The Standard Loan Agreement Between Friends is essential for documenting personal lending arrangements in India, providing a clear framework for loans between individuals who share a personal relationship. This document type has become increasingly important as personal lending grows more common, particularly in the digital age where financial transactions between friends are frequent. The agreement ensures compliance with Indian legislation, including the Indian Contract Act, 1872, while maintaining the informal spirit of friendly arrangements. It should be used whenever friends engage in significant financial lending to protect both parties' interests, document the terms clearly, and prevent future misunderstandings. The document typically includes loan amount, repayment schedule, interest terms, default provisions, and both parties' obligations, while remaining simpler than commercial loan agreements.

1. Parties: Identifies and provides full details of the lender and borrower including names, addresses, and contact information

2. Background: Brief context explaining the relationship between parties and purpose of the loan

3. Definitions: Defines key terms used throughout the agreement

4. Loan Amount and Purpose: Specifies the principal amount being lent and its intended use

5. Interest Rate: States the agreed interest rate (if any) and calculation method

6. Repayment Terms: Details the repayment schedule, including payment amounts, frequency, and duration

7. Method of Payment: Specifies acceptable payment methods and account details

8. Default and Consequences: Explains what constitutes default and the resulting consequences

9. Representations and Warranties: Basic statements about the parties' capacity to enter into the agreement

10. Governing Law: Confirms the agreement is governed by Indian law

11. Signatures: Space for parties to sign and date the agreement