Document background
A Loan Agreement Between Two Individuals is a crucial legal document used when one person lends money to another in Canada. This agreement serves to protect both parties' interests by clearly documenting the terms of the loan, including the principal amount, interest rate (which must comply with Canadian federal limits), repayment schedule, and consequences of default. The document becomes particularly important for substantial loans or when security is involved, as it provides legal recourse in case of non-payment. It must comply with federal legislation such as the Interest Act and Criminal Code, as well as provincial contract and consumer protection laws. The agreement can be modified to accommodate various lending scenarios, including secured loans, guarantors, or specific repayment structures, while maintaining its essential function as a legally binding contract between private parties.
