assignment of promissory note canada

Promissory Notes and Canadian Law

Are promissory notes legally binding in canada and how do they work in canadian law , introduction: promissory notes in canada.

Helping a family member or close friend out with an altruistic loan is not uncommon. It may be a brother or a high school friend who may need to borrow a few thousand dollars for a car, rent payment, or other necessities. In these situations, we likely won’t reach out to a lawyer to draft a loan agreement with complicated procedures on what occurs on default or upon a late payment. 

A promissory note is a legal document to evidence when a lender loans a sum of money to a borrower. The document contains a promise to repay the loan amount under specific terms and conditions and is a simpler alternative to a loan agreement. In Canada, Part IV of the  Bills of Exchange Act   generally governs promissory notes.

In this article, we review how promissory notes work in Canada and Ontario and answer whether promissory notes are legally binding in Canada. This piece further details when you should have a promissory note over a traditional loan agreement and what terms and clauses to consider for a promissory note.

When Should You Use a Promissory Note?

Generally, a promissory note comes in handy for smaller loans with someone you’re close with. The borrower and lender likely trust each other and believe that the borrower will pay back the amount without the Canadian law having to step in. 

Although some may not use any documentation when lending money to those they trust, a promissory note can ensure that both the borrower and the lender are on the same page about the terms of the loan. Promissory notes are generally legally binding and can thus be enforced in court, in a case of default or disagreement. Further, a promissory note in Canada creates a verified paper trail of who the money is being lent to or borrowed from. This can prevent organizations such as the Canada Revenue Agency from suspecting the parties of tax fraud or money laundering. 

In contrast, a loan agreement usually involves a substantial amount of money. It’s significantly more detailed than a promissory note, and lawyers are typically involved with both the drafting and review process. Therefore, it’s more expensive to execute a loan agreement than a promissory note in Canada and generally in any jurisdiction. A loan agreement contemplates details such as payment plans, what happens upon default, and more. However, both a promissory note and loan agreement are both just as legally binding as the other.

A lender and borrower may choose a loan agreement over a promissory note where there is a lot of money involved (such as a big loan for a house). If a borrower is looking to private lenders for a loan, regardless of the amount, there will likely be a loan agreement since the borrower is likely not close friends or family members with the private lender. 

Additionally, if there’s money from a shareholder loaned to a corporation, the two parties will likely use a shareholder loan agreement instead of a promissory note or loan agreement. A shareholder loan agreement will better account for the relationship between the shareholder and the corporation than a promissory note or loan agreement will.  

What Terms Should You Include in Your Promissory Note?

Promissory notes in Canada are straightforward relative to most legal contracts. Commonly, individuals use online resources to write their own. At the most basic level, a promissory note should include:

● The sum of money being advanced/borrowed; 

● The identity of the lender and borrower; 

● When the borrower has to repay the money; 

● How the borrower will repay the money; 

● Whether the borrower will need to pay interest, and if so, how much; 

● Whether there’s collateral to secure the loan against; and, 

● The borrower’s recognition of the promissory note, evidenced by their signature. 

Concerning  when  the borrower repays the money, there are commonly two ways that a promissory note arranges this. The first is for the promissory note to carry a “maturity date” of which the borrower must repay the debt on. The second is a demand promissory note, where there’s no specific maturity date, and the borrower must repay the debt on a few days’ notice by the lender. 

How  a borrower repays the debt can also differ between promissory notes. The debtor can ultimately repay the principal amount (the amount initially borrowed) in instalments or all at once. Another option is for the borrower to pay only the interest before the maturity date or pay part of the principal along with interest. There are ultimately dozens of ways to arrange how a borrower repays the amounts owed. 

Lastly, collateral is an important option to consider in a promissory note. If the lender does not take the collateral and the borrower defaults on the loan, the only option is to go to court. Collateral will let the lender seize the pledged assets if the borrower fails to repay the amount. If the collateral is worth less than the borrowed amount, the lender can still sue for the difference. 

Promissory notes are not limited to these terms, however. It’s up to the lender and borrower on how they want to construct their agreement. 

Promissory Notes in Ontario

An important caveat regarding promissory notes in Ontario is how the  Limitations Act, 2002  affects a note’s enforceability in court. Because of the  Limitations Act , a borrower has no obligation to repay a loan under a promissory note in Ontario after a certain amount of time has passed. A lender has two years to collect repayment or commence legal proceedings for repayment after the maturity date of the loan or after the date where the lender demanded repayment. After the two years, the agreement is statute-barred and unenforceable.  

For those who wondered whether a promissory note is legally binding in Canada — it is! A promissory note in Canada and in Ontario is a powerful tool that simplifies the borrowing process, without leaving out the details. If you’re lending or borrowing money to or from a close friend or family member, a promissory note may be the best option because there’s already trust between you and the borrower/lender. This document ensures that the borrower and lender understand what the loan details are — often, without the fuss of lawyers. 

Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.

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• Promissory Note

Borrowers or Lenders Can Download A Promissory Note Template For Future Payments

What is a Promissory Note?

A promissory note is a legally binding document in which a borrower commits to repaying a specified sum of money to a lender at a future date. This type of agreement differs from a loan agreement as it solely governs the obligations of the borrower, making it suitable for less formal arrangements between parties such as family members, friends, or business associates.

Key Features of Promissory Notes

Promissory notes typically include the following elements:

• Payment terms: The repayment schedule can be structured as a lump sum due on or before a specific date, or as installments paid at set intervals.
• Interest rates: The agreed-upon interest rate and duration should be clearly outlined in the document.

When to Use Promissory Notes

Given their less formal nature compared to traditional loans, promissory notes are well-suited for a variety of lending situations, including:

• Corporate loans: Businesses may use promissory notes for intra-company lending or financing arrangements.
• Major purchases: Promissory notes can facilitate the purchase of high-value items such as vehicles or boats.
• Real estate transactions: They may be utilized for mortgages, down payments, closing costs, or property repairs.
• Student loans: Parents may provide their children with more favorable loan terms for educational expenses.
• Personal loans: When lending to friends or family, it is always advisable to record the terms in a promissory note to avoid potential misunderstandings or disputes.

Expert Assistance and Consultation

At Canada Business Lawyers , we provide free templates of promissory notes and other legal documents for personal and business use in Canada. We also offer a complimentary 15-minute consultation to answer any questions and help you better understand the specific contract or document you require.

Contact us today to learn more about our customized legal document and contract services tailored to the unique needs of Canadians.

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Promissory Note FAQ

1. What is a Promissory Note? A Promissory Note is a legally binding document that promises payment of a specified amount of money by a borrower to a lender, on a certain date or on demand. It is an unconditional promise to pay that can be used as evidence of a debt and may be used as a means of financing a business or personal loan.

