Lending money out-how to make it legally binding?

ironlady2022

Not sure if this is the right thread but here goes;

A friend of mine is prepared to lend the sum of £4000 to a trustworthy friend. And I advised that a contract of some sort shouldn't go amiss. My question is;

-can they draw up their own contract? If so what details need to be recorded and how should it be worded?
-alternatively, are their any templates that can be downloaded or used from anywhere?

I have warned my friend that without this he may aswell say bye bye to the money but I can't change his mind hence I just want to help him.

Thank you in advance!

ironlady2022

Like I said I cannot change his mind. And the sum of £4000 may be pocket money to you but it's not to some.

ironlady2022

Read my original post I'm not looking for an alternative. I'm wanting answers about the contract.

property.advert

business_man wrote: »

Like I have always said, a DIY job wouldnt stand in court for more than 10 minutes if the other party has a half decent solicitor. But again the sum is pocket money so involving a legal eagle isnt an option either.

I think the best would be lend it via zopa to minimise the risk.

I am prepared to be educated as to why a contract freely entered into by two adults would be struck out as you suggest. Until then, I don't agree with you.

In the OP's situation, I would ask for surety and if that could not be given, then there is little come back.

ironlady2022

property.advert wrote: »

I am prepared to be educated as to why a contract freely entered into by two adults would be struck out as you suggest. Until then, I don't agree with you.

In the OP's situation, I would ask for surety and if that could not be given, then there is little come back.

Thank you for that property.advert That is exactly why I am proposing the question.

GemBlueTopaz1984

Hi OP,

If you can't change his mind then really what need writing down are the facts x is loaning Y the sum of £4,000 on 08/03/2011 with the agreement that Y will make payments to X of £400 on the 1st of each month for 10 months or until the loan is fully repaid. Also include any penalties i.e what happens if payments are missed.

and have both parties sign and date it. I think that would be sufficient in small claims court as it shows proof of debt, also it would be a good idea for your friend to receipt all payments. It might sound a bit formal to them but it is for both parties protection. example. x has to take y to small claims as they aren't making payments, x can produce agreement showing proof of debt. x claims y has made 3 payments, Y can show receipts for 5 payments. This type of thing can give some protection although the best protection is not to do it at all. Money and friendships should never mix it usually ends up badly.

barbarawright

You might also want to ask why two adults are prepared to enter into a major financial committment but are leaving you to do the research. If there's any doubt at all in the lender's mind, why isn't he/she looking into it?

ironlady2022

barbarawright wrote: »

You might also want to ask why two adults are prepared to enter into a major financial committment but are leaving you to do the research. If there's any doubt at all in the lender's mind, why isn't he/she looking into it?

I don't care what the purpose of the money is for and all I want to do is offer him some sort of protection. He has not asked for help. I'm just looking out for him and it's useful to know.

zppp

Probably good to have witnesses countersign the contract as well IMHO.

[Deleted User]

zppp wrote: »

Probably good to have witnesses countersign the contract as well IMHO.

exactly,and preferably 2 who have no connection at all to the agreement

kev.s

a solicitor will draw up an agreement for a nominal fee, if your friend won't listen then why are you so desperate to persue it? he's and adult so let him "live & learn" if he's to pig headed to listen..