Hi pinkhippo-ga :)
This answer is heavily based on a similar previous answer that I
prepared for another UK resident (see Question ID: 220687)as they both
deal with the same subject matter. It is a very standard UK based
contract and should suit your purposes although this answer should in
no way be a substitute for you seeking professional legal advice.
1. Re: I would like to protect myself in the event that the family
member dies
This is known as an "Event of Default" and is included at paragraph
7 (v).
2. Re: I would like to protect myself in the event that the family
member... suffers a stroke, etc.
This is known as an "Event of Default" and is included at paragraph
7 (v).
3. I may wish the money back when I demand it.
Depending on the amount of money involved, this is a fairly draconian
clause and might be seen as unreasonable so I've drafted it at clause
8 with the proviso that you must give the Lender at least 30 days'
notice.
4. General caveat: this extensive answer is not typical of the normal
$5 answer that you should expect for this kind of question. Bear in
mind that a large amount of this answer comes from previously prepared
material, hence my ability to prepare such a length answer for you so
quickly.
Kind regards
jem-ga :)
***********************
Please find below a very basic loan agreement (and related loan note)
which is suitable for two individuals contracting in the UK. Items to
be filled in by you are in [square brackets]. You should also ensure
that BOTH documents (the loan note should be attached to the loan
agreement) are witnessed correctly (i.e. for the loan agreement:
someone to witness your signature and someone different to witness the
Borrower's signature; for the attached Note: it's just the Borrower
that needs to sign this and have it witnessed).
I have not included something called a security note which is a
separate document granting you security over the borrower's assets
(probably a bit heavy-handed for a transaction between family members)
I have, however, left the option open for you to obtain security at a
later date if you wish (see clause 5).
I've assumed that you will not be charging interest (see paragraph 3
of the Loan Agreement). If you are charging interest, simply alter
the wording in this paragraph to read: "Both parties have agreed that
the Loan shall
bear interest at a rate of [ ]% per annum." You should also include
non-payment of interest as an Event of Default at praragraph 7 if you
are, in fact, charging interest.
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LOAN AGREEMENT
THIS AGREEMENT IS MADE the __ day of ___2003 BETWEEN:
(1) pinkhippo-ga (the “Lender”); and
(2) [ ](the “Borrower”).
IT IS HEREBY AGREED as follows:
1. Loan. Subject to and in accordance with this agreement, its terms,
conditions and covenants, the Lender agrees to lend the Borrower on __
day of ___ (the “Loan Date”) the sum of [ pounds]
(£00.00) (the “Loan”).
2. Note. The Loan shall be evidenced by a Note in the form attached
as Exhibit A of this agreement (the “Note”) executed by the Borrower
and delivered to the Lender on the Loan Date.
3. Interest. Both parties have agreed that the Loan shall not bear
interest. However, in the event of a default in payment, interest
shall be applied from the date of default at an annual rate of [ ]%
per annum unless otherwise agreed in writing between the parties.
4. Payment. Payment shall be in accordance with the terms of the
Note. The Note may, at any time, and from time to time, be paid or
prepaid in whole or in part without premium or penalty except that any
partial payment shall be a minimum of £[ ].
5. Security. From time to time the Lender may demand, and the
Borrower shall execute, additional loan documents which are reasonably
necessary to perfect the Lender’s security interests.
6. Representations and Warranties. The Borrower represents and
warrants: (i) that the execution, delivery and performance of this
agreement and the Note have been duly authorised and are proper; (ii)
that there will be no material adverse changes in the financial
condition of the Borrower at the time of the Loan Date; (iii) there
are no material, unrealised or anticipated losses from any present
commitment of the Borrower; (iv) that the Borrower will advise the
Lender of material adverse changes which may occur at any time prior
to the Loan Date and thereafter to the date of final payment. The
Borrower represents and warrants that such representations and
warranties shall be deemed to be continuing representations and
warranties during the entire life of this agreement.
7. Events of Default. The Borrower shall be in default: (i) if any
payment
due hereunder is not made within [10] days of the date due; (ii) in
the
event of assignment by the Borrower for the benefit of creditors;
(iii) upon the filing of any voluntary or involuntary petition of
bankruptcy by or against the Borrower; (iv) if the Borrower has
breached any representation or warranty specified in this agreement;
(v)if the Borrower dies or suffers from any debilitating illness such
that the Borrower is no longer capable of being involved in his day to
day affairs.
The Lender shall be entitled at any time after becoming aware of the
occurrence of an Event of Default by notice in writing to the Lender
to declare that the Loan shall become immediately due and payable
whereupon the Borrower shall be obliged forthwith to pay to the Lender
all such monies.
8. Accelerated Repayment. For the avoidance of doubt, the Borrower
hereby agrees that the Lender shall be entitled, on demand, to full
repayment of the Loan (including any applicable interest), regardless
of whether an Event of Default has occured, by giving not less than 30
days notice in writing to the Borrower.
9. Governing Law. This agreement and the Note shall be governed by,
construed and enforced in accordance with the laws of England and
Wales and both parties agree to submit to the exclusive jurisdiction
of the English Courts.
IN WITNESS OF WHICH the parties have signed this agreement the day and
year first above written.
Signed by the Borrower: ____________________
in the presence of (witness signature): ______________
Name:
Address:
Occupation:
Signed by the Lender: ____________________
in the presence of (witness signature): ______________
Name:
Address:
Occupation:
EXHIBIT A – LOAN NOTE
THIS DEED is made the __day of ___2003
BY:[Name of Borrower] of [full physical address of Borrower](the
“Borrower”).
WHEREAS: The Borrower is indebted to [pinkhippo-ga ] (“the Lender”) in
the
sum of [£00.00].
NOW THIS DEED WITNESSES as follows:
1. The Borrower promises to pay to the order of the Lender the sum of
[ pounds] (£00.00).
2. This note shall be paid as follows: [you need to put the payment
schedule in this section]
(i) On [insert date], 2003, the sum of [£ ]
(ii)On [insert date], 2003, the sum of [£ ], etc.
[OR you can simply use the following wording for this clause 2: "This
note shall be paid as follows: starting from the date of the Loan and
for a period of not more than 6 months thereafter, the Borrower hereby
agrees to make bi-weekly payments to the Lender in the amount of [£ ]
per week."
The first option gives certainty of dates and receipt of payment, the
second option is much more general and vague and does not stipulate
any actual dates, only that payments are made bi-weekly over the
course of 6 months. *If you are charging interest on this loan, don't
forget to include the interest amount in the payment schedule.*]
3. This note may be prepaid without penalty subject to the minimum
payment requirement stipulated in clause 4 of the loan agreement.
4. This note shall be due and payable upon demand by any holder hereof
should the Borrower default in any payment beyond 10 days of its due
date.
IN WITNESS OF WHICH the Borrower has executed this deed the day and
year first above written.
[Signature of Borrower]:________________________
in the presence of (witness)
Name:
Address:
Occupation:
Signature of Witness:____________________________ |
,
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