2. What are the key elements of a Promissory Note? A Promissory Note must contain several key elements to be legally binding, including the names of the borrower and lender, the amount borrowed, the repayment terms, the interest rate (if any), the due date or dates, and the signatures of both parties. The note may also include additional terms such as a default clause or a provision for early repayment.

3. Are Promissory Notes enforceable in Canada? Yes, Promissory Notes are enforceable in Canada. They are considered legally binding contracts that can be enforced through legal action in court. However, to be enforceable, a Promissory Note must meet certain requirements, such as being in writing, containing all necessary elements, and signed by both parties.

4. Can a Promissory Note be transferred or assigned to another party? Yes, a Promissory Note can be transferred or assigned to another party, either in whole or in part, unless there is a provision in the note that specifically prohibits it. The transfer or assignment may require the written consent of the original parties and must be done in accordance with the terms of the note and applicable laws.

5. What happens if a borrower defaults on a Promissory Note? If a borrower fails to make payments according to the terms of a Promissory Note, the lender may have the right to take legal action to recover the debt. This may include obtaining a court judgment, garnishing wages or bank accounts, or seizing assets. The lender may also be entitled to interest, late fees, and other charges as provided for in the note or by law.

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Canadian Promissory Note

This document is up to date! It was last reviewed by a lawyer in March 2024 .

[What is a Promissory Note?]

A Promissory Note, or loan agreement, is used to record that one party promises to pay a sum of money to another party at a later date. This obligation usually results from a loan to the promising party. Creating a Promissory Note or loan agreement is often recommended for tax and record-keeping reasons. This form is also known as: loan agreement, secured loan agreement, demand note.

Simply answer the questions below to personalize your Promissory Note

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Sample Canadian Promissory Note

Canada Promissory Note

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Governing Jurisdiction:

Borrower details:, borrower's contact information:, first borrower's contact information:, second borrower's contact information:, lender's contact information:, principal sum:, schedule of payments:, installment dates, installment starting date, nature of installments:, pre-payment:, aircraft information, equipment information, vehicle information, watercraft information, other security information, default by borrower(s):, additional clauses:, signatures required:, date of signing, if known:, free canadian promissory note templates.

The sample documents below are provided for informational purposes only.

• They are NOT up to date;
• They have NOT been reviewed by a Lawyer;
• They may NOT be legally valid or enforceable.

We strongly recommend obtaining an attorney reviewed Promissory Note directly from us .

• Instructions

Demand Promissory Note

Installment promissory note, instructions for free promissory note templates:.

• They have not been reviewed by a lawyer
• We make no representations as to their quality
• You agree to use them at your own risk
• Select a document above, and cut-and-paste the text into a word processor of your choice.
• Fill in the blanks, modify the wording and format appropriately.

THE PARTIES TO THIS AGREEMENT ARE:

• Legal Names:
• For value received, the Borrower hereby unconditionally promises to pay to the Lender the sum of ___________ together with interest accrued at the rate of ________ percent per year on any unpaid balance.

Payable on Demand

• The entire outstanding amount shall become immediately payable upon demand by the Lender providing that such demand not be made before the ______ day of _____________________ 20____.

Place of Payment

• Payment shall be made at the above stated address of the Lender or at such place as may be designated from time to time in writing by the Lender.
• The Borrower may prepay this Note in full or in part at any time without premium or penalty. All prepayments shall first be applied to accrued interest and thereafter to the principal loan amount.
• Should the Borrower not make full payment within 14 days of demand, this Note may be turned over for collection and the Borrower agrees to pay all reasonable legal fees (on a solicitor basis) and out-of-pocket expenses to the extent permissible by law, in addition to the other amounts due.
• The Lender may transfer this Note to another holder without notice to the Borrower and the Borrower agrees to remain bound to any subsequent holder of this Note under the terms of this Note.

Joint and Several Liability

• All Borrowers or Co-signors identified in this Note shall be equally liable for the repayment of the debt described in this Note.

Borrower's Waiver

• The Borrower waives presentment for payment, notice of non-payment, off-set, protest and notice of protest and agrees to remain fully bound until this Note is paid in full.

Binding Effect

• The terms of this Note shall be binding upon the Borrower's successors and shall accrue to the benefit and be enforceable by the Lender and his/her successors, legal representatives and assigns.

Jurisdiction

• This Note shall be construed, interpreted and governed in accordance with the laws of _______________ and should any provision of this Note be judged by an appropriate court of law as invalid, it shall not affect any of the remaining provisions whatsoever.

Acknowledgement

• For value received, the Borrower hereby unconditionally promises to pay to the Lender the sum of ____________ together with interest accrued at the rate of ________ percent per year on any unpaid balance.

Payment Terms

• The Borrower will pay ________ payments of $_____ each at monthly intervals on the _____ day of each month, starting on the _______ day of _________________20____ until the Principal amount and accrued interest is paid in full.
• first be applied to any outstanding late fees;
• then to interest;
• and finally to the Principal.
• The Borrower may prepay this Note in full or in part at any time without premium or penalty.
• then to accrued interest;
• Payment shall be made to the above address of the Lender or at such place as may be designated from time to time in writing by the Lender.

Late Payment Fees

• If payment is not made within 7 days as stipulated in the payment terms, the Borrower shall be required to pay an additional late fee in the amount of $______.

Default and Acceleration of Debt

• If the Borrower fails to make any payment when due and the Lender provides notice of such failure, the Borrower must effect payment of the amount due within ____ days, failing which the Lender can demand immediate payment of the entire outstanding Principal amount, accrued interest and late fees.

Collection Fees

• In the event of default this Note may be turned over for collection and the Borrower agrees to pay all reasonable legal fees (on a solicitor basis), collection other charges to the extent permissible by law, in addition to other amounts due.
• The Lender may transfer or assign this Note to another holder without notice to the Borrower and the Borrower agrees to remain bound to any subsequent holder of this Note under same terms.
• All Borrowers identified in this Note shall be jointly and severally liable for the repayment of the debt.
• The Borrower waives demand and presentment for payment, notice of non-payment, off-set, protest and notice of protest and agrees to remain fully bound until this Note is paid in full.

Below are some random samples we have created with Documatica. Please note that these documents reflect a certain set of answers, and it is very likely that the document you require is different. Do not rely on the templates below - create your own customized Promissory Note with our webpage.

Promissory Note (Canadian) Sample 27MvfI1.pdf

Promissory Note (Canadian) Sample 27MvfW1.pdf

Promissory Note (Canadian) Sample 27YlWl1.pdf

Promissory Note (Canadian) Sample 27Ylwv1.pdf

For maximum legal protection, obtain a lawyer reviewed Promissory Note directly from us .

• Promissory Notes

WHAT IS A PROMISSORY NOTE?

