Make it Legal: Loan Agreement

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Relevant LawDepot Documents: Loan Agreement

When drafting a loan agreement it is important to make sure that all of the requirements to ensure that your document will be legally binding have been met. This is especially true in the UK and Australia where the Consumer Credit Act and the Consumer Credit Code, respectively, may apply.

This article is intended to help you make sure that your LawDepot Loan Agreement will be legally binding.

Contents

United States & Canada

Does my loan agreement need to be witnessed or notarized?

In most cases, you will not need witnesses to the signing of a loan agreement, nor will the document need to be notarized. However, depending on the nature of the loan and the governing law of the jurisdiction in which you’re entering into the loan, witnesses or notarization may be required. Even if it isn’t required, it’s a good idea to have an objective third party witness the signing of the document, as this will provide better evidence when you need to enforce the repayment of the loan. Signing the note in front of a notary public is the best evidence that the borrower signed the loan agreement.

United Kingdom

Will my loan agreement by governed by the Consumer Credit Act?

Under some circumstances, your loan agreement may be governed by the Consumer Credit Act 1974 as amended by the 2006 Act. The Consumer Credit Act will not affect your loan if:

  • Your loan is a non-commercial agreement.
  • Your loan was created for a business purpose and the loan is greater than £25,000.00.
  • Your loan is for £30.00 or less.

For more information about the Consumer Credit Act, or to determine whether or not it will apply to your loan agreement, please visit LawDepot’s Loan Agreement FAQ.

Does my loan agreement need to be witnessed or notarized?

The United Kingdom signing requirements for this document are the same as those for the United States & Canada. Please view the United States & Canada section above for more information.

Australia

Does the Consumer Credit Code apply to my loan agreement?

The Consumer Credit Code will apply to your loan agreement if:

  1. The borrower is a natural person ordinarily resident in Australia or a strata corporation formed in Australia; and
  2. The credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes; and
  3. A charge is or may be made for providing the credit; and
  4. The credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider.

Do I need to provide any disclosures to the borrower before entering into a loan agreement?

If the Consumer Credit Code applies to your loan agreement, the lender cannot enter into a loan agreement without giving the borrower:

  1. A pre-contractual statement setting out the matters required by section 15 to be included in the contract document; and
  2. An information statement in the form required by the regulations of the borrower’s statutory rights and statutory obligations.

Does my loan agreement need to be witnessed or notarized?

The Australian signing requirements for this document are the same as those for the United States & Canada. Please view the United States & Canada section above for more information.