North Dakota Promissory Note
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A North Dakota Promissory Note is akin to an IOU, just dressed up a bit. It's a pact between two entities with one borrowing funds from the other, assuring its return. It sketches out all the pivotal specifics, such as the payback timeline and interest tolls.
What is the Usury Rate for North Dakota?
Essentially, a usury rate serves as the highest legally permissible interest one can slap on a loan. If a lender oversteps this rate, they're venturing into "usury," a big no-no in legal terms. Keep in mind, these rates are a shifting landscape—they change from state to state. Therefore, being clued up regarding your local regulations is crucial. By understanding the usury rate, you're taking a responsible step to avoid treading unsafe grounds. So, if securing a loan for your business is in your plans, having this rate on speed-dial is a smart move!
For North Dakota written contracts for loans less than $35,000, the maximum rate is 5.5% above the current maturity rate of Treasury Bills for the six months preceding the issuing of the loan, or 7%, whichever is greater. (N.D. Cent. Code § 47-14-09)
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Read on to learn more about North Dakota Promissory Notes, including:
What's included in a North Dakota Promissory Note?
Here are some key components that are typically included in a North Dakota 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" lays out the exact pile of cash you're funneling into the company. No ambiguity here—it ensures a crystal clear transaction and shields both sides of the deal. To seal this term, all you need to do is scribble the loan sum in the blank space. And, don't forget to glance at "Exhibit A"—that's your promissory note, stepping up as both the written oath and the official receipt of your loan.
Bottom line—this essential line item spotlights the bucks you're parting with, laying a stable bedrock for your promissory note pact.
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 segment choreographs the last dance steps of your promissory note agreement. In Closing, you'll pinpoint when the deal seals. This date is a shared decision—it doesn't have to be the day you first put pen to paper on the contract.
Delivery sketches out how the swap goes down: the loan provider shuttles the loan sum to the company and, in a reciprocal gesture, the company hands over the filled-out promissory note, scripting out the loan provider's payback promise. This two-way transaction bolsters clarity and fosters dedication from everyone involved.
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 portion covers the company's attestations about the genuineness surrounding significant details. They're legally tied to a pledge of accuracy here, to sidestep potential legal hiccups. Toss in pertinent intel about the company's monetary status, day-to-day running, or any legal happenings. Having these squared away is key to fostering mutual trust and transparency in your agreement.
a. Organization, Good Standing and Qualification
The Organization, Good Standing, and Qualification part validates the company's official standing. Toss in the state where the company's roots are planted, making sure it can function without hitches and bridges trust among everyone 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 clause verifies the company's legitimate capacity to see this agreement through and settle commitments. It basically signals: "Our company's legally primed for this transaction." It's vital to fostering a sense of trust and lawful assurance. So, keep this term in sight and make sure it sinks in.
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 chunk guarantees that the firm's shareholders gave the green light and the note abides by the law. It's a pivotal piece of your contract, confirming every must-do corporate move has been made. This clause acts as a safety shield for everyone involved, moreover, it provides a strong baseline for your pact.
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 clause states clearly that your enterprise isn't consciously stepping over any legal lines that might land it in hot water. Incorporating this provision comforts everyone involved because it shows your business's dedication to playing by the legal rulebook.
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 part clarifies that the loan's sole purpose is for business endeavors, not personal whims. It's key to fostering an atmosphere of openness and holding onto trust with those holding the purse strings.
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, a promissory note can exist independently of a mortgage. Think of a promissory note as a written pledge spelling out the agreement of a loan. On the flip side, a mortgage acts as a safety net, anchoring the loan to a tangible asset like a property. Promissory notes comfortably fit into both secured (with collateral) and unsecured (without collateral) loan scenarios. Hence, it's totally possible to see a promissory note standing alone without a mortgage, which places it in the "unsecured loan" club. But, you usually won't spot a mortgage without a promissory note tagging along — the note breathes life into the repayment roadmap and carries the borrower's vow to settle the debt.
How do you collect from a promissory note?
In order to recover from a promissory note, first sum up total liabilities—this covers interest and any charges. Reach out to the borrower via a friendly written memo. If they turn a blind eye, exploring legal measures might be your next stop. Be sure to have all paperwork in order and make a dash for competent legal advice, as every territory dances to its own legal tunes. Don't pester the debtor excessively, as that can step over legal boundaries. It's always wise to chat with your legal buddy to dodge any potential pitfalls.