A promissory note is a legal document that acts as evidence of a borrower’s indebtedness and their unconditional promise to pay back the lender. The promissory note generally sets out information about the lender and the borrower, the principal amount of the loan, the interest rate payable, details about payments, maturity date, and interest adjustment date. In our experience, promissory notes are used in smaller loans where there is a level of trust between the lender and the borrower. Promissory notes are generally simple to draft and do not cost a lot in legal fees. In situations where a borrower signs a promissory note in favour of the lender unless the lender obtains collateral from the borrower to ensure repayment of the loan, the typical recourse for the lender upon default by the borrower will be limited to a court action for collection of the debt. While there is no requirement that a promissory note be drafted by a lawyer or witnessed, we recommend that the promissory note be both drafted by an experienced real estate or business lawyer and witnessed in front of an impartial third party.

Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here .

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Promissory Notes

A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.

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005 CAPITAL ASSETS (note 4) 708,597 913,334 PROMISSORY NOTES (note 5) - 202,469 $ 4,515,485 $ 5,309,808 … inducement (104,139) (104,139) Allowance for promissory notes 2,374 1,227,769 Net loss resulting from share … 2,176,303 INVESTING ACTIVITIES Issuance of promissory notes (770,140) (1,388,014) Repayment of interest … capital assets of $204,737 (2022 - $221,773). 5. PROMISSORY NOTES In 2020, OBI changed the form of funding that … year, OBI issued interest bearing convertible promissory notes to five (2022 - seven) companies totaling …

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Schools #27 #35 1991 Public Report The Sale of Promissory Notes in British Columbia by 1996 Special Report … https://bcombudsperson.ca/investigative_report/the-sale-of- promissory-notes -in-british-columbia-by-principal-group-ltd/ … https://bcombudsperson.ca/investigative_report/the-sale-of- promissory-notes -in-british-columbia-by-principal-group-ltd/ …

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5 To what circums·tances is the test of applicability to be applied: the circumstances of the tie of the enact ment of the English statute in question, the circumsta nces. …

obtained by forfeiture 7 Geo . 4 c. 6 No bearer promissory notes under £5 8 Geo. 4 c. 28 Benefit of clergy …

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Home Legal Answers Business & Corporate Law Business Documents Promissory Note

What is a Promissory Note?

A promissory note is a legal document where one party makes an unconditional promise to pay a certain sum of money to the other party. A promissory note can be made payable on demand, at a specific period of time, or upon an event that is certain to occur. In Canada, promissory notes are governed by the federal Bills of Exchange Act .

Preparing or signing a promissory note involves many legal decisions that will affect you now and in the future. To get help, call a lawyer now.

Why are Promissory Notes used?

Typically, promissory notes are used in connection with short term financing, and business loans. They are usually unsecured. For the note to be legally valid, the note must be signed by the borrower and must include language that clearly shows the borrower promises to pay a defined amount.

Is a Promissory Note the same as a Loan Agreement?

Promissory notes are not the same as loan agreements. A promissory note is considered a ‘negotiable instrument’. This means that the note is similar to currency in that it may be transferred to a third party by simply delivering it to them. As a negotiable instrument, a promissory note may be payable to the party specified in the note or to a third party who is holding the note. Unlike signing multiple copies of a loan agreement, if a borrower puts their original signature on 2 promissory notes, then the borrower will be responsible to pay the amount twice.

What information do Promissory Notes include?

Promissory notes often include many different features, such as:

• the principle amount outstanding
• the interest rate, (fixed or floating), and the basis for calculation
• names of lenders or borrowers (individuals, corporations, partnerships etc.)
• date of payment (‘term note’), or if payable on Demand (‘demand note’)

A demand promissory note is a note that must be paid when the lender ‘demands’ payment. This is typically done through a written demand for payment by the lender to the borrower. The borrower will then be obligated to pay the amount outstanding within a reasonable amount of time, typically a few days.

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Assignment of Promissory Note as Security (Canada)

Assignment of lender's interest in a promissory note as security for obligations to assignee., for immediate download, file types included.

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Promissory Note

Indicate the province or territory in which this agreement is created. This determines the laws applicable to the agreement.

PROMISSORY NOTE ( Alberta )

Amount: $ ________

Date: ________

FOR VALUE RECEIVED, the undersigned borrower, ________ , having a primary address at the following:

(hereinafter the " Borrower ")

hereby promises to pay the lender, ________ , having a primary address at the following:

(hereinafter the " Lender ") the sum of $ ________ (________) ("Principal Amount") with interest at the rate of ________ % per annum, compounded monthly ("Interest") on the unpaid principal in accordance with the terms and conditions set forth below.

1. Terms of Repayment

General Repayment: The Principal Sum plus all accrued interests will be paid back in full on ________ ("Due Date"). The Borrower shall ensure that the entirety of the Principal Sum and all interests will be returned by the Due Date. The Borrower shall pay back the Lender by cheque sent to the address of the Lender specified above.

Past Due Interest : If the Due Date passes and the entirety of the Principal Sum with accrued interest has not been paid back, a higher interest rate of ________ % per annum on the unpaid amount will be charged until all the funds owing are recouped in full.

The following events constitute default of this Promissory Note and upon their occurrence, the entirety of any remaining amount due shall become immediately payable:

a) The Borrower's insolvency;

b) The Borrower's death, incompetency; liquidation, or dissolution;

c) The Borrower's making of a general assignment for the benefit of Borrower's creditors;

d) The Borrower's filing of any bankruptcy proceedings; or

e) Any application for the appointment of a receiver for the Borrower.

3. Collection costs

Should the Borrower default on completing any obligation contained within this Promissory Note, including, but not limited to, if any of the circumstances in the Default provision occur, the Lender may declare the entire amount remaining due immediately. Any and all costs or expenses incurred by the Lender in enforcing the obligations of this Promissory Note as a result of the Borrower's default, including any legal fees or costs, will be added to the remaining amount due and must be paid immediately by the Borrower.

4. Security

This Promissory Note is secured by the following collateral ("Collateral"):

Until this Promissory Note is paid in full, Borrower grants Lender a security interest in the Collateral. Borrower hereby agrees to list Lender as a lender on the title of the Security, regardless of Lender's choice to perfect the security interest.

If the Borrower defaults on this Promissory Note and does not make payment for seven (7) days after it is demanded by Lender, the Collateral will revert to Lender and all rights in the ownership of such Collateral will belong to Lender.

5. 228252822 258

5588 2522888252 8222 8888 82 22825225 25885888282 82 5882555282 8825 252 8588 22 252 25288282 22 ________ , 525 252 8588 22 852555 82 222282 82 252 25288282 22 ________ .

