Promissory Note Question

[Tensore]

I recently lend a friend $7000 and had them sign a promissory note. Long story short, we had several disagreements. I would like to get the money back. Can I do so legally? Please reference the clauses from the note below.

Principal Amount: $7000.00

1. FOR VALUE RECEIVED, The Borrower promises to pay to the Lender at such address as may be provided in writing to the Borrower, the principal sum of $7,000.00 USD, without interest payable on the unpaid principal.
2. This Note will be repaid in consecutive monthly installments of $300.00 USD each on the fifteenth of each month commencing the month following executing of this Note and continuing until April 15th, 2016 with the balance then owing under this Note being paid at that time.
3. At any time while not in default under this Note, the Borrower may pay the outstanding balance then owing under this Note to the Lender without further bonus or penalty.
4. Notwithstanding anything to the contrary in this Note, if the Borrower defaults in the performance of any obligation under this Note, then the Lender may declare the principal amounting owing and interest due under this Note at that time to be immediately due and payable.
5. All costs, expenses and expenditures including, and without limitation, the complete legal costs incurred by the Lender in enforcing this Note as a result of any default by the Borrower, will be added to the principal then outstanding and will immediately be paid by the Borrower.
6. If any term, covenant, condition or provision of this Note is held by a court of competent jurisdiction be invalid, void or unenforceable, it is the parties’ intent that such provision be reduced in scope by the court only to the extend deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Note will in no way be affected, impaired or invalidated as a result.
7. This Note will be construed in accordance with and governed by the laws of the State of North Dakota.
8. This Note will endure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and assigns of the Borrower and the Lender. The Borrower waives presentment for payment, notice of non-payment, protest and notice of protest.
9. If any installment payment due under this Note is not received by Lender within 10 days of its due date, Borrower will pay a late fee of five percent of the amount of the monthly payment. The late fee will be due immediately. If any installment payment is not received by lender within 90 days of its due date, Lender may demand, in writing, that Borrower repay the entire amount of unpaid principal immediately. After receiving Lender’s demand, Borrower will pay the entire unpaid principal.
10. This Note represents the entire agreement between Borrower and Lender. Any modifications must be in writing and signed by both Borrower and Lender.

 

[Proserpina]

Is there at least a decent chance of reimbursement?

That may be the first question.

 

[LdiJ]

Is there at least a decent chance of reimbursement?

That may be the first question.

I think that the first question is: Have the breached the agreement? The OP stated that the parties had disagreements, but not that the payments were not being made in a timely fashion.

 

[Ohiogal]

Who wrote this agreement?
Numbers 8 and 9 might be big issues.

 

[Tensore]

I wrote the agreement and she signed and had it notarized. I lend her the money to purchase a car. To make the situation more complicated, she worked for my company. Out of good faith, I decided to help because she had no source of transportation. However, after violating several company policies, I had to let her go. I want her to reimburse the money but I want to do so tactfully. Keep in mind, I did NOT list her vehicle as a security on the note. Her name is on the vehicle title.

 

[latigo]

Who wrote this agreement?
Numbers 8 and 9 might be big issues.

Perhaps you would care to explain your negative response.

Are you suggesting that if the note was drafted by the payee, or that its form was solely selected by the payee, that the contract is one of adhesion?

What do you find objectionable about the succession clause? Would not those respective benefits and obligations carryover even in the absence of being expressly stated?

Are you saying that assessing a late installment fee of $15 is excessive and thereby unconscionable when the federal cap on credit card late fees is $25?

That it is unconscionable that a negotiable instrument contain an acceleration clause?

Obviously you don't owe me an explanation, but the OP is certainly entitled to hear some justification for your dismissive reply. He's holding $7K promissory note and according to you there is some doubt as to its worth!

 

[Tensore]

Does anyone have any other suggestions? I am trying to approach this situation without causing any more damage. Any advice would be highly appreciated.

 

[anteater]

You did not answer this question:

I think that the first question is: Have the breached the agreement? The OP stated that the parties had disagreements, but not that the payments were not being made in a timely fashion.

 

[Mark Maroon]

Does anyone have any other suggestions? I am trying to approach this situation without causing any more damage. Any advice would be highly appreciated.

There is no way that anyone can offer you any suggestions as to how to approach this situation without causing any more “damage”. Only you know yourself, the person you lent the money to, your relationship with that person, exactly what they have paid thus far, the reasons why they are not making payments as they promised, the likelihood that they will actually ultimately pay you what they owe you if you don’t sue them, etcetera. If you have talked with them and asked them to bring the loan payments current, but they have not done so, then you have three choices; (1) Let it go, (2) try to “negotiate” with them some more in the hopes that you can agree to some modification of the payment plan (put in writing) that is acceptable to both parties, or (3) proceed with what you need to do in order to sue them for breach of the agreement.

If they haven’t made any payments towards the loan in over 90 days, then I suggest you send them a letter (certified mail, return receipt requested) with a detailed accounting of the loan payments thus far. For each month indicate what was or wasn’t paid and if there is a late fee that you are assessing. Request that they send you a specific amount of money (whatever it is you believe they owe you) to bring the account current by a specific date. If for some reason they believe that you have verbally altered the agreement (for instance if they believe you told them that it was OK not to make the March payment at all), then you need to address that in your letter. But don’t rehash all of your conversations back and forth about this and that and the other thing. Keep it very simple and clear as to what they owe and when it should be paid.

