Promissory Note - Simple - Alabama

SIMPLE PROMISSORY NOTE (ALABAMA)

Date: [__/__/____]

Principal amount: $[________________________________]

Maker / Borrower: [________________________________]

Payee / Lender: [________________________________]

1. Drafting Gate

Before execution, counsel should confirm:

• ☐ the transaction and parties are appropriate for a short-form note;
• ☐ the original principal and every interest, fee, default, late, prepayment, and collection charge have been reviewed together under current Alabama law;
• ☐ the fixed principal stated above has actually been delivered to Maker before this Note is signed, so the value-received recital is accurate;
• ☐ the maturity date and payment amount are fixed and complete;
• ☐ the Note is intended to be negotiable and satisfies Ala. Code §§ 7-3-104, -106, -108, and -112; or a conspicuous non-negotiable statement has been added after counsel review;
• ☐ any collateral, guaranty, covenants, arbitration term, or jury waiver are separately documented and do not unintentionally alter the Note's status; and
• ☐ the maker's exact name, authority, payee, place of payment, and delivery method are correct.

2. Promise to Pay

For value received, Maker unconditionally promises to pay to the order of Payee the fixed principal amount stated above, together with interest and only the other charges expressly described in this Note.

This Note is not subject to or governed by another writing. A reference to a separate security agreement is only for rights concerning collateral.

3. Interest and Charges

• Rate: [____]% per year / [variable formula: ________________________________]
• Interest begins: [__/__/____]
• Day-count method: [________________________________]
• Compounding, if any: [________________________________]
• Default-rate increment: [____] percentage points after an uncured payment default

Other direct or indirect charges incident to the loan:

If Ala. Code § 8-8-5 applies, every direct and indirect charge incident to the loan is part of the interest analysis. If it does not apply, counsel must determine the governing rate rule, including § 8-8-1 when applicable. This Note contains no automatic reformation or “deemed a mistake” savings clause.

4. Payment at Definite Time

Maker shall pay all principal, accrued lawful interest, and enforceable described charges on [MATURITY DATE: __/__/____].

Payment shall be made to Payee at:

[________________________________]

Approved payment method: [________________________________].

Payee shall give written notice of any replacement payment address or account. A changed payment instruction does not change the amount or due date.

5. Prepayment

• ☐ Maker may prepay without premium after [____] days' notice.
• ☐ Maker may prepay subject to this charge, which is described above and included in the lawful-rate review: [________________________________].

6. Payment Default and Acceleration

A payment default occurs if Maker fails to pay the amount due and the failure continues for [____] days after [written notice / no notice, if approved: ________________________________].

After an uncured payment default, Payee may declare the unpaid principal, accrued lawful interest, and enforceable described charges immediately due by written notice.

No automatic bankruptcy acceleration, unidentified-account setoff, cross-default, or nonpayment covenant default is included.

7. Collection Expenses

After an uncured payment default, Maker shall pay Payee's reasonable documented collection expenses, including reasonable attorney's fees, only to the extent permitted by law and included in the interest-and-charge analysis when required.

This Note contains no blanket indemnity, liability cap, force-majeure clause, punitive-damages waiver, automatic equitable remedy, arbitration clause, or jury-trial waiver.

8. Collateral and Guaranties

• ☐ Unsecured. No collateral secures this Note.
• ☐ Secured. Collateral is governed only by this separate security agreement: [________________________________].

Guaranty, if any: [________________________________].

9. Governing Law and Forum

Alabama law governs this Note. Selected forum for counsel review: [________________________________].

If this Note qualifies as a negotiable instrument, an action to enforce it generally must be commenced within six years after its stated due date or accelerated due date under Ala. Code § 7-3-118(a), subject to the section's exceptions. Interest on a contract-based money judgment is governed by Ala. Code § 8-8-10(a), including its contract-rate rule; no separate judgment rate is promised here.

10. General Terms

1. Amendment. An amendment must be in a signed writing identifying this Note and the term changed.
2. No implied waiver. A delay or single waiver does not waive another or later default.
3. Transfer. Payee may transfer this Note subject to applicable law and any restriction stated here: [________________________________].
4. Notices. Notices must be sent to the addresses below by this method: [________________________________].
5. Execution method. If counterparts or electronic signatures will be used, counsel should add execution language appropriate to the selected method.
6. Severability. An unenforceable provision will be severed only to the extent permitted by law; no court is directed to rewrite the interest rate or another material economic term.

11. Signatures

Maker

[MAKER LEGAL NAME]

By: [________________________________]

Name: [________________________________]

Title: [________________________________]

Address: [________________________________]

Date: [__/__/____]

Payee Acknowledgment of Agreed Terms

[PAYEE LEGAL NAME]

By: [________________________________]

Name: [________________________________]

Title: [________________________________]

Address: [________________________________]

Date: [__/__/____]

Sources and References

• Alabama Legislature — Code of Alabama