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Key Elements to include in a Demand Promissory Note:
- Name of the debtor (borrower) with complete address
- Name of the creditor with address
- Amount of debt that is borrowed by the debtor
- Sworn statement from the borrower that he agrees to pay back the debt whenever the creditor or lender demands it
- The term of allowing the creditor to demand for his money anytime he wants
- Signature of both parties with dates
Advantages and Disadvantages of Demand Promissory Note:
By reading the above content, you may think that this document looks very promising and you can use it without involving any legal helps because of convenience and ease but just like any other agreement or legal contract, the demand promissory note also has its benefits and setbacks too. When we talk about the benefits or advantages of demand promissory note, it includes the most important benefit which is; a demand promissory note is a legal contract. If you have signed this note with a creditor, you are legally required to pay the debt whenever the creditor demands it either you are in situation to pay it or not. Secondly, this is a very simple and easy document so there is no need to involve attorneys and lawyers to draft the content of this note but you just need to add a sworn statement as the borrower and mention the amount and the fact that you will pay back the debt on demand from the creditor.
In the same manner, there are some disadvantages and flaws too when we talk about demand promissory notices. The most important and common drawback of promissory note is that this note allows the creditor to demand for the money or the debt anytime he wants and the law doesn’t prevent him to demand even if you are in financial crisis or about to declare bankruptcy. Second, this is not as effective as a formal debt or credit agreement that is challenge-able in the court for any dispute and it is also possible that even if you make a formal demand, the debtor will not return the money or simply denies or has declared bankruptcy before you can make your demand.
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