Contingent Promissory Note for Nigeria

Contingent Promissory Note Template for Nigeria

A Contingent Promissory Note under Nigerian law is a specialized financial instrument that combines the characteristics of a standard promissory note with conditional elements. This document represents a written promise to pay a specified sum of money, but the payment obligation is triggered only when certain predetermined conditions are met. Governed by Nigerian law, particularly the Bills of Exchange Act and general contract law principles, this instrument must be carefully drafted to ensure both its negotiability and the clear specification of the contingent conditions. The document includes essential elements such as the payment amount, parties' details, specific conditions precedent, and payment terms, while maintaining compliance with Nigerian banking and financial regulations.

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What is a Contingent Promissory Note?

The Contingent Promissory Note is a vital financial instrument in Nigerian business transactions where parties wish to create a binding payment obligation subject to specific conditions. This document type is particularly useful in complex commercial arrangements where payment is dependent on the occurrence of certain events or the fulfillment of particular obligations. Under Nigerian law, these notes must comply with the Bills of Exchange Act and related financial regulations while maintaining their essential character as negotiable instruments. The document combines the straightforward nature of a promissory note with carefully drafted conditions that trigger the payment obligation. It's commonly used in trade finance, construction projects, business acquisitions, and other commercial transactions where staged or conditional payments are necessary. The contingent nature of the note provides security to the maker while giving the payee a legally enforceable instrument once the specified conditions are met.

What sections should be included in a Contingent Promissory Note?

1. Promise to Pay: Unconditional promise to pay a specific sum, subject to stated conditions, including the payee's name and payment amount in both figures and words

2. Payment Terms: Details of payment date(s), interest rate if applicable, and payment method

3. Contingent Conditions: Clear specification of the conditions that must be met before the payment obligation becomes effective

4. Maker's Details: Full legal name and address of the person/entity making the promise to pay

5. Place of Payment: Specific location where payment is to be made or bank account details for transfer

6. Governing Law: Specification that Nigerian law governs the promissory note

What sections are optional to include in a Contingent Promissory Note?

1. Security Provisions: Optional section detailing any collateral or security backing the note, used when the note is secured by specific assets

2. Default Provisions: Terms specifying what constitutes default and consequences, included for higher-value notes or complex commercial transactions

3. Acceleration Clause: Provision allowing the entire amount to become due upon certain trigger events, used in installment payment arrangements

4. Assignment Rights: Specific terms regarding the right to assign or transfer the note, included when transferability needs to be restricted or clarified

5. Witness Statement: Section for witness signatures and details, used when additional verification of execution is desired

What schedules should be included in a Contingent Promissory Note?

1. Payment Schedule: Schedule detailing installment amounts and dates if payment is to be made in multiple installments

2. Condition Verification Documents: List of documents or evidence required to verify that contingent conditions have been met

3. Security Details: Detailed description of any collateral or security provided, including asset specifications and valuations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Nigeria

Publisher

Genie AI

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant Industries

Banking and Financial Services

Real Estate and Construction

Manufacturing

International Trade

Oil and Gas

Agriculture

Telecommunications

Professional Services

Retail and Distribution

Infrastructure Development

Relevant Teams

Legal

Finance

Treasury

Risk Management

Commercial Operations

Corporate Services

Credit Control

Business Development

Compliance

Transaction Advisory

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Commercial Director

Legal Counsel

Contract Manager

Business Development Manager

Risk Manager

Credit Manager

Company Secretary

Financial Controller

Transaction Manager

Project Finance Manager

Corporate Finance Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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