An IOU is a legally effective document, which is used to prove that there is a creditor-debtor relationship between the creditor and the debtor and other important contents.
In order to ensure the rights and interests of both parties, the IOU needs to contain some necessary content and some legally valid writing.
First of all, the IOU must contain the names and ID numbers of the borrower and lender. This is to verify the identities of both parties and facilitate future recovery.
The second is the amount. The amount mentioned in the IOU should not only indicate the specific amount, but also the unit (yuan or 10,000 yuan, etc.), and the currency of the loan (RMB, US dollar, etc.). To clarify the amount, you should also write out the uppercase and lowercase amounts.
The IOU should also indicate the term of the loan and the term of repayment, the interest rate, etc. It is also important to repay the loan, whether it is paid in installments (monthly, quarterly, yearly) or in a lump sum. In the case of instalments, it is also advisable to be specific about the timing of each instalment.
Of course, in order to protect the rights and interests of the lender, the borrower can take the initiative to provide a guarantor and a guarantee method, and the lender can also require the borrower to provide a corresponding way to protect the rights and interests. If the borrower provides a guarantee, the name and ID number of the guarantor, and the method of guarantee shall be clearly written in the IOU.
The liability for breach of contract involved in the non-repayment of money owed is also an important part of the IOU. The liability for breach of contract that the borrower will have to bear if the borrower defaults or fails to pay on time should be clearly written. On the one hand, the borrower is reminded to repay the loan on time, and on the other hand, it is also a preparation for the lawsuit where the borrower does not repay.
Last but not least, the IOU should be signed and dated. It shall be signed and fingerprinted by the borrower and the lender in person. The date shall be indicated when signing, so as to facilitate the determination of the statute of limitations.
In addition to the above-mentioned essential contents of the IOU, the lender should also take care to keep the original IOU in case it is needed.