6. Severability

The Parties acknowledge that if a dispute between the Parties arises out of this Promissory Note or the subject matter of this Promissory Note, they would want the court to interpret the Promissory Note as follows:

a) with respect to any provision that it holds unenforceable, by modifying that provision to the minimum extent necessary to make it enforceable, or if that modification is not permitted by law, by disregarding that provision;

b) if an unenforceable provision is modified or disregarded in accordance with the present section, by holding that the rest of the Promissory Note will remain in effect as written;

c) by holding that any unenforceable provision will remain as written in any circumstances other than those in which the provision is held to be unenforceable;

d) if modifying or disregarding the unenforceable provision would result in a failure of an essential purpose of this Promissory Note, by holding the entire Promissory Note unenforceable.

7. Amendement

This Promissory Note may only be amended in writing signed by both Parties.

8. Assignment

This Promissory Note, or the rights granted hereunder, may be assigned, sold, leased or otherwise transferred in whole or part by the Lender.

This Promissory Note will inure to the benefit of and be binding upon the respective successors, assigns, heirs, executors and/or administrators of the Borrower.

BORROWER Name: ________

Signature: _________________________

Date: _____________________________

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Canada: Promissory Notes: Who Are You Promising To Pay?

Promissory notes are often issued in the course of business arrangements and financial transactions to record indebtedness and financial obligations. People who use these instruments, however, should be aware of the specialized nature of promissory notes.

A promissory note is an unconditional promise to pay made by one person to another, which must be signed by the person giving the promise. The indebtedness contemplated in the promissory note may be repaid either on demand or at a fixed time in the future, depending on the specific wording of the note. Promissory notes are governed by federal legislation, specifically, the Bills of Exchange Act , RSC 1985, c. B-4.

The Bills of Exchange Act provides that promissory notes, along with bills of exchange and cheques, are negotiable instruments. "Negotiable" means that the title to the promissory note can be transferred by the original creditor who holds the note to a third party, without the consent or knowledge of the debtor who gave the note. This concept may be more familiar in the context of a cheque, which is another negotiable instrument. A cheque may be made payable to Person A, who endorses it for transfer to Person B. Person B then becomes the person entitled to receive the amount of the cheque. The endorsement of the cheque is the negotiation.

A promissory note can be used in a business transaction as a means of evidencing indebtedness, for example, as part payment on an asset or share purchase or to evidence a corporate loan from a shareholder. The relationship between the original creditor and the debtor is often governed by a broader personal or contractual relationship. However, if the promissory note is negotiated to a third party, that "new" creditor may acquire the promissory note free from contractual rights or other obligations that existed between the original parties.

This results in at least two risks:

• As noted, a buyer may give a promissory note to a seller for part of the purchase price in a sale transaction. Suppose the buyer, for example, has a claim against the seller due to a misrepresentation or breach of contract by the seller under the sale agreement. If the seller demands payment of the promissory note, the buyer may be able to "set off" its legal claim under the sale agreement against amounts owing to the seller under the note. However, if the seller transfers the note to a third party, that third party is typically entitled (with some narrow exceptions) to payment from the buyer free from any rights the buyer has against the seller, and may enforce payment. The result is that the buyer has no right of set-off and must pay the amount of the promissory note to the third party. The buyer must separately pursue the seller for any loss due to the misrepresentation or breach of contract.
• In most cases, a promissory note is construed to be separate and apart from the contract or other rights or relationship that exists between the original parties. A third party who holds a "demand" promissory note may therefore be able to demand payment at any time (subject to the specific terms of the promissory note), even where the agreement between the original parties limited or otherwise directed "if" or "when" the demand for payment would be made.

The risks can be managed by using the following tips:

• Be cautious of "demand" promissory notes, where payment could be demanded at any time.
• Draft the promissory note in such a way that makes it non-negotiable. Then, the promissory note will only operate to evidence indebtedness and an obligation to repay the original creditor.
• Seek legal advice to ensure that the promissory note is appropriate to the transaction and properly addresses unforeseen legal risks.

Promissory notes can be a useful means of documenting financial obligations, but care must be taken to avoid unintended results.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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• Assignment of Promissory Note

An Assignment of a Promissory note is a bilateral document that transfers the rights and obligations associated with a promissory note from one party (the assignor) to another party (the assignee). Jotform Sign ’s Assignment of Promissory Note shows the date the document was created, assignor information, assignee details, start and end dates of the promissory note, total amount due, interest rate percentage, and chosen payment method.

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A letter of authorization is an agreement between the person, known as the principal, authorizing another, known as an agent, to perform certain functions or powers in order to perform the duties of the principal. This letter also contains the period of effectivity of the contract of agency between the principal and the agent. Share Jotform’s free Letter of Authorization via email and securely collect electronic signatures from any device. Once signed, a finalized PDF document will be sent to your inbox — ready to download, print, and share with the appropriate parties.You can make changes to this Letter of Authorization in just a few easy clicks using Jotform’s intuitive form builder. Simply drag and drop to add or remove text fields, include additional signature fields, change fonts and colors, include your own branding and letterhead, and other design changes. Ditch messy paper forms and streamline your e-signature process with this free Letter of Authorization from Jotform. If you want to take your signing process online, create an e-sign document with Jotform Sign.

Professional Letter of Recommendation

A professional letter of recommendation is used by a prospective job applicant when applying for a position at a different company. Usually written by a previous supervisor, this letter highlights the skills, personality, and qualities of the applicant that is related to the job position they are applying for. Share this Professional Letter of Recommendation via email, which the respondent can then fill out and sign from any device. Once signed, a finalized PDF document will be automatically sent to your inbox and ready to present to the hiring manager.Make updates to this Professional Letter of Recommendation in seconds without any coding. Using Jotform’s drag-and-drop form builder, you can easily add or remove form fields, choose new fonts and colors, personalize automated emails, and much more. Land your next big job with Jotform’s free and fully customizable Professional Letter of Recommendation. If you want to take your signing process online, create an e-sign document with Jotform Sign.

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These templates are suggested forms only. If you're using a form as a contract, or to gather personal (or personal health) info, or for some other purpose with legal implications, we recommend that you do your homework to ensure you are complying with applicable laws and that you consult an attorney before relying on any particular form.

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If you need to draft polished, official letters, our customizable Letter E-Sign templates can help you generate them — for free! To get started, customize any of our free templates for confirmation letters, consent letters, cover letters, letters of recommendation, and more. Submissions made through your online letter form will automatically be converted into designed, professional PDFs that are easy to download, print, and email.

Using Jotform’s PDF Editor, you can modify any letter template to perfectly match your needs. Feel free to change the fonts and colors, drop in a text box for terms and conditions, write a personalized message, and add your logo for a more official touch. Your custom letter template will instantly convert every form response into an easily accessible PDF. If you’d like to send your clients confirmation letters or copies of their submissions, simply set up an autoresponder email and enable PDF attachments.

With an automated letter template, you’ll never have to manually write or sort paper letters for your business again.

