Whether you're borrowing money or providing a loan to someone else, a Promissory Note is usually the best way to establish a record of the transaction and make sure that repayment terms, for example, are clear and fair.
However, an “IOU†is generally regarded as only an acknowledgment of a debt, not a promise to pay the debt. However, this form is a written promise to pay a debt.
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Is an IOU a Legal Document? An IOU is a legal document that can be introduced in a court of lawthough whether or not it is binding is open to dispute. Some authorities feel an IOU isn't binding at all; it's merely the acknowledgement that a debt exists.
Is an IOU a Legal Document? An IOU is a legal document that can be introduced in a court of lawthough whether or not it is binding is open to dispute. Some authorities feel an IOU isn't binding at all; it's merely the acknowledgement that a debt exists.
How Do I Write an IOU?How the debt is to be repaid (lump sum or installments)A repayment schedule (size and frequency of payments, if in installments)Whether interest is charged, and if so, at what rate.A guarantor for the debt, if any.The state whose laws govern the agreement.Signature of the lender.
Essentials of an IOUName of the debtor.Name of the creditor.Amount of money in question (written out in both words and numbers).When the debt will be repaid.If interest is to be charged until the debt is repaid, the details of how the interest is calculated should be spelled out.Signatures of both parties.More items...
An IOU is an informal documentsometimes handwrittenthat records the existence of a debt. Since it typically is not a formal written contract, it may not be as legally binding as other loan agreements, such as a conventional residential mortgage. Consider this example of an IOU in its most basic form.
With this in mind, the following terms are merely a recommendation for what one should include in their IOU contract:The lender's full name;The borrower's full name;The amount of money ($) borrowed;The due date for the borrowed money;The amount ($) the borrower will pay per month/week; and.More items...
A promissory note is different from an I.O.U. because a promissory note says a person will pay the money back and lays out how and when it will be paid and other details. An I.O.U. just says that a person owes a debt to someone else.
An IOU letter format is the suggested way that a rather informal agreement between two parties should be put down in writing. It is the only guide to the particulars that an IOU should include, because an IOU can be as simple as words scribbled on a napkin, which is the way most people think of the document.
A promissory note is a written promise from one person or business to pay another. Also known as loan agreements or IOUs, these documents lay out the terms and conditions of a loan and ensure that the agreement is legally enforceable.
