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An IOU Agreement is a simple written promise to repay borrowed money or items, commonly used in Nigerian business and personal transactions. It serves as evidence of debt, stating the amount owed, repayment terms, and the identities of both parties involved.

While not as formal as promissory notes, IOUs still hold legal weight under Nigerian contract law when properly documented with signatures, dates, and clear terms. Many Nigerian businesses and individuals use these agreements for short-term loans, especially in situations where trust exists between parties but a record of the debt is needed for clarity and protection.

Use an IOU Agreement when lending money or items informally to friends, family, or business associates in Nigeria. This simple document becomes especially valuable for short-term loans where you trust the borrower but need basic documentation of the transaction, particularly for amounts under ���500,000.

The agreement proves essential when lending within community savings groups (like ajo or esusu), between small business partners, or during emergency cash advances. While less formal than bank loans, having an IOU protects both parties under Nigerian contract law and helps prevent misunderstandings about repayment terms or amounts.

• Basic Personal IOU: Simple handwritten agreement for small personal loans, stating amount, date, and basic repayment terms
• Business IOU with Collateral: Includes security provisions where borrower pledges specific assets against the loan
• Installment IOU: Details structured repayment schedule with specific dates and amounts
• Group Contribution IOU: Used in Nigerian rotating savings groups (ajo/esusu), documenting member obligations
• Goods/Services IOU: Covers non-monetary lending, specifying item description, condition, and return terms

• Individual Lenders: Friends, family members, or community members who provide personal loans and need basic documentation
• Small Business Owners: Entrepreneurs who extend credit to trusted customers or business partners
• Savings Group Members: Participants in traditional Nigerian ajo or esusu groups documenting contribution obligations
• Market Traders: Vendors who offer goods on credit to regular customers with simple repayment terms
• Community Leaders: Respected individuals who often witness or validate IOUs to add credibility to informal agreements

• Basic Details: Gather full names, addresses, and contact information for both lender and borrower
• Loan Specifics: Document exact amount, currency, and purpose of the loan clearly
• Payment Terms: Determine repayment schedule, interest rate (if any), and payment method
• Witness Information: Select a reliable witness and collect their contact details
• Documentation: Take photos or copies of both parties' valid ID cards
• Signatures: Ensure all parties sign and date in the presence of the witness

• Parties' Information: Full legal names and addresses of lender and borrower
• Loan Amount: Exact sum in both figures and words, specified in Naira
• Payment Terms: Clear repayment schedule, including due date and method
• Interest Rate: Any applicable interest rate stated explicitly
• Default Clause: Consequences of non-payment or late payment
• Signature Block: Space for dated signatures of both parties and witness
• Witness Details: Name and contact information of an independent witness

The main difference between an IOU Agreement and a Bond Issuance Agreement lies in their formality, legal complexity, and typical usage in Nigerian financial transactions.

• Legal Formality: IOUs are informal documents for personal or small business loans, while Bond Issuance Agreements are formal financial instruments regulated by Nigerian securities law
• Amount Range: IOUs typically handle smaller amounts between private parties, while Bond Issuance Agreements deal with larger corporate financing, often in millions of Naira
• Documentation Requirements: IOUs need basic details and witness signatures, while Bond Issuance Agreements require extensive legal documentation, regulatory compliance, and professional financial advisors
• Transferability: IOUs are usually non-transferable personal promises, while bonds can be traded on secondary markets under Nigerian securities regulations