Simple Promissory Note

A promissory note is simply an instrument in writing wherein borrower undertakes to pay the specified amount with interest to lender at a specified time. You need this to legally enforce claim to funds,or access to other remedies,if the borrower defaults.Promissory note contains detail regarding rate of interest and collateral security(property given in lieu of loan e.g. jewellery). It helps in avoiding any confusion in the minds of both borrower and lender.

When a person issues a promissory note, he/she would have to stamp it as per Indian Stamp Act and normally a revenue stamp is affixed on the promissory note signed by the borrower. Use this agreement if You plan to loan money to another person or business, and would like to formalize the agreement. You are looking to borrow money from a private party or a business, and you would like to get all the terms in writing. You are involved in a loan that includes interest, and you wish to prepare an amortization table for both parties. You need a written record determining the amount of a monthly loan payment. You have been asked to create a Promissory Note on behalf of a lender and borrower to outline the terms of a loan.

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Frequently Asked Questions

A promissory note is simply an instrument in writing wherein borrower undertakes to pay the specified amount with interest to lender at a specified time. You need this to legally enforce claim to funds,or access to other remedies,if the borrower defaults.Promissory note contains detail regarding rate of interest and collateral security(property given in lieu of loan e.g. jewellery). It helps in avoiding any confusion in the minds of both borrower and lender.
Who needs this agreement and why?
When a person issues a promissory note, he/she would have to stamp it as per Indian Stamp Act and normally a revenue stamp is affixed on the promissory note signed by the borrower. Use this agreement if You plan to loan money to another person or business, and would like to formalize the agreement. You are looking to borrow money from a private party or a business, and you would like to get all the terms in writing. You are involved in a loan that includes interest, and you wish to prepare an amortization table for both parties. You need a written record determining the amount of a monthly loan payment. You have been asked to create a Promissory Note on behalf of a lender and borrower to outline the terms of a loan.
What is the use of Annexure?
The following are the major clauses included in this agreement:
  1. Promise of Payment-this clause ensures that the value will be paid to the lender at a particular place specified
  2. Interest Rate-specifies the interest rate that is levied on the principal amount
  3. Schedule of Payment-mentions how the lender is to be paid including conditions about installments.
  4. Default snd Acceleration-states the effects of default on part of the borrower.
  5. Pre Payment-provides against the borrower repaying the loan in whole or in part without the lender's permission.
  6. Security-includes details about the things given as security by the borrower.
  7. Relationship-defines how the borrower and lender are related to each other.
  8. Waiver-explains the conditions of voluntary surrender by the lender.
  9. Severability-states that if any provision in the agreement cannot be fulfilled,then it will be removed while the rest of the provisions will still remain in place.
  10. Jurisdiction-mentions the laws under which the agreement is to be constucted.
These are a few terms which might be useful to read for a better understanding of this agreement:
  1. Borrower- is the person or company to whom the money is lent.
  2. Lender- is the person or company who lends money to the borrower.
  3. Waiver-the voluntary surrender of any right or claim by a party.
What are the legal jargons used in this agreement?
It does not contain any annexure section.
How to use this agreement?
The following are the major clauses included in this agreement:
  1. Promise of Payment-this clause ensures that the value will be paid to the lender at a particular place specified
  2. Interest Rate-specifies the interest rate that is levied on the principal amount
  3. Schedule of Payment-mentions how the lender is to be paid including conditions about installments.
  4. Default snd Acceleration-states the effects of default on part of the borrower.
  5. Pre Payment-provides against the borrower repaying the loan in whole or in part without the lender's permission.
  6. Security-includes details about the things given as security by the borrower.
  7. Relationship-defines how the borrower and lender are related to each other.
  8. Waiver-explains the conditions of voluntary surrender by the lender.
  9. Severability-states that if any provision in the agreement cannot be fulfilled,then it will be removed while the rest of the provisions will still remain in place.
  10. Jurisdiction-mentions the laws under which the agreement is to be constucted.

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