What can I expect in court with this loan agreement?

[Simon1977]

What is the name of your state? Missouri

I have a signed and notarized contract text of which is pasted below. Being the first party in this contract, what ruling can I expect in court? The second party has paid me a part of the loan in the amount of $1000 on Apr. 1, 2008 by check. Is there a risk that the judge will rule the contract unlawful since the interest charged on the loan exceeds maximum legal interest limit?

Since the loan is unsecured, does it meet the requirement (4) of the statute 408.035?
The text of the statute: [url]http://www.moga.mo.gov/statutes/C400-499/4080000035.HTM[/url]

Thank you for your attention to my question. Your help is sincerely appreciated.

Simon

The text of the contract:

General Agreement

THIS AGREEMENT made this 4th day of June, 2007, by and between
(First Party),
(Second Party).

WITNESSETH: That in consideration of the mutual covenants and agreements to be kept and performed on the part of said parties hereto, respectively as herein stated, the said party of the first part does hereby covenant and agree that it shall:

I. Said party of the first part covenants and agrees that it shall: lend $ 15,000.00 (fifteen thousand dollars).

II. And said party of the second part covenants and agrees that it shall: repay $ 15,000.00 (fifteen thousand dollars) plus an interest, compounded at a rate of $ 8.88 (eight dollars, eighty eight cents) per day, in three months period of time or sooner.

III. Other terms to be observed by and between the parties:
Said party of the second part defaults under this agreement if said party of the second part fails to repay, by September 4th, 2007, the total amount specified in Part II of this agreement; files for bankruptcy; pays by a check or similar instrument that is not honored or that must be returned because it cannot be processed; deceases; or defaults under any other condition of this agreement. If said party of the second part defaults, said party of the first part may demand and has a right under this agreement to obtain: immediate payment of the total amount specified in Part II of this agreement, immediate payment of default interest compounded beginning September 5th, 2007 at a rate of $ 10 (ten dollars) per day.

This agreement shall be binding upon the parties, their successors, assigns and personal representatives. Time is of the essence on all undertakings. This agreement shall be enforced under the laws of the State of Missouri. This is the entire agreement.

Signed June 5th, 2007.

[Debt Guy]

One would need to be expert in MO law to answer your questions definitively. There are some attorneys who frequent the board but not from MO.

Generally, if one provision of a contract is found unlawful (the interest rate, for example) then that clause is severed from the contract and the other provisions remain intact. In that literal event, then this contract would bear interest at zero.

Alternatively, the judge might "conform" the contract. In other words, make the interest rate the legal maximum.

State law will direct the judge. Usury is a real bugaboo in most states. I know nothing about MO law but I have heard of cases where the judge invalidated the entire contract for a usury violation. Perhaps that is just an internet myth.

My advice would be to go to the lawyer who drafted this agreement and pose your question to him/her.

Oh wait, you probably snatched the agreement off the internet in the first place. I bet no lawyer has ever seen the durn thing. Penny wise and pound foolish.

For this kind of money, get thee to a real lawyer.

[Simon1977]

Thank you for your response.

I have a hard time interpreting legal definitions and would greatly appreciate if somebody with experience in "lawyer language" would read the statute which relates to my situation.
The statute can be found at this link:

[url]www.moga.mo.gov/statutes/C400-499/4080000035.HTM[/url]

The statute says that if the loan is > $5000 and secured solely by the bill of exchange, then unlimited interest is allowed. Is my agreement considered to be the bill of exchange? Please, do not advise me to "google" bill of exchange. I have read the formal definition. What I don't know is whether this agreement can be considered an instance of bill of exchange.

Most of the text of the contract came from Office Depot stencil that was supposedly written by a lawyer. Part III was mainly written by me using my credit card agreement.

Oh wait, you probably snatched the agreement off the internet in the first place. I bet no lawyer has ever seen the durn thing. Penny wise and pound foolish.

For this kind of money, get thee to a real lawyer.

That wasn't nice. I am not trying to save pennies on the lawyer. If I decide to go to court, I will hire an attorney. However, a lawyer who charges you per hour does not necessarily have your interest in mind; he makes his money regardless of the case outcome. For this reason, I would like to get an independent opinion.

Thanks,

Simon