A well-drafted Promissory Note will:
Information & Benefits:
The following information and benefits is what distinguishes us from other online providers.
Detail Principal and Interest Payment and Term of payments. Often, a Borrower agrees to a larger final "balloon payment" to accommodate smaller installment payments. The Borrower may also pay interest-only over the course of the loan payment term and pay the principal as a lump-sum at the end. Variable and fixed rates of interest and installment periods may vary.
Where payment should be submitted.
Promisor (Borrower) wants to be able to prepay the balance due without penalty. Conversely, the Promisee (Lender) wants to be able to accelerate the balance due because he wants the regular interest payments. Old argument was that it was difficult for Seller to recalculate new Principal and Interest each month, but new technology pretty much absorbs this argument.
Not all notes are "Secured" or otherwise backed up with collateral. However, a Lender may require such collateral before lending any monies. Such collateral can be almost anything, but is usually comprised of corporate stock, hard assets such as equipment and inventory, and/or real estate. NOTE ALSO that the Lender may require additional collateral upon subsequent advances (See below).
Very practical because client may want to start off with smaller advances of capital, but over the longer period may wish to advance much larger amounts - this provision allows for this. Very favorable to lender borrower's progress can be examined prior to additional advances.
Lender generally accelerates the balance due upon default or assumes rights in security if a secured note. Lender is most concerned with the following activities which will result in a default by Borrower:
- Payments not made on time;
- Borrower assigns any business interest to another creditor;
- Borrower petitions for or declares bankruptcy or insolvency;
- Borrower falls into receivership;
- Borrower is dissolved
Litigation & Attorney's Fees
Lender wants assurances that no litigation is pending against the Borrower and if litigation is required, the prevailing party will also receive attorney's fees.
Mediation and Arbitration
Mediation and Arbitration should always specify a location in Client's jurisdiction (preferably, in the same county where they run their business). Mediation is a non-binding way to settle the dispute quickly and amicably. If unable to settle in mediation, arbitration is first option available. Arbitration is the preferred alternative to litigation because of speed, cost, and ability to maintain low profile (no info is publicly available).
Always stipulate that the contract will be governed under whatever law the Client ordinarily conducts business. Always make sure that venue and jurisdiction are as convenient to client as possible.
No Modification or Waiver
No modifications except those specifically agreed upon by the parties in writing. Any waiver of a term or provision will not act as a waiver of any other provision.
Notices should always list the current and best addresses where each party may contact the other for whatever reason.
Spiegel & Utrera, P.A. : Affordable Agreements. Custom-Fit Contracts.
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