Frequently Asked Questions

1) what are letter templates.

Letter templates are pre-made formats or layouts to help you draft a letter — no matter what your specific needs. With a letter template, you can just fill in fields like date, sender and recipient addresses, greeting, body text, and signature. These templates help you minimize busywork while producing professional results.

The best part? You won’t have to write each letter from scratch, and you can reuse templates as many times as you need, changing the letter for each circumstance.

2) Subtypes of letter templates

There are many different types of letter templates. While you can customize letter templates to your exact needs, you can also use our ready-made templates as is.

One common letter template is for a job promotion letter, which is a formal correspondence used to offer an employee a promotion, raise, or new role within a company. These templates can save your HR department time drafting individual promotion letters , so all they have to do is fill in an employee’s salary and job specifics to create a perfect letter. Job promotion letters provide a formal way to inform the employee of their new position, convey the details of their new role, and celebrate their accomplishments.

Another common letter template is a letter of recommendation . A letter of recommendation vouches for an individual based on a person’s first-hand experience of their characteristics and qualifications. Whether you’re an employer or a teacher, you’ve most likely received multiple requests to write letters of recommendation on top of your regular workload. Instead of spending valuable time drafting new letters from scratch, you can customize a template to create letters of recommendation in minutes. You can even set up an autoresponder email that sends the individual their completed letter of recommendation once you’ve finished.

Another common letter template type is for a resignation letter , which is an official document that notifies an employer when an employee is leaving their job. These templates work great for anyone who is planning to resign from their current position or for HR teams that need to offboard employees. You can personalize the template with your reasons for resigning from a job, then send it as a PDF in seconds.

3) Key elements of letter templates

Letter templates are structured to accommodate specific formatting and layout needs. The key fields to include are

• Header: The title or purpose of your letter
• Date : The date the letter is being sent
• Sender name : The full name of the person sending the letter
• Email: The email of the person sending the letter
• Phone number : The contact phone number of the person sending the letter
• Sender and recipient addresses : The full addresses of both the person sending the letter and the person receiving the letter
• Greeting : A formal salutation to the person receiving the letter
• Body text : The bulk text of the letter stating its purpose, whether that be for a resignation, a promotion, an appraisal, etc.
• Signature and signoff : The signature of the person sending the letter, followed by an optional field for their printed name and the date of signing

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You can create a letter with Jotform in minutes using our ready-made templates. Navigate to Letter Templates in our PDF template directory, and select one that best suits your needs. Then, use our intuitive drag-and-drop builder to customize the letter design with elements of your personal branding, different fonts and colors, and so much more.

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5) What can I use a letter for?

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Letters are one of the oldest and most effective means of written communication, and they are still used by just about every institution and industry today. As such, it’s useful to know how to use them effectively and efficiently.

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Assignment of Promissory Note dated effective as of April 16, 2020

Exhibit 10.2

ASSIGNMENT OF PROMISSORY NOTE

THIS ASSIGNMENT OF PROMISSORY NOTE (this “ Assignment ”) is effective as of April 16, 2020, and is by and among RIVULET FILMS LLC, an Arizona limited liability company (“ Assignor ”), and RIVULET MEDIA, INC., a Delaware corporation (“ Assignee ” and together with Assignor, the “ Parties ”).

A.       Blue Scout Enterprises LLC, an Arizona limited liability company (“ Maker ”), executed that certain Promissory Note dated February 11, 2020 in the original principal amount of Five Hundred Fifty Thousand Dollars ($550,000.00) and payable to Assignor (the “ Note ”).

B.       Assignor desires to assign to Assignee, and Assignee desires to assume, all of Assignor’s rights and obligations under the Note, including the right to receive payment thereunder.

C.       Consent by Maker is not required to effect the assignment contemplated herein.

Now, therefore, the Parties agree as follows:

1.        Assignment and Assumption . Effective as of the date written above, Assignor hereby assigns, and Assignee hereby assumes, all of Assignor’s rights and obligations under the Note.

2.        Representations and Warranties . Assignor represents and warrants to Assignee that (a) concurrently with this Assignment, it will deliver to Assignee the original, executed Note, including any modifications and amendments thereto; (b) the Note is in full force and effect and that no Event of Default has occurred thereunder; and (c) it has not assigned the Note to any third parties.

3.        Further Assurances . The Parties will take such additional actions as each may reasonably request to effect, consummate, confirm, or evidence the assignment contemplated herein.

4.        Binding Effect; Parties . This Assignment shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

5.        Governing Law . This Agreement is governed by the laws of the State of Arizona without regard to principles of conflicts of laws.

6.        Counterparts . This Agreement may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument. This Agreement may be executed and delivered by facsimile or other electronic signature (including .pdf).

(Signature page follows)

IN WITNESS WHEREOF, the Parties have caused this Assignment Agreement to be duly executed as of date first above written.

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Bonds, debentures, promissory notes, crypto-assets, and other similar properties

Use this section of Schedule 3 to report capital gains or capital losses from the disposition of bonds, debentures, Treasury bills , promissory notes, crypto-assets, and other properties. Other properties include  bad debts , foreign currencies , and options, as well as discounts, premiums, and bonuses on debt obligations.

A capital gain or loss cannot arise from Canada Savings Bonds or similar provincial savings bonds.

For more information on the tax treatment of these bonds, see line 12100 .

Capital gains arising from donations made to a qualified donee of a debt obligation or right listed on a designated stock exchange, or a prescribed debt obligation, are treated differently. If you made such a donation, use Form T1170 , Capital Gains on Gifts of Certain Capital Property . If you have a capital gain, report on Schedule 3 the amount calculated on Form T1170 . For more information on these donations, see Guide P113 , Gifts and Income Tax .

If you sold any of the types of properties listed above in 2023, you will receive a T5008 slip, Statement of Securities Transactions , or an account statement.

A linked note is a debt obligation, most often issued by a financial institution, the return on which is linked in some manner to the performance of one or more underlying assets or indexes over the term of the debt obligation. For transfers of debt obligations (as described in paragraph 7000(1)(d) of the Income Tax Regulations), any gain realized at the time of the assignment, or transfer of a linked note, is treated as interest that accrued on the debt obligation for a period commencing before the time of the transfer and ending at the time of the transfer.

If you sold a linked note in 2023, you will receive a T5008 slip , Statement of Securities Transactions, and a T5 slip , Statement of Investment Income . Box 30  of your T5 slip contains the amount of interest income you have to report on line 12100 of your return. The T5008 slip contains information to help you calculate a capital gain (or loss) , if any. The box on the T5008 slip called "Proceeds of disposition or settlement amount" does not contain any interest income that is already reported on your T5 slip . For instructions on how to calculate your capital gain (or loss) , see Calculating your capital gain or loss .

