Loan Agreement (Individual to Individual) (Interest Free)

Updated for 2014

This is an interest free loan agreement pursuant to which an individual lends money to another individual. The loan agreement sets out details of the loan to be advanced by the lender to the borrower, when the loan amount can be drawn down, the repayment terms, and the default provisions which set out the terms upon which the loan shall become immediately repayable if the borrower breaches the terms of the loan agreement.

The loan agreement contains a number of standard representations and covenants given by the borrower to the lender relating to his authority and capacity to borrow the loan monies and enter into the loan agreement. It also includes standard confidentiality provisions to ensure that the terms relating to the loan are kept confidential.

Further details are set out below.

See below for a full product description
 

This is an interest free loan agreement which sets out the basis upon which a lender will lend monies to a borrower.

The loan agreement is drafted on the basis that, having been signed by the lender and the borrower, the lender will be obliged to advance the loan monies to the borrower upon receipt of a written request from the borrower (drawdown notice) to advance the funds. A number of options have been included in the loan agreement to allow for the loan amount to be drawn down in one or more tranches and to set out the dates on which such drawdowns can take place. In each case, the borrower will need to provide the lender with a specific amount of advance notice before he can drawdown the loan monies. If you wish, you can also add specific conditions that must be satisfied before the loan or part of the loan can be drawn down.

Under the loan agreement, no interest will be payable on the loan amount. However, the interest clause leaves scope for the parties to agree that interest will be chargeable on a later date. If the parties later agree that interest will be chargeable and payable at a later date, it will be necessary to document the rate of interest payable, the dates on which it will be paid, the period in respect of which interest will be charged, the rate of interest, whether the interest compounds daily, monthly, quarterly, etc.

The repayment provisions in the loan agreement contain options to allow you to state whether the loan amount is to be repaid in full on a given date or in periodical instalments (i.e. weekly, monthly, annually, etc.). It also gives the borrower an option to make an early repayment of the loan amount if he so wishes. The clause can be customised as you require.

The loan agreement also contains a default interest clause. So, while interest may or may not be charged on the outstanding loan amount, interest will be charged at a specific rate on any amount that the borrower is late in repaying to the lender. This default interest rate shall be payable in respect of the overdue amount for so long as it remains overdue.

The borrower will be required to give certain representations and covenants to the lender under the terms of the loan agreement. It is on the basis of these representations and covenants being true and accurate that the lender will agree to advance the loan monies to the borrower. If it turns out that the borrower has incorrectly given these representations and covenants, the lender can call for the immediate repayment of the loan monies by the borrower and, if he wishes, take legal action against the borrower to recover those monies.

A default clause has been included in the loan agreement which sets out a number of circumstances, known as defaults, which if they occur will entitle the lender to immediately call for the repayment of the entire loan amount.

The loan agreement also contains standard ‘boiler plate’ clauses and other clauses typically found in loan agreements of this kind.

Detailed information in relation to each clause of this loan agreement and on how to complete the loan agreement are contained in the notes that accompany the agreement.



Clauses Included in this Loan Agreement:

- Defined Terms Clause

- Loan Clause

- Drawdown of Loan Clause

- Interest Clause

- Repayment by the Borrower Clause

- Representations and Covenants Clause

- Default Clause

- Waiver Clause

- Notices Clause

- Confidentiality Clause

- Amendments Clause

- Counterparts Clause

- Severance Clause

- Assignment Clause

- Entire Agreement Clause

- Governing Law and Jurisdiction Clause

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