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Provide a template for a Promissory Note.
Introduction
A promissory note is a financial instrument that contains a written promise by one party (the issuer or maker) to pay another party (the payee) a definite sum of money, either on demand or at a specified future date. In Kenya, the creation and enforcement of promissory notes are governed by various laws, including the Bills of Exchange Act (Cap 27) and the Law of Contract Act (Cap 23).
Table of Contents
Legal Framework
1.1 Bills of Exchange Act (Cap 27)
1.2 Law of Contract Act (Cap 23)
Template for a Promissory Note
2.1 Heading
2.2 Date
2.3 Parties Involved
2.4 Principal Amount
2.5 Interest Rate
2.6 Payment Terms
2.7 Default Terms
2.8 Governing Law
2.9 Signatures
Conclusion
1. Legal Framework
1.1 Bills of Exchange Act (Cap 27)
The Bills of Exchange Act (Cap 27) provides the legal framework for promissory notes in Kenya. According to Section 83 of the Act, a promissory note is defined as an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money to, or to the order of, a specified person or to bearer.
1.2 Law of Contract Act (Cap 23)
The Law of Contract Act (Cap 23) governs the general principles of contract law in Kenya, which are applicable to promissory notes. This Act ensures that the promissory note is a legally binding document, provided it meets the essential elements of a contract, such as offer, acceptance, consideration, and intention to create legal relations.
2. Template for a Promissory Note
Below is a comprehensive template for a promissory note, structured to comply with Kenyan law:
2.1 Heading
Promissory Note
2.2 Date
Date: [Insert Date]
2.3 Parties Involved
Issuer/Maker: [Full Legal Name of the Issuer] Address: [Full Address of the Issuer]
Payee: [Full Legal Name of the Payee] Address: [Full Address of the Payee]
2.4 Principal Amount
Principal Amount: Ksh [Insert Amount in Words] ([Insert Amount in Figures])
2.5 Interest Rate
Interest Rate: [Insert Interest Rate] per annum
2.6 Payment Terms
Payment Terms:
The principal amount and interest shall be payable on [Insert Due Date].
Payments shall be made in [Insert Payment Method, e.g., cash, bank transfer, etc.].
2.7 Default Terms
Default Terms:
In the event of default in payment, the Issuer agrees to pay a late fee of [Insert Late Fee Amount or Percentage].
The Payee may take legal action to recover the outstanding amount, including any accrued interest and late fees.
2.8 Governing Law
Governing Law:
This Promissory Note shall be governed by and construed in accordance with the laws of Kenya.
2.9 Signatures
Issuer/Maker:
[Full Legal Name of the Issuer] Signature: _______________________ Date: _______________________
Payee:
[Full Legal Name of the Payee] Signature: _______________________ Date: _______________________
3. Conclusion
A promissory note is a crucial financial instrument that facilitates the lending and borrowing of money. It is essential to ensure that the promissory note complies with the relevant legal provisions in Kenya, particularly the Bills of Exchange Act (Cap 27) and the Law of Contract Act (Cap 23). The template provided above serves as a comprehensive guide to drafting a legally binding promissory note in Kenya.
Answered by mwakili.com