If you bought and sold the same type of property over a period of time, a special rule may affect your capital gain (or loss) calculation. For more information, see Identical properties . 

Completing your Schedule 3

Report dispositions on line 15199 and line 15300 of Schedule 3 .

Forms and publications

• Schedule 3, Capital Gains (or losses)
• Form T1170, Capital Gains on Gifts of Certain Capital Property
• Guide P113, Gifts and Income Tax

Related topics

• Line 34900 – Donations and gifts

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What Is a Promissory Note?

How promissory notes work.

• What's Included

Types of Promissory Notes

Promissory note repayment, investing in promissory notes, a brief history of promissory notes, the bottom line.

• Personal Finance

Promissory Note: What It Is, Different Types, and Pros and Cons

A promissory note is a written promise by one party (the note's issuer or maker) to pay another party (the note's payee) a definite sum of money, either on demand or at a specified future date. A promissory note typically contains all the terms involved, such as the principal debt amount, interest rate, maturity date, payment schedule, the date and place of issuance, and the issuer's signature.

Key Takeaways

• A promissory note is a financial instrument that contains a written and signed promise between two parties to repay a sum of money in exchange for a loan or other financing. 
• A promissory note typically contains all the terms pertaining to the indebtedness, such as the principal amount, interest rate, maturity date, date and place of issuance, and issuer's signature.
• In terms of their legal enforceability, promissory notes lie somewhere between the informality of an IOU and the rigidity of a loan contract.

Investopedia / Tara Anand

Promissory notes can lie between an IOU's informality and a loan contract's rigidity. An IOU merely acknowledges a debt and the amount one party owes another. A promissory note includes a promise to pay on demand or at a specified future date, in addition to steps required for repayment (like the repayment schedule)

Although financial institutions may issue promissory notes—for instance, you might be required to sign one to take out a small personal loan —they also allow companies and individuals to get financing from a non-bank source. This source can be an individual or a company willing to carry the note (and provide the financing) under the agreed-upon terms. In effect, promissory notes can enable anyone to be a lender.

In its simplest form, a promissory note might be a written promise to repay a family member. State or federal securities entities may regulate more complicated promissory notes.

Typically, there are two parties to a promissory note: The promisor, also called the note's maker or issuer, promises to repay the amount borrowed. The promisee or payee is the person who gave the loan.

Secured vs. Unsecured Promissory Notes

A promissory note can be secured or unsecured. A secured promissory note describes the collateral—typically property—that secures the debt or amount borrowed. For example, if the borrower owns property, the lender can use the car as collateral until the debt is repaid. If the borrower doesn't repay the loan, the promissory note permits the lender to take possession of the property.

An unsecured promissory note doesn't involve collateral. In this case, if the borrower doesn't repay the loan, the lender can try to use standard debt-collection procedures.

In either case, the lender holds the promissory note until the debt is repaid. Typically, those drafting a promissory note will consult with an attorney to make sure the note follows any state or federal laws around loans or investments.

A promissory note is usually held by the party that's owed money; once the debt has been fully paid, the note must be canceled by the payee and returned to the issuer.

What's Included in a Promissory Note?

A promissory note should include all the details about a loan and the repayment terms. In addition to the names of the borrower and the lender, a promissory note may also include:

• Name and address of borrower and lender
• Maturity date
• Sum borrowed
• Payment schedule
• Interest rate and how interest is calculated
• Prepayments process
• Overdue payment interest charged
• Waivers, amendments, and governing law for the promissory note

In the United States, promissory notes are often used when getting a student loan, mortgage, or a loan from a friend or family member. Promissory notes are also sometimes issued to corporate clients.

Student Loan Promissory Notes

Many people sign their first promissory notes as part of getting a student loan . Private lenders typically require students to sign promissory notes for each loan taken out.

Some schools allow federal student loan borrowers to sign a one-time master promissory note, allowing receipt of multiple loans for up to 10 years if the school certifies the student's continued eligibility.

Student loan promissory notes outline the student borrower's rights and responsibilities and the loan's conditions and terms. By signing a master promissory note for federal student loans , the student promises to repay the loan amounts plus interest and fees to the U.S. Department of Education.

The master promissory note also includes the student's personal contact and employment information as well as the names and contact info for the student's references.

Mortgage Promissory Notes

Homeowners usually consider their mortgage an obligation to repay the money they borrowed to buy their residence. But actually, the signed mortgage promissory note represents a promise to repay the mortgage or loan, along with the repayment terms.

Typically, the promissory note includes:

• Amount you owe
• Mortgage loan's interest rate
• Ways your interest rate can change, if you have an Adjustable Rate Mortgage (ARM)
• Payment dates
• Repayment length of time
• Where you send payments
• Consequences of not making monthly mortgage payments

The promissory note describes the debt's amount, interest rate, and late fees. A lender holds the promissory note until the mortgage loan is paid off. Unlike the mortgage or deed of trust , the promissory note is not entered into county land records.

Corporate Credit Promissory Notes

Promissory notes are commonly used in business as a means of short-term financing. For example, when a company sells products but hasn't yet collected payments, cash may run low, leaving the company unable to pay creditors. The company may ask creditors to accept a promissory note to be exchanged for cash after the company collects its accounts receivables .

Or the company may ask the bank for cash in exchange for a promissory note. Promissory notes offer companies a credit source after exhausting other options, like corporate loans or bond issues. A note issued by a company in this situation is at a higher risk of default than, say, a corporate bond. The corporate promissory note's interest rate will likely provide a greater return than a bond from the same company, as high risk means higher potential returns.

These notes must be registered with the government in the state where sold and with the Securities and Exchange Commission (SEC).

If the note is not registered, the investor has to analyze whether the company is capable of servicing the debt. Companies in dire straits may hire high- commission brokers to push unregistered promissory notes on the public. If the company defaults, the investors' legal avenues may be somewhat limited.

There are several different structures for repayment of a promissory note, but most involve repaying the principal plus interest. The interest rate can be fixed or variable and calculated daily, monthly, annually, or in another way. In some states, interest rates may be capped by state law. A certified accountant and attorney can advise you on the tax or legal implications of the promissory note's repayment schedule.

Here are various repayment approaches for a promissory note:

• Installment note : The most familiar repayment approach is through installments, with the borrower making regular payments; the repayment schedule and interest payments can vary.
• Simple note: For smaller loans, borrowers might arrange a lump-sum repayment on a specified date, meaning that's when you'll repay the whole amount listed in the promissory note.
• Open-ended note : This promissory note allows you to draw on an operating or other loan over time and repay your draw plus interest by a specific date.
• Demand note : Sometimes, a promissory note may specify "on demand" repayment, meaning that the note must be repaid at the lender's request at any time.

Company or corporate promissory notes are rarely sold to the public. When they are, it is usually at the behest of a struggling company working through unscrupulous brokers who are willing to sell promissory notes that the company may not be able to honor.

