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Promissory Note & Loan agreement


21-Jan-2026 (In Recovery Law)
Lending a loan of 5 lacs to a friend need legal paper trail to secure transaction
Answers (3)

Answer #1
658 votes
A promissory note is a written and unconditional promise made by the borrower to pay a certain sum of money to the lender. Law Applicable Negotiable Instruments Act, 1881 Essential Elements Written document Clear promise to pay Definite amount loan agreement is a detailed contract between lender and borrower that sets out all terms and conditions of the loan. Law Applicable Indian Contract Act, 1872 Contents Loan amount Interest rate Repayment schedule
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Advocate Prashant Gupta

Adv. Prashant Gupta

LawRato Mumbai | 50+ Answers
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Answer #2
849 votes
you can get him to sign a loan agreement or a Memorandum of understanding and give the proper timeline for the return of your money, add details of the transaction at the time of lending money, seek compensation and interest if you need in default or repayment or general interest as a Friendly loan.
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Advocate Moksh Jain

Adv. Moksh Jain

LawRatoMumbai | 100+ Answers
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Answer #3
745 votes
Always execute a written loan agreement stating amount, interest, repayment terms and default clause. Transfer money only through bank. Take post-dated cheques or promissory note; if possible, obtain guarantor or security. Proper documents ensure recovery rights.
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Advocate Pankaj Bajaj

Adv. Pankaj Bajaj

LawRatoMumbai | 1000+ Answers
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