The Promissory Note with Personal Guarantee is a crucial financial instrument in Indian business and lending practices, combining the features of a standard promissory note with additional security through a personal guarantee. This document is commonly used when a lender requires extra assurance beyond the primary borrower's promise to pay, particularly in situations involving substantial loans, business financing, or when the borrower's creditworthiness needs reinforcement. The document is governed by Indian law, specifically the Negotiable Instruments Act, 1881, and the Indian Contract Act, 1872, requiring careful attention to legal formalities including proper stamping and execution. It's particularly valuable in both commercial and personal lending scenarios, providing lenders with recourse to both the primary borrower and the guarantor's assets in case of default. The document must include specific details about payment terms, interest rates, guarantor obligations, and enforcement mechanisms to be legally effective.
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1. Date and Place of Execution: Specifies the date and location where the promissory note is executed, which is crucial for determining jurisdiction and limitation period
2. Maker's Details: Full name, address, and identification details of the person making the promise to pay (the maker/borrower)
3. Payee's Details: Full name, address, and identification details of the person to whom the payment is to be made (the payee/lender)
4. Guarantor's Details: Full name, address, and identification details of the person providing the personal guarantee
5. Promise to Pay: Unconditional promise to pay a specific sum with clear payment terms, including the principal amount in words and figures
6. Interest Rate: Clear specification of the applicable interest rate and calculation method
7. Payment Terms: Details of payment schedule, installment amounts, and due dates
8. Guarantee Declaration: Express guarantee statement and scope of the guarantor's liability
9. Execution Block: Signature blocks for maker and guarantor with witness provisions
1. Default Interest Rate: Include when there's a different interest rate applicable in case of default
2. Prepayment Provisions: Include when early payment is allowed, specifying any terms or penalties
3. Security Details: Include when the note is secured by any collateral in addition to the personal guarantee
4. Cross-Default Provisions: Include when default on other obligations should trigger default under this note
5. Multiple Guarantors Clause: Include when there is more than one guarantor, specifying joint and several liability
6. Force Majeure: Include when specific circumstances might affect the payment obligations
7. Alternative Dispute Resolution: Include when parties agree to specific dispute resolution mechanisms before court proceedings
1. Payment Schedule: Detailed breakdown of installment amounts and due dates if payment is to be made in installments
2. Guarantor's Net Worth Statement: Statement of guarantor's assets and liabilities to demonstrate capacity to honor the guarantee
3. Collateral Details: If applicable, detailed description of any additional security or collateral
4. Related Party Details: If applicable, details of other parties involved such as co-guarantors or witnesses
Relevant legal definitions
Business Day
Default
Default Interest Rate
Due Date
Event of Default
Guarantee
Guaranteed Obligations
Guarantor
Indebtedness
Interest Rate
Loan Amount
Maker
Material Adverse Effect
Maturity Date
Outstanding Amount
Payee
Payment Date
Principal Amount
Promissory Note
Related Parties
Repayment Schedule
Security
Stamp Duty
Working Day
Default
Default Interest Rate
Due Date
Event of Default
Guarantee
Guaranteed Obligations
Guarantor
Indebtedness
Interest Rate
Loan Amount
Maker
Material Adverse Effect
Maturity Date
Outstanding Amount
Payee
Payment Date
Principal Amount
Promissory Note
Related Parties
Repayment Schedule
Security
Stamp Duty
Working Day
Clauses
Promise to Pay
Payment Terms
Interest
Default Interest
Personal Guarantee
Guarantor Obligations
Joint and Several Liability
Representations and Warranties
Events of Default
Remedies
Notice Requirements
Amendment and Modification
Assignment
Governing Law
Jurisdiction
Force Majeure
Severability
Stamp Duty
Execution
Waiver
Indemnification
Dispute Resolution
Payment Terms
Interest
Default Interest
Personal Guarantee
Guarantor Obligations
Joint and Several Liability
Representations and Warranties
Events of Default
Remedies
Notice Requirements
Amendment and Modification
Assignment
Governing Law
Jurisdiction
Force Majeure
Severability
Stamp Duty
Execution
Waiver
Indemnification
Dispute Resolution
Relevant Industries
Financial Services
Banking
Real Estate
Construction
Manufacturing
Retail
Small and Medium Enterprises
Professional Services
Education
Healthcare
Agriculture
Trading
Technology
Relevant Teams
Legal
Finance
Credit
Risk Management
Treasury
Compliance
Corporate Secretarial
Banking Operations
Loan Administration
Business Development
Relevant Roles
Chief Financial Officer
Finance Manager
Credit Manager
Legal Counsel
Corporate Lawyer
Loan Officer
Credit Analyst
Risk Manager
Treasury Manager
Accounts Manager
Business Development Manager
Company Secretary
Compliance Officer
Financial Controller
Banking Relationship Manager
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