior written consent from the lender. This limitation ensures that the lender maintains control over who is responsible for the debt repayment, preventing the borrower from passing on obligations to an unreliable third party. It also ensures the lender can assess the creditworthiness and trustworthiness of a potential new borrower .

If the borrower defaults under the terms of the promissory note, the lender is entitled to collect all costs associated with collection, including reasonable attorney's fees. Furthermore, the lender may demand immediate payment of the entire unpaid principal amount and any accrued interest if the borrower is significantly delayed in payment, as specified in the acceleration clause .

The waiver clause implies that borrowers waive various defenses and procedural requirements such as presentment, protest, demand, and notice of nonpayment. This could limit the borrower's ability to delay enforcement by the lender due to procedural defects, thereby streamlining the process for the lender to claim overdue payments. Consequently, borrowers might have fewer legal defenses available if they fail to make required payments .

The notifications clause specifies that any communications regarding the promissory note must be in writing and delivered personally, or sent by a reliable method such as overnight courier or electronic transmission. This ensures clarity, formality, and traceability in all communications, preventing misunderstandings or disputes over whether proper notice was given for actions like prepayments or legal disputes. This clause helps in creating a clear audit trail and reduces the risk of claims regarding failure to communicate .

Including a security interest reduces the risk profile for the lender as it grants them a claim over specified borrower assets until the note is fully paid. This minimizes the lender's potential loss if the borrower defaults. Conversely, it raises the risk for the borrower, as they stand to lose the collateral if they fail to meet the obligations. This provision makes the debt more enforceable and possibly affects the terms, such as interest rates or borrowing amounts, favorably for the borrower when compared to an unsecured note .

The borrower is allowed to prepay all or any part of the Principal Amount at any time without incurring a prepayment penalty, as long as they provide prior written notice to the lender of the prepayment and its amount. Additionally, if the borrower pays the entire Principal Amount plus any accrued interest by a specified date, the lender may offer a discount on the outstanding Principal Amount. This setup could potentially benefit the borrower by reducing the total amount of interest paid and potentially availing a discount if paid by the deadline .

The guarantor promises to unconditionally guarantee full payment and performance by the borrower of all duties and obligations arising under the note. This obligation remains effective until the note is fully satisfied. The role of the guarantor provides additional assurance to the lender that debts will be paid even if the borrower defaults, effectively sharing or transferring some default risk from the lender to the guarantor .

The governing law clause stipulates that any disputes arising from the promissory note will be governed by the laws of a specific state. This provides certainty and predictability regarding which legal standards apply, potentially influencing the litigation process, including interpretations of the note, available defenses, and applicable remedies. It may also impact the convenience and cost of litigation for parties outside that jurisdiction, who may have to engage with unfamiliar legal systems .

The joint and several liability clause allows the lender to demand full repayment of the debt from any single borrower or combination of borrowers, regardless of each one's share in the borrower's collective obligation. This can significantly affect enforcement by simplifying the collection process for the lender, who can choose the most financially capable party to pursue, while increasing the risk to borrowers as each one may be liable for the full amount of the debt .

The amendment clause, which requires a written agreement signed by both the Borrower and the Lender for any modifications, solidifies the enforceability of the promissory note's terms by ensuring any changes formally agreed upon are documented. This clause adds flexibility by allowing the parties to adjust terms through mutual consent while preventing unilateral alterations, which protects both parties’ interests .

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