Q:

How do you write a promissory note?

A:

Quick Answer

To write a promissory note, include sections to note the value received, payment of the principal, interest and other sections such as remedies and events of acceleration. A promissory note is a written agreement between parties concerning the lending of money, with a payment agreement and schedule.

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Full Answer

There is no set template for writing a promissory note, as the terms and conditions will differ from party to party. Payment options for a promissory note include a lump sum payment, due on demand or a payment with interest. The payment of principal section is an important section which lists the terms of the repayment. While this note is typically drawn up between two friendly parties, it is a legal and binding document. If a payment schedule is agreed upon, it must be adhered to. With this in mind, terms should be chosen that are agreeable to both parties.

A promissory note should first list the parties involved, the amount of money that was lent or borrowed and how it is to be paid back. Sections such as "acceleration" may be included, which allows the creditor to request all due money immediately from the debtor. A remedies notation ensures that the payee will not delay in his or her repayment.

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