You can typically sign a legally binding promissory note that contains unconditional pledges to pay a certain sum of money. However, you can strengthen the legality of a valid promissory note by having it notarized. It never hurts to add a layer of protection as you may have to use it in court.
A promissory note typically contains all the terms involved, such as the principal debt amount, interest rate, maturity date, payment schedule, the date and place of issuance, and the issuer's signature.
A promissory note could become invalid if: It isn't signed by both parties. The note violates laws. One party tries to change the terms of the agreement without notifying the other party.
Promissory notes are legally binding whether the note is secured by collateral or based only on the promise of repayment. If you lend money to someone who defaults on a promissory note and does not repay, you can legally possess any property that individual promised as collateral.
Enforcing a secured promissory note is simply a matter of either repossessing the secured asset through your own efforts, or hiring a professional agency to accomplish the task on your behalf. These agencies will charge a set fee for their services, but they usually have a very high rate of success.
Circumstances for release of a promissory note
The debt owed on a promissory note either can be paid off, or the noteholder can forgive the debt even if it has not been fully paid. In either case, a release of promissory note needs to be signed by the noteholder.
An unsecured promissory note does not use collateral. If the borrower defaults on the loan, the lender's only means of enforcement is by filing a lawsuit against the borrower.
If the borrower does not repay you, your legal recourse could include repossessing any collateral the borrower put up against the note, sending the debt to a collection agency, selling the promissory note (so someone else can try to collect it), or filing a lawsuit against the borrower.
However, using a lawyer is not necessary for the loan to be valid. Once you draft the promissory note, it's time for everyone to sign it: the lender, the borrower and the co-signer (if there is one). Again, seeking professional help such as notarizing the signatures is a good idea but not required.
This means both the lender and borrower must sign the original document (plus any amended versions). Without the signatures, the promissory note has no legal leg to stand on.
At closing, however, lenders should consider obtaining wet signatures. Nothing in E-Sign or UETA prohibit use of an e-signature on a promissory note. However, because paper promissory notes are “negotiable instruments” under the UCC, having “possession” of the “original” signed note is legally significant.
If someone pressures you to decide on a promissory note purchase, steer clear. Check and double-check. Look on the SEC's EDGAR Database to see if the notes are registered. Check with your state securities regulators to see whether the investment and the salesperson are in compliance with your state's securities laws.
If both parties agree to cancel the promissory note agreement, they may sign a cancellation or release agreement. This agreement releases the borrower from their obligation to repay the loan and releases the lender from their right to collect the loan.
Who is primarily liable on a promissory note. It is the maker who is primarily liable on a promissory note. The issuer of a note or the maker is one of the parties who, by means of a written promise, pay another party (the note's payee) a definite sum of money, either on-demand or at a specified future date.
If the lender cannot establish the validity of the promissory note, this may be a defense to the claim of breach. Duress, coercion, or fraud: If the plaintiff or a third party forced the defendant to sign the promissory note under duress, coercion, or fraud, this might be a valid defense to a claim of breach.
If the person you're trying to collect from didn't sign it – and yes, this happens – the note is void. It may also become void if it failed some other law, for example, if it was charging an illegally high rate of interest. Even if the note had been originally valid, you can void it by altering it.
The short answer is yes, e-signatures are legal. But what this question is really getting at is whether an e-signature can create a binding and enforceable contract. And, again, the short answer is yes.
It would help if you used loan agreements when you want to borrow a large sum and you also want to use them. If you cannot trust the other party, you cannot trust them personally. It is easier to sit back and relax using a loan agreement instead of a promissory note because you won't have to worry about your money.
For a personal loan agreement to be enforceable, it must be documented in writing, as well as signed and dated by all parties involved. It's also a good idea to have the document notarized or signed by a witness.
promissory note, you'll see the documents have some significant differences. As a borrower, you should have a loan agreement because of the additional protections it provides. The reason is that a promissory note doesn't bind the lender in any way.
The Electronic Signatures in Global and National Commerce Act, otherwise known as the E-Sign Act, states that electronic signatures shouldn't be considered invalid simply because they're electronic. In other words, e-signatures are completely legal and binding.
All that needs to be is some mark that represents you. It can be a series of squiggles, a picture, or even the traditional "X" for people who can't read and write. As long as it records the intent of the parties involved in a contractual agreement, it's a valid signature.