The first to do when borrowing money to someone is that youneed to know this person or company. Without really knowing the lender, you mayrisk losing money. Learning about his past performance is a good way to assessthe possibility of a normal repayment. When making a promissory note, you needto check his identity card or business license, in order to place his name andidentity number on promissory note.
People usually ignore the importance of having the backgroundintroduced into the promissory note. As a lawyer handling many cases before, Iremind the lender or borrower to not bother to have the background writtendown. Even though the background won’t affect each other’s right and obligationin most circumstances, there are some lawsuit case of lend and loan in whichthe background becomes critically importance in determining the promissory noteto be valid or not.
The currency and amount of borrowing is not easy to beignored, however, in case you make something wrong on it, it’s very hard foryou to make a remedy on it. In China legal practice, people usually not onlyuse the Arabic numbers to express the amount but also having traditionalChinese characters written in the promissory note.
Specify a date when the debt is due, at least you need toprovide how the date to be calculated. The debt expiry date may affect thatwhen you should raise a complaint to a law court to start a legal procedure. Asper the laws of China, the plaintiff should file his complaint to the courtwithin three years upon the debt due. Ifyou fail to file your claim in the limited time, a possibility is that you losethe right to seek for legal remedy.
In a promissory note, liquidated damage usually is thedamage you expected if the borrower doesn’t repay your money in due time. You’dbetter provide the liquidated damage when making the promissory note or themethod how to calculate your damage if the lender fails to return your money ontime. Without a liquidated damage in advance, it’s hard to claim compensationto cover your loss when a dispute was raised to a law court.
In order to secure the repayment, you could agree with thelender or borrower to have a collateral or surety on the loan. If you have a mortgageor alike, you need to get it registered to a due authority as per the laws ofChina. If you produce a suretyship, don’tmind to define what kind of surety the guarantor would like to undertake. Is itan ordinary guarantee or a guarantee of joint and several liabilities? there isdifferent legal liabilities in legal practice of China.
Additionally, you could also agree on the burden of lawyerfees and etc. in case a lawsuit have to be filed to seek recovery of yourmoney.
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