Most Important Items to Include in a Promissory Note

A promissory note is a legally binding contract detailing the loaning of money or to detail an agreement used to collect a debt. Banks are not the only ones that use these contracts. Individuals are now using them for services as well. The following are the most important items to include in a promissory note.

1. Names. List the names of the lender and the borrower are listed in this section. Normally when a promissory note is written, the first paragraph begins with "Between:" and includes the name of the lender and the address of this lender. The second paragraph outlines the name of the borrower and their address.




2. Terms. This specified the exact terms of this loan. This includes: the amount of payments to be made, the number of payments, late charges, default repercussions, and the legal rights of both parties. It can also state that both parties are of sound mind at the time that this contract is signed. In order to cover all bases, so to speak, these terms should be highly specific to the type of loan being issued.




3. Signatures. The signatures required for a promissory note are the lender, the borrower, and up to two witnesses. A date should be listed as to when this note was signed. In some cases, a notary is asked to sign and stamp this type of document.