Alternatively, the promissory note may be part of a scam sold by life insurance agents or online or out-of-state investment advisors. Some sellers may know nothing about the investments' true origins—the promissory notes may be for companies that don't exist. Promissory notes promising "low risk, high yield" investments may lead to a type of fraud, according to the SEC.

Before investing in promissory notes, ensure all of the following are true:

• The person selling the promissory notes is licensed to sell securities 
• The company offering promissory notes is legitimate and can repay debts
• Promissory notes are properly registered by the SEC, state securities regulator, or legally exempt from registration
• If guaranteed or insured by a foreign insurance company, contact your state department of insurance to make sure the company can do business in the U.S.

Investing in promissory notes involves risk. These promissory notes are only offered to corporate or sophisticated investors who can handle the risks and have the money needed to buy a note. To help minimize these risks, an investor must register the promissory note or have it notarized so that the obligation is publicly recorded and legal.

Promissory notes have had an interesting history. At times, they have circulated as a form of alternate currency, free of government control. In some places, the official currency is a form of promissory note called a demand note (one with no stated maturity date or fixed term, allowing the lender to decide when to demand payment).

Promissory notes and bills of exchange are governed by the 1930 Geneva Convention of Uniform Law on Bills of Exchange and Promissory Notes. Its rules stipulate that the term "promissory note" should be inserted in the instrument's body and contain an unconditional promise to pay.

What Does a Promissory Note Contain?

A form of debt instrument, a promissory note represents a written promise on the part of the issuer to pay back another party. A promissory note will include the agreed-upon terms between the two parties, such as the maturity date, principal, interest, and issuer’s signature. Essentially, a promissory note allows entities other than financial institutions to provide lending services to other entities.

What Is an Example of a Promissory Note?

One example of a promissory note is a corporate credit promissory note. For this type of promissory note, a company will typically be seeking a short-term loan. In the case of a growing startup that is low on cash as it expands its operations, the terms of the agreement could state that the company pays back the loan once its accounts receivable are collected.

There are several other types of promissory notes, including investment promissory notes, take-back mortgages, and student loan promissory notes. 

What Are the Pros and Cons of a Promissory Note?

A promissory note can be advantageous when an entity is unable to secure a loan from a traditional lender, such as a bank. However, promissory notes can be risky, as the lender may not have the same means and scale of resources as traditional financial institutions. At the same time, legal issues could arise for both the issuer and payee in the event of default. Because of this, getting a promissory note notarized can be important.

A promissory note is a written promise by one party to make a payment of money at a date in the future. Although potentially issued by financial institutions, other organizations or individuals can use promissory notes to confirm the agreed terms of a loan. In short, a promissory note allows anyone to act as a lender. However, the average investor should be wary of and heavily research any sales pitches for promissory notes as an investment.

University of Vermont Extension. " Guide to Financing the Community Supported Farm ," Page 26 of PDF.

University of Vermont Extension. " Guide to Financing the Community Supported Farm ," Page 27 of PDF.

Stanford University. " Simple Promissory Note (Small Business) ."

Federal Student Aid. " Master Promissory Note (MPN) ."

CFPB. " Guide to Closing Forms ," Page 1 of PDF.

• State of Connecticut Department of Banking. " Promissory Note Scams ."

Ohio State University Extension Farm Office. " Financing the Farm ," Page 3.

Ohio State University Extension Farm Office. " Financing the Farm ," Pages 2–3.

U.S. Securities and Exchange Commission. " Broken Promises: Promissory Note Fraud ."

Investor.gov. " Promissory Notes ."

United Nations Treaty Collection. " 10.Convention Providing a Uniform Law for Bills of Exchange and Promissory Notes ."

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• The Assignment Of Litigation Rights And Champerty

It is not often that we examine a case involving the doctrine of champerty. The last time we did so was on March 8, 2023 ( here ). We also examined the champerty doctrine in 2021 ( here ), 2020 ( here ), and 2016 ( here ).

Today, we examine the champerty doctrine in our discussion of IKB Intl. S.A. v. Morgan Stanley , 2024 N.Y. Slip Op. 01675 (1st Dept. Mar. 26, 2024) ( here ).

Champerty is the prohibited practice of purchasing claims for the purpose of commencing litigation. It has been described as “a venerable doctrine developed hundreds of years ago to prevent or curtail the commercialization of or trading in litigation.” 1

The doctrine of champerty is codified in New York within Judiciary Law § 489. 2 Under Judiciary Law § 489, no corporation “shall solicit, buy or take an assignment of … a bond, promissory note, bill of exchange, book debt, or other thing in action, or any claim or demand, with the intent and for the purpose of bringing an action or proceeding thereon.” However, for an assignment of a claim to be void for champerty, the assignee must have made the purchase “for the very purpose of bringing such suit” to the “exclusion of any other purpose.” 3 Thus, while assignments “for the primary purpose of obtaining costs or [harassment]” are void as champertous, 4 assignments are not champertous where the intent to bring a suit is merely “incidental and contingent” to other rights. 5

Moreover, champerty does not apply where the assignee had a “preexisting proprietary interest” in the subject matter. 6

IKB began in the years immediately prior to the financial crisis of 2007-2008. Plaintiff IKB International S.A. (“IKB S.A.”) was a commercial bank incorporated in Luxembourg.

IKB S.A. purchased a number of certificates (“Certificates”) for residential mortgage-backed securities from Morgan Stanley, allegedly in reliance on misrepresentations that Morgan Stanley made in its offering documents. In particular, Morgan Stanley allegedly made misrepresentations to IKB S.A.’s investment managers, Standish Mellon and BlackRock, including misrepresentations regarding loan-to-value and combined loan-to-value statistics, owner-occupancy status of borrowers, and adherence to the originators’ underwriting guidelines. The contemporary value of the Certificates collapsed during the onset of the financial crisis as the poor quality of the underlying loans and resulting increased credit risk became apparent. Ultimately, IKB S.A. was placed into liquidation as part of the German government’s bailout of IKB S.A.’s parent, IKB A.G.

In November 2008, IKB S.A. sold the Certificates to IKB A.G. Two weeks later, IKB A.G. sold the Certificates to Rio Debt Holdings (Ireland) Limited (“Rio”), a newly created Irish special purpose vehicle. As part of the sale of Certificates to Rio, IKB A.G. became a junior lender to Rio and also became a portfolio administrator to Rio.

IKB A.G. and Rio subsequently executed an assignment on May 9, 2012 (the “2012 Assignment”) in which Rio assigned to IKB A.G. “all the rights of action and claims against any other party with respect to the Securities it may have obtained in connection with its purchase of the Securities from IKB Deutsche Industriebank AG … except rights of action and claims for the receipt of interest and principal on the Securities.” In exchange, IKB A.G. agreed to provide to Rio “a sum equal to the proceeds of any recovery stemming from a resolution of claims relating to the Assigned Rights, net of all agreed costs, taxes and expenses, which shall be set out and governed by a separate agreement to be executed by the Parties.”

