Friendly Loan Agreement for Singapore

Friendly Loan Agreement Template for Singapore

A Friendly Loan Agreement under Singapore law is a legally binding document that formalizes a loan arrangement between individuals who have a pre-existing relationship, such as friends or family members. The agreement encompasses key terms including the loan amount, repayment schedule, and any applicable interest, while ensuring compliance with Singapore's Civil Law Act and avoiding classification under the Moneylenders Act. This document provides legal protection for both parties while maintaining the informal nature of the arrangement.

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What is a Friendly Loan Agreement?

The Friendly Loan Agreement serves as a formal record of financial arrangements between individuals who have a personal relationship. This document is particularly useful when individuals wish to establish clear terms for a loan while maintaining the informal nature of their relationship. Under Singapore law, such agreements must be carefully drafted to avoid falling under the Moneylenders Act while ensuring enforceability under the Civil Law Act. The agreement typically includes loan amount, repayment terms, any applicable interest, and default provisions, providing both parties with legal clarity and protection.

What sections should be included in a Friendly Loan Agreement?

1. Parties: Identification and details of the lender and borrower

2. Background: Context of the friendly loan arrangement

3. Definitions: Key terms used in the agreement

4. Loan Amount: Principal sum being lent

5. Repayment Terms: Schedule and method of repayment

6. Governing Law: Specification of Singapore law as governing law

What sections are optional to include in a Friendly Loan Agreement?

1. Interest: Terms of interest if applicable - include when parties agree to charge interest

2. Security: Details of any collateral or security - include when loan is secured

3. Early Repayment: Terms for early loan settlement - include when early repayment is permitted

4. Default Provisions: Consequences of payment default - include when parties want formal default procedures

What schedules should be included in a Friendly Loan Agreement?

1. Repayment Schedule: Detailed breakdown of repayment dates and amounts

2. Security Details: Description of any security/collateral provided (when loan is secured)

3. Bank Details: Payment account information for both parties

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

Singapore

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Industries

Civil Law Act (Cap. 43): Primary legislation governing civil law matters in Singapore, particularly sections dealing with contracts, interest rates, contractual capacity (Section 6), and contract enforcement (Section 8)

Moneylenders Act (Cap. 188): Regulates moneylending activities in Singapore. While friendly loans typically fall outside its scope, agreement must be clearly documented as a one-off friendly loan to avoid falling under this Act's regulations

Singapore Contract Law: Based on Common Law system, covering essential elements of valid contract formation including offer, acceptance, consideration, intention to create legal relations, and capacity to contract

Limitation Act (Cap. 163): Sets time limits for enforcement of contractual rights, generally 6 years for contractual claims in Singapore

Consumer Protection (Fair Trading) Act: While less relevant for individual-to-individual loans, ensures fair trading practices and consumer protection in Singapore. Promotes fair and transparent terms in agreements

Documentation Requirements: Legal requirements for proper documentation of loan agreements under Singapore law, including format and content specifications

Interest Rate Regulations: Singapore's legal framework for interest rates in private loans, ensuring compliance with usury laws and fair lending practices

Stamp Duties: Requirements for stamp duty payments on loan agreements under Singapore law, if applicable

Electronic Transactions Laws: Singapore's legal framework for electronic execution of documents and agreements, relevant if the loan agreement is to be executed electronically

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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