What Can Void a Promissory Note in Wisconsin?
A promissory note is a handy tool in many instances. Perhaps you’re taking a loan to fund your education or you want to buy expensive equipment. You could also be planning to buy your dream house but have no cash.
Whatever the reason, a promissory note regulates your lending relations with the creditor. Although this legal document may be less daunting than a contract, it should contain clear terms to remain valid.
Read on to understand why the courts may void your promissory note in Wisconsin.
But First: What’s a Promissory Note?
A promissory note is a formal agreement between a lender and the borrower. The document contains the borrower’s promise to pay the loan within the required timeline. It may also outline essential clauses governing the transaction.
Although the agreement exists between the lender and borrower, they may also wish to involve a co-signer and notaries when signing the document.
You have two options for creating a promissory note in Wisconsin: secured or unsecured.
A secured promissory agreement in Wisconsin allows you to include an item as collateral. Later on, you can use it to reimburse the lender if you can't meet your obligations.
On the other hand, an unsecured Wisconsin agreement doesn’t require you to incorporate valuable collateral.
A promissory note also contains legal obligations for the lender and borrower. Some essential elements of the agreement include:
- The legal names and roles of all parties.
- The date of issuing the agreement.
- The mailing addresses of each party.
- The borrower’s physical address.
- Payment information.
- The principal amount.
- The annual interest rate.
What Can Void Your Promissory Note?
A promissory note is a legally enforceable document. If you have a dispute over the loan repayment, the court may use the document as a basis to settle your dispute.
However, in some instances, your agreement may be void if it doesn’t meet the following conditions:
The Document Lacks a Valid Signature
According to Wisconsin Statutes, a promissory note should contain the borrower's signature to become valid. Therefore, you should sign it before issuance to the creditor. If you have a cosigner, make sure to include the cosigner’s signature too.
The Promissory Note Has Ambiguous Clauses
A promissory note must have specific clauses written in the proper legal language. If you're unsure of the clauses to include, you may download a free template from our website.
The Terms Are Unlawful
Your promissory note should uphold fair lending practices using legal terms. For instance, the annual interest rates shouldn't surpass the state's maximum limit. A violation of the interest rates will void your agreement and attract fines.
The Original Draft Isn't Available.
The courts will use the original draft of the document to settle disputes arising from a breach. Without the original draft, it may be hard to prove the facts and content of the promissory note. Moreover, the absence of the original draft means the agreement may not exist in the first place.
The Document Has Unlawful Alterations
A promissory note contains a clause allowing amendment of conflicting or unlawful clauses. However, you should agree with the lender on what requires an alteration before an amendment. The document may be void if either party amends the clauses without mutual consent or permission.
Writing a promissory note may be daunting, especially if you haven’t done it before. Whether you’re borrowing money from a relative or simply buying an item, you should be sure the document contains clear terms. You can avoid the costly attorney’s fees by downloading a generic Wisconsin promissory note from our website.