If the due date given in the first letter passes and they still haven’t made any payments or brought the account current, then send them a second letter (certified mail, return receipt requested), asking them to pay the full amount of the loan by a specific date.

If the due date given in the second letter passes and they haven’t paid the loan back in full, then file suit against them for breach of the contract.

 

[Ohiogal]

Perhaps you would care to explain your negative response.

Are you suggesting that if the note was drafted by the payee, or that its form was solely selected by the payee, that the contract is one of adhesion?

What do you find objectionable about the succession clause? Would not those respective benefits and obligations carryover even in the absence of being expressly stated?

Are you saying that assessing a late installment fee of $15 is excessive and thereby unconscionable when the federal cap on credit card late fees is $25?

That it is unconscionable that a negotiable instrument contain an acceleration clause?

Obviously you don't owe me an explanation, but the OP is certainly entitled to hear some justification for your dismissive reply. He's holding $7K promissory note and according to you there is some doubt as to its worth!

Actually no. My issue is with how OP might think this applies:

The Borrower waives presentment for payment, notice of non-payment, protest and notice of protest.

Is she trying to state that due process does not apply to this consumer loan? Is she trying to state that this is a cognovit note? That is my issue depending on how she is interpreting what she put together. That is why I say 8 may be a big problem.

Nine may be depending on what late fee is allowed in OP's state -- and I will be quite honest that I did not check. Those were my first impressions upon reading. And I did not see what state OP is in or what state in which this agreement was made. Did you?

 

[Proserpina]

North Dakota.

(Granted, it's buried quite firmly in the text)

 

[justalayman]

so far OP has not given any reason the acceleration clause could be invoked so so far, the answer to this question:

I would like to get the money back. Can I do so legally?

would be yes and OP should be expecting it in $300 a month payments until April 15th, 2016 where a balloon payment of the remainder of the outstanding balance would be due.

on top of that, op kind of hung himself and his acceleration clause being enforceable immediately upon a breach with this:

9. If any installment payment due under this Note is not received by Lender within 10 days of its due date, Borrower will pay a late fee of five percent of the amount of the monthly payment. The late fee will be due immediately. If any installment payment is not received by lender within 90 days of its due date, Lender may demand, in writing, that Borrower repay the entire amount of unpaid principal immediately. After receiving Lender’s demand, Borrower will pay the entire unpaid principal.

 

[Tensore]

North Dakota.

(Granted, it's buried quite firmly in the text)

To answer the above mentioned questions, she has not breached the contract. She resides in Texas and I am in North Dakota. However, she has disappeared (lack of responses to emails and phone calls etc). We made a verbal agreement that as long as she stayed employed and remained in good conduct at work, I wouldn't mind lending her the money, granted that is NOT in the contract. For a lack of better terms, she left the office showing one of her fingers and specifically advised not to be contacted again. I am taking precautionary measures to get my money back before I am in a deeper hole.She has only made two months worth of payment (which were both on time). I will clarify my question. Can I have my money reimbursed to me legally because I have no association with her and will probably never see or hear from her again? She has indirectly hinted to me that if she left, the money would leave with her.

 

[LdiJ]

To answer the above mentioned questions, she has not breached the contract. She resides in Texas and I am in North Dakota. However, she has disappeared (lack of responses to emails and phone calls etc). We made a verbal agreement that as long as she stayed employed and remained in good conduct at work, I wouldn't mind lending her the money, granted that is NOT in the contract. For a lack of better terms, she left the office showing one of her fingers and specifically advised not to be contacted again. I am taking precautionary measures to get my money back before I am in a deeper hole.She has only made two months worth of payment (which were both on time). I will clarify my question. Can I have my money reimbursed to me legally because I have no association with her and will probably never see or hear from her again? She has indirectly hinted to me that if she left, the money would leave with her.

Until she goes 90 days without paying, (at least that is the way I interpret your contract) you have no grounds to get your money back.

 

[Mark Maroon]

To answer the above mentioned questions, she has not breached the contract. She resides in Texas and I am in North Dakota. However, she has disappeared (lack of responses to emails and phone calls etc). We made a verbal agreement that as long as she stayed employed and remained in good conduct at work, I wouldn't mind lending her the money, granted that is NOT in the contract. For a lack of better terms, she left the office showing one of her fingers and specifically advised not to be contacted again. I am taking precautionary measures to get my money back before I am in a deeper hole.She has only made two months worth of payment (which were both on time). I will clarify my question. Can I have my money reimbursed to me legally because I have no association with her and will probably never see or hear from her again? She has indirectly hinted to me that if she left, the money would leave with her.

Your questions aren't making any sense to me. You wrote up the contract, and we can read it as well as you can, so we all know what she is legally required to do. Thus far she has done what she is legally required to do. End of story. I already posted what in my opinion you should do if 3 months (90 days) pass without a $300.00 payment.

You say that she worked for you, but that she lives in Texas and you live in North Dakota. How long did she work for you before you lent her the money? Did you ever actually pay her for her work? Did she sign any kind of employment contract? Did she live in North Dakota while working for you, but only recently quit her job with you and moved to Texas? Answers to these questions will help determine if the courts in North Dakota will have jurisdiction should you want to sue her, or if you will have to file in Texas.