Hawaii Promissory Note
Last Updated:
A Hawaii Promissory Note is like an IOU, just a bit more formal. It's an agreement between two parties, where one borrows money from the other and promises to pay it back. It covers all the important details, like when to repay and any interest charges. More than just a handshake, it acts as a legally binding contract that keeps everything open and honest for everyone involved.
What is the Usury Rate for Hawaii?
Essentially, a usury rate denotes the top legal interest rate allowed on loan transactions. Charging above this rate results in "usury," which is considered illegal. Rates vary across states, so it's crucial to be aware of the regulations in your specific area. By comprehending the usury rate, you ensure sensible borrowing, avoiding potential harmful situations. Therefore, it's a crucial number to understand if considering a loan for your business.
For Hawaii, the default is 10% if no written contract is established. 12% is the general usury limit, and 10% is the limit on judgments. (Haw. Rev. Stat § 478-2, Haw. Rev. Stat § 478-3, and Haw. Rev. Stat § 478-4)
Thank you for downloading!
How would you rate your free form?
Read on to learn more about Hawaii Promissory Notes, including:
What's included in a Hawaii Promissory Note?
Here are some key components that are typically included in a Hawaii Promissory Note:
- Amount and Terms of the Loan
- Closing and Delivery
- Representations, Warranties the Company
- Organization, Good Standing and Qualification
- Corporate Power
- Authorization
- Compliance with Laws
- Use of Proceeds
1. Amount and Terms of the Loan
"The Loan" defines the exact amount of money you're lending to the company. This subsection is crucial as it safeguards clarity and protection for both parties involved. To seal this provision, just fill in the loan amount in the provided blank space. Also, inspect "Exhibit A", showcasing the promissory note acting as the written confirmation and evidence of the loan.
In essence—this significant stipulation highlights the funds you're pledging, laying a transparent foundation for your promissory note agreement.
The Loan. Subject to the terms of this Agreement, Purchaser agrees to lend to the Company at the Closing $_________ (“Loan Amount”) against the issuance and delivery by the Company of a promissory note for such amount, attached as EXHIBIT A (“Note”).
2. Closing and Delivery
The CLOSING AND DELIVERY provision outlines the final stages of your promissory note agreement. In Closing, you'll specify the moment the transaction reaches completion. This date can be mutually determined, not limited to just the contract formation date.
Delivery details the exchange method: the borrower provides the loan amount to the company, and in return, the firm presents the borrower with the completed promissory note, documenting the borrower's repayment obligation. This mutual exchange ensures transparency and commitment from all participating parties.
CLOSING AND DELIVERY
Closing. The closing of the sale and purchase of the Notes (the “Closing”) will be held on the Effective Date, or at such other time as the Company and Purchasers may mutually agree (such date is referred to as the “Closing Date”).
Delivery. At the Closing (i) Purchaser will deliver to the Company a check or wire transfer funds in the amount of the Loan Amount; and (ii) the Company will issue and deliver to Purchaser a Note in favor of Purchaser payable in the principal amount of Purchaser’s Loan Amount.
3. Representation, Warranties The Company
This section covers the company's statements concerning the truthfulness of essential details. They're legally bound to uphold accuracy, preventing possible legal issues. Include relevant information about the business's finances, operations, or legal matters. Maintaining trust and transparency in your agreement is of the highest significance.
a. Organization, Good Standing and Qualification
The Organization, Good Standing, and Qualification segment authenticates the firm's legal standing. Emphasize the state where the enterprise is established, facilitating seamless operations and fostering trust among all parties involved.
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of [State]. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.
b. Corporate Power
The Corporate Power segment substantiates the firm's legal capacity to execute this agreement and meet its commitments. Essentially, it states, "Our enterprise has the lawful authority for this transaction." This is vital for bolstering trust and legality. Hence, it's essential to incorporate this provision and grasp it thoroughly.
Corporate Power. The Company has all requisite corporate power to execute and deliver this Agreement, to issue the Note and to carry out and perform its obligations under the terms of the Note.
c. Authorization
The Authorization section includes the endorsement of company shareholders and guarantees the note's legal validity. It's an essential component of your agreement that confirms all necessary business procedures are fulfilled. This portion safeguards both parties engaged and establishes a strong base for your contract.
Authorization. All corporate action has been taken on the part of the Company, its directors and its stockholders necessary for the authorization of the Note and the execution, delivery and performance of all obligations of the Company under the Note. The Note, when executed and delivered by the Company, will constitute valid and binding obligations of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors.
d. Compliance with Laws
The Compliance with Laws segment verifies that your enterprise isn't knowingly breaking any regulations that might jeopardize its operation. Incorporating this provision reassures all parties of your company's steadfast commitment to maintain legal norms.
Compliance with Laws. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency in respect of the conduct of its business or the ownership of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company.
e. Use of Proceeds
The Use of Proceeds section specifies that the borrowed funds are solely for business objectives, not personal. It's pivotal in providing clarity and upholding responsibility with creditors.
Use of Proceeds. The Company will use the proceeds of the Note for the operations of its business, and not for any personal, family or household purpose.
Can a promissory note be used without a mortgage?
Indeed, it is feasible to employ a promissory note without necessitating a mortgage. A promissory note functions akin to a legal commitment, outlining the stipulations of a loan. Conversely, a mortgage acts as a loan guarantee, linking it to assets like properties. Promissory notes can be utilized for both loan types, secured and unsecured. Thus, having a promissory note independent of a mortgage, essentially an unsecured loan, is definitely possible. However, it's typically impossible to have a mortgage without a promissory note, as this note lays out your repayment scheme and signifies your pledge to repay the loan.
How do you collect from a promissory note?
To recover from a promissory note, initiate by tallying the total amount payable, incorporating interest and charges. Subsequently, courteously pen a letter to the indebted party. If payment isn't forthright, explore your legal alternatives. Keep all pertinent records and procure legal advice, as laws vary across regions. Bear in mind, incessantly pestering the debtor might overstep legal limits. It's consistently wise to liaise with a lawyer to sidestep any potential errors.