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Simple Interest Promissory Note for the United Kingdom

Simple Interest Promissory Note Template for England and Wales

A Simple Interest Promissory Note is a legally binding document under English and Welsh law that formalizes a loan agreement where interest is calculated only on the principal amount. The document outlines the loan amount, interest rate, payment terms, and maturity date. It creates a clear obligation for the borrower to repay the specified sum plus simple interest to the lender according to agreed terms, providing legal protection for both parties.

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Simple Interest Promissory Note

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What is a Simple Interest Promissory Note?

A Simple Interest Promissory Note is commonly used in England and Wales when parties wish to document a straightforward lending arrangement where interest is calculated solely on the principal amount. This document is particularly useful for private loans, business financing, or family lending arrangements where compound interest is not desired. The note includes essential terms such as the principal amount, interest rate, payment schedule, and maturity date, while providing legal protection under English and Welsh contract law. It offers a simpler alternative to more complex loan agreements while maintaining legal enforceability.

What sections should be included in a Simple Interest Promissory Note?

1. Promise to Pay: Clear statement of the debt amount and promise to repay

2. Interest Rate: Specification of simple interest rate and calculation method

3. Payment Terms: Schedule and method of payments

4. Maturity Date: Date when the full amount becomes due

5. Execution: Signature blocks and date

What sections are optional to include in a Simple Interest Promissory Note?

1. Security: Details of any collateral, use when note is secured

2. Prepayment Terms: Conditions for early repayment, include if early repayment is allowed

3. Default Provisions: Consequences of default, include for higher-value loans

4. Assignment Rights: Rights to transfer the note, include if transferability is intended

What schedules should be included in a Simple Interest Promissory Note?

1. Payment Schedule: Detailed breakdown of payment dates and amounts

2. Interest Calculation Examples: Sample calculations showing how interest is computed

3. Security Details: Description of any collateral (if secured)

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions















Clauses















Industries

Consumer Credit Act 1974: Primary legislation governing credit agreements where the borrower is an individual. Sets out regulatory requirements for consumer credit agreements and provides consumer protection measures.

Law of Property Act 1925: Fundamental legislation concerning property rights and interests in England and Wales. Relevant when the promissory note is secured against property.

Limitation Act 1980: Establishes statutory time limits for bringing legal actions to enforce debts, typically 6 years for simple contracts including promissory notes.

Financial Services and Markets Act 2000: Regulates financial services and markets in the UK. Relevant if the promissory note could be classified as a regulated financial instrument.

Late Payment of Commercial Debts (Interest) Act 1998: Governs the right to claim interest on late commercial payments between businesses. Sets statutory interest rates for late payments.

Consumer Rights Act 2015: Ensures fairness of contractual terms when dealing with consumers. Relevant if one party to the promissory note is a consumer.

Unfair Contract Terms Act 1977: Regulates unfair terms in contracts and establishes general principles of contractual fairness.

Bills of Exchange Act 1882: While primarily concerning bills of exchange, contains relevant principles that may be applicable to promissory notes as negotiable instruments.

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