Promissory Note Template Texas Word

PROMISSORY NOTE (SECURED/UNSECURED)

Document ID: TX-PN-2024-001
Effective Date: [Date]
Version: 1.0
Governing Jurisdiction: State of Texas

LEGAL COMPLIANCE NOTICE

This document constitutes a legal instrument. It is drafted in accordance with the Texas Business and Commerce Code and applicable Texas common law. This template is for educational and drafting purposes. Laws regarding usury, interest rate caps (e.g., Texas Finance Code), and enforceability of debt instruments vary based on the specific nature of the parties (corporate vs. individual) and the underlying transaction. Consult with licensed Texas counsel prior to execution to ensure compliance with specific usury limitations and consumer protection statutes.

1. PARTIES AND RECITALS

This Promissory Note (the “Note”) is made and entered into as of the Effective Date by and between:

BORROWER: [Borrower Full Legal Name], with a principal address at [Borrower Address] (“Borrower”).

LENDER: [Lender Full Legal Name], with a principal address at [Lender Address] (“Lender”).

RECITALS: WHEREAS, Borrower desires to borrow from Lender, and Lender desires to lend to Borrower, the principal sum of [Amount in USD] (the “Principal”), subject to the terms and conditions set forth herein.

2. OPERATIVE CLAUSES

1. PROMISE TO PAY. For value received, the Borrower unconditionally promises to pay to the order of the Lender the Principal sum of [Amount in USD], together with interest on the unpaid principal balance at the rate of [Interest Rate]% per annum (the “Interest Rate”).

2. REPAYMENT TERMS. The Principal and all accrued interest shall be payable in full on [Maturity Date] (the “Due Date”). Alternatively, payments shall be made in [Number] installments of [Installment Amount] due on the [Day] of each [Month/Quarter] beginning [Start Date].

3. PREPAYMENT. The Borrower reserves the right to prepay the Principal, in whole or in part, at any time without penalty. Any partial prepayments shall be applied first to accrued interest and then to the reduction of the Principal balance.

4. DEFAULT AND ACCELERATION. If the Borrower fails to make any payment when due, or fails to perform any other obligation under this Note, and such default continues for a period of [Number, e.g., 10] days after written notice from the Lender, the Lender may declare the entire remaining unpaid Principal and all accrued interest immediately due and payable.

5. LATE FEES AND INTEREST. If any payment is not received within [Number] days of the Due Date, the Borrower shall pay a late fee of $[Amount] or [Percentage]% of the overdue amount, whichever is greater. To the extent permitted by Texas law, any past-due amounts shall bear interest at the maximum rate permitted by the Texas Finance Code.

6. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that: (a) they have full power and authority to enter into this Note; (b) this Note constitutes a legal, valid, and binding obligation; and (c) the execution of this Note does not violate any other contract or agreement to which the Borrower is a party.

7. GOVERNING LAW AND VENUE. This Note shall be governed by and construed in accordance with the laws of the State of Texas. Any litigation arising hereunder shall be brought exclusively in the courts of [County Name] County, Texas.

8. SEVERABILITY. If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect to the maximum extent permitted by law.

9. ENTIRE AGREEMENT. This Note constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior discussions, negotiations, or understandings, whether written or oral.

10. WAIVER. No failure or delay by the Lender in exercising any right under this Note shall operate as a waiver thereof.

3. SIGNATURE BLOCKS

FOR BORROWER: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Company: [Company Legal Name, if applicable] Date: [Date]

FOR LENDER: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

4. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Drafting: Replace all bracketed text [ ] with actual data. Ensure the interest rate complies with the Texas Finance Code (Chapter 301 et seq.) to avoid usury violations.
2. Verification: If the Borrower is a business entity, verify the signatory has the “Actual Authority” (via Corporate Resolution or Operating Agreement) to bind the entity to debt.
3. Execution:
   • Physical: Print two originals. Both parties sign both copies. Each party retains one “wet-ink” original.
   • Digital: Use a platform such as DocuSign, Adobe Sign, or HelloSign. Ensure the platform produces an Audit Trail Certificate.
4. Security (Optional): If this loan is intended to be secured by collateral (e.g., equipment, inventory), this Note must be accompanied by a Security Agreement and a UCC-1 Financing Statement filed with the Texas Secretary of State.
5. Record Retention: Retain this document in a secure, fireproof digital or physical archive. Under the Texas statute of limitations for debt (generally 4 years for breach of contract, Tex. Civ. Prac. & Rem. Code § 16.004), ensure the document is kept at least until the debt is satisfied plus the applicable limitation period.