IKB A.G. maintained that under a supplementary deed (the “Supplementary Deed”) and other governing documents, the parties agreed that 80% of the net litigation proceeds would revert to IKB A.G. Rio and IKB A.G. executed the Supplementary Deed on January 11, 2013—after Plaintiffs filed the summons in the action—but gave it retroactive effect from May 9, 2012.

IKB A.G. filed the summons in November 2012 and later filed the complaint on May 17, 2013. The complaint alleged causes of action for fraud, fraudulent concealment, aiding and abetting fraud, and negligent misrepresentation. Defendants moved to dismiss the complaint, in part for lack of standing, arguing that the 2012 Assignment of the fraud claims back to IKB A.G. was void as champertous. The motion court denied the motion, finding that Defendants had not shown that “IKB AG’s primary or sole purpose [for the assignment] was not to enforce a legitimate claim, or that the claim was not acquired as part of a larger transaction or for leverage in other disputes between the parties.” The motion court determined that IKB A.G.’s intent in the 2012 Assignment was a factual question that required further development of the record. However, the motion court dismissed the causes of action for fraudulent concealment and negligent misrepresentation.

On summary judgment, Defendants again sought dismissal on the basis of champerty. The motion court held that the 2012 Assignment was not champertous “because IKB AG had a preexisting proprietary interest in the subject matter.” The motion court explained that

In order to finance the initial assignment of the Certificates to Rio in 2008, IKB AG and Rio entered into a loan agreement. Pursuant to the 2008 loan agreement between IKB AG and Rio, IKB AG as junior lender was entitled to 80% of the profits from the assets. While Defendants are correct that the loan has since been paid down to one dollar, this does not change the fact that, unlike other champertous assignments, the 2012 Assignment indisputably did not involve a “stranger” to the transaction, but a party with a prior interest. 7

The motion court also held that Defendants “failed to establish that the sole purpose for the 2012 Assignment was to profit off of litigation, to the exclusion of all other purposes.” The motion court explained that “[a]n assignment is not champertous merely because the parties enter into the assignment ‘for the purpose of collecting damages, by means of a lawsuit.’” 8 “Rather,” said the motion court, “there is a key distinction between ‘acquir[ing] a right in order to make money from litigating it [champertous] and … acquir[ing] a right in order to enforce it [not champertous].’” 9

The motion court found that Plaintiffs “provided evidence that they [were] still entitled to 80% of the future cash flows under the 2008 loan agreement with Rio because the loan was not paid off entirely—even though it was paid down almost in its entirety.” “Therefore,” concluded the motion court, “regardless of whether or not the 2012 Assignment’s primary purpose was litigation, Defendants [had] not provided sufficient evidence to establish that the sole purpose, to the exclusion of all other purposes, was to profit off of litigation.” “As such,” said the motion court, “Defendants have failed to establish that the 2012 Assignment is void as champertous.”

The Appellate Division, First Department unanimously affirmed.

As an initial mater, the Court rejected Defendants’ argument (as the Court framed it) that “any assignment of litigation claims — even when fashioned to protect an independent litigation right of the assignee — must necessarily be void,” stating that such a formulation was “not the law.” 10 “Rather,” explained the Court, “the champerty doctrine is intended to prevent opportunistic parties from profiting from litigation claims that otherwise would not have been brought — not preventing the assignment of legitimate claims to a party holding a beneficial interest in those claims to enforce its own rights.” 11 “The critical distinction,” noted the Court, was “‘between acquiring a thing in action in order to obtain costs and acquiring it in order to protect an independent right of the assignee.’” 12

The Court also held that the motion court “correctly found that champerty only prohibits the acquisition of a cause of action by a ‘stranger’ to the underlying dispute.” 13 The Court found that the evidence “establishe[d] that plaintiff IKB Deutsche Industriebank A.G. had an independent interest in pursuing the claims, and was not a stranger to the action.” 14 “IKB A.G. owns 100% of plaintiff IKB International, S.A., the original purchaser of the assets, and was the assignor’s junior lender beginning in November 2008,” said the Court. “Defendants’ reading of Justinian [did] not compel a different result,” concluded the Court. 15

• Bluebird Partners, L.P. v. First Fidelity Bank, N.A. , 94 N.Y.2d 726, 729 (2000).
• Ehrlich v. Rebco Ins. Exchange, Ltd. , 225 A.D.2d 75, 77 (1st Dept. 1996).
• See Richbell Information Servs., Inc. v. Jupiter Partners , 280 A.D.2d 208, 215 (1st Dept. 2001) (citing Moses v.McDivitt , 88 N.Y. 62 (1882)). In Justinian Capital SPC v. WestLB AG, N.Y. Branch , the New York Court of Appeals explained that to “constitute the offense [of champerty] the primary purpose of the purchase must be to enable [one] to bring suit, and the intent to bring a suit must not be merely incidental or contingent.” 28 N.Y.3d 160, 166 (2016) (internal quotation marks omitted).
• See 71 Clinton St. Apts. LLC v. 71 Clinton Inc. , 114 A.D.3d 583, 585 (1st Dept. 2014); Trust For the Certificate Holders of Merrill Lynch Mortg. Investors, Inc. v. Love Funding Corp. , 13 N.Y.3d 190, 198 (2009).
• New York Chinese TV Programs, Inc. v. U.E. Enterprises, Inc. , 1989 WL 22442, *13 (S.D.N.Y. Mar. 8, 1989).
• See Love Funding , 13 N.Y.3d at 198.
• Citing Jamaica Public Service Co., Ltd. v. La Interamericana Compania De Seguros Generales S.A. , 262 A.D.2d 73, 74 (1st Dept. 1999); In re Imax Sec. Litig. , 2011 WL 1487090, *6 (S.D.N.Y. Apr. 15, 2011).
• Quoting Universal Inv. Advisory SA v. Bakrie Telecom Pte., Ltd. , 154 A.D.3d 171, 180 (1st Dept. 2017).
• Quoting id.
• Slip Op. at *1.
• Id. (citation omitted).
• Id. (citing Justinian , 28 N.Y.3d at 167) (internal quotation marks omitted)).

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Term Promissory Note | Canada

Secure the repayment of a loan with this Term Promissory Note template for Canada.

• The Note allows the borrower to repay the loan amount in regular payments of blended principal and interest.
• The interest is calculated monthly and compounded yearly.
• This is a reusable legal form. Buy it, download it, re-use it as often as you require.
• Available in MS Word format.
• Intended for use only in Canada.

Promissory Note with Monthly Payments, No Penalty | Canada

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