IOU Agreement Template for United States

An IOU Agreement is a simple written promise to pay back money borrowed from someone. In the Philippines, this informal debt document includes the amount owed, when it needs to be paid back, and signatures from both the borrower and lender.

While not as formal as a promissory note, IOUs still hold legal weight under Philippine civil law. They're commonly used between friends, family members, or small business partners. The agreement should specify interest rates if any apply, and both parties should keep signed copies. Many Filipinos use IOUs for short-term loans when bank financing isn't practical.

Use an IOU Agreement when lending money informally to friends, family, or business associates in the Philippines. This document proves especially valuable for short-term loans under ₱50,000, where a formal bank loan would be impractical or take too long to process.

The agreement becomes essential when lending money without collateral, protecting both parties' interests through written documentation. It's particularly useful for urgent financial needs like medical expenses, school fees, or small business cash flow gaps. Creating an IOU helps avoid future misunderstandings about repayment terms and maintains good relationships during financial transactions.

• Basic One-Time IOU: Simplest form for a single loan with fixed repayment date
• Installment IOU: Details multiple payment schedules with specific amounts and dates
• Interest-Bearing IOU: Includes agreed-upon interest rates and computation method
• Business IOU: More detailed version used between small business partners, often including collateral terms
• Family IOU: Informal version commonly used among relatives, typically with flexible payment terms but still maintaining legal validity under Philippine civil law

• Individual Lenders: Friends, family members, or acquaintances who provide personal loans and need written documentation
• Small Business Owners: Entrepreneurs who lend money to business partners or receive short-term financing from associates
• Borrowers: Individuals seeking quick financial assistance without going through formal banking channels
• Private Money Lenders: Licensed individuals who provide informal loans as a business, using IOUs as basic documentation
• Witnesses: Third parties who verify the agreement's authenticity and signing process, often required for larger amounts

• Basic Details: Record full names, addresses, and contact information of both lender and borrower
• Loan Terms: Specify the exact amount, currency, and agreed-upon repayment date(s)
• Interest Rate: Document any interest charges and calculation method if applicable
• Payment Method: Note how and where payments will be made
• Witness Information: Gather details of witnesses who will verify the signing
• Supporting Documents: Keep copies of valid IDs from all parties involved
• Signatures: Ensure all parties sign in the presence of witnesses

• Parties' Information: Complete names and addresses of lender and borrower
• Loan Amount: Exact sum in both numbers and words to prevent alterations
• Payment Terms: Clear repayment schedule, including due dates and installment amounts
• Interest Clause: Specific interest rate and computation method if applicable
• Default Provisions: Consequences of missed payments or breach
• Witness Section: Space for witness names and signatures
• Date and Signatures: Execution date and signature blocks for all parties
• Governing Law: Statement that Philippine law governs the agreement

An IOU Agreement differs significantly from a Bond Issuance Agreement in several key aspects. While both involve financial obligations, they serve distinct purposes in Philippine law.

• Formality Level: IOUs are informal documents for personal or small business loans, while Bond Issuance Agreements are formal, complex instruments used by corporations or government entities
• Legal Requirements: IOUs need minimal documentation and can be handwritten, whereas Bond Issuance Agreements require extensive legal documentation and regulatory compliance
• Amount Range: IOUs typically cover smaller amounts under ₱100,000, while Bond Issuances deal with millions of pesos
• Transferability: IOUs are usually non-transferable personal promises, but Bonds can be traded in secondary markets
• Enforcement: IOUs rely on basic civil law protections, while Bond Agreements have stronger legal enforcement mechanisms and often involve trustees