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IOU Agreement Template
Put a straightforward “I owe you” promise in writing so everyone understands the amount owed and how it will be repaid.
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IOU Agreement Template
This IOU Agreement (“Agreement”) is made as of [Date of Agreement].
1. Parties
Debtor (Person Who Owes Money):
Full Legal Name: [Debtor Full Legal Name]
Address: [Debtor Street Address, City, State/Province, ZIP/Postal Code, Country]
Phone: [Debtor Phone Number]
Email: [Debtor Email Address]
Creditor (Person to Whom Money Is Owed):
Full Legal Name: [Creditor Full Legal Name]
Address: [Creditor Street Address, City, State/Province, ZIP/Postal Code, Country]
Phone: [Creditor Phone Number]
Email: [Creditor Email Address]
2. Amount Owed and Acknowledgment of Debt
The Debtor acknowledges and agrees that the Debtor owes the Creditor the total sum of:
Amount Owed: [Amount in figures] ([Amount in words]) (“Debt”).
By signing this Agreement, the Debtor confirms that this Debt is valid and payable to the Creditor under the terms set out below.
3. Reason for the Debt
The Debt arises from the following, in general terms:
[Short description, such as “personal loan,” “reimbursement for paid expenses,” “money advanced for rent,” “business advance,” or similar.]
4. Interest (If Any)
Select one option and complete as needed:
Interest-Free:
Interest Rate: 0% (no interest will be charged on the Debt).Interest-Bearing:
Interest Rate: [Annual Interest Rate %] per year, calculated on [simple interest or other basis] on the unpaid balance from [Interest Start Date] until the Debt is repaid in full.
5. Repayment Terms
Choose one structure and complete the details.
5.1 Single Payment
The Debtor will pay the full Amount Owed, plus any agreed interest, to the Creditor on or before:
Due Date: [MM/DD/YYYY]
OR
5.2 Installment Payments
The Debtor will repay the Amount Owed (and any interest, if applicable) in installments as follows:
Number of Payments: [Number of payments]
Amount of Each Payment: [Amount per payment]
Payment Frequency: [Monthly / Weekly / Other]
First Payment Due Date: [MM/DD/YYYY]
Subsequent Payments: [Description, such as “on the same day of each following month until the Debt is paid in full.”]
Unless the parties agree otherwise in writing, each payment will be applied first to any accrued but unpaid interest (if applicable) and then to the remaining balance of the Debt.
6. Payment Method
Payments will be made in [Currency] by: [Bank transfer / Cash / Check / Other method].
Payment Details (if applicable):
Payee / Account Name: [Account or Payee Name]
Bank / Institution: [Bank or Institution Name]
Account Number / IBAN: [Account Number or IBAN]
Payment Reference: [Suggested reference, such as “IOU – Debtor Name”]
7. Partial Payments and Additional Payments
The Creditor may accept partial payments without waiving the right to receive full payment of the remaining balance.
The Debtor may make additional payments at any time to reduce the outstanding balance early. Any such additional payment will be applied to the Debt in the same order as regular payments.
8. Late Payment and Default
8.1 Late Payment
A payment will be considered late if it is not received within [Number] calendar days after its due date.
Late Fee (if any): [Amount or Percentage, or “No late fee”].
8.2 Default
The Debtor will be in default under this Agreement if:
The Debtor fails to pay any amount due under this Agreement within [Number] days after receiving written notice of non-payment from the Creditor; or
The Debtor otherwise materially breaches this Agreement and does not correct the breach within [Number] days after written notice from the Creditor.
9. Effect of Default and Collection
If a default occurs and continues beyond any applicable cure period, the Creditor may, subject to applicable law:
Declare the entire remaining balance of the Debt (including any agreed interest and permitted fees) immediately due and payable; and
Take lawful steps to collect the unpaid amount, which may include making a formal demand, using a collection service, or seeking a court judgment.
10. No Security Interest
This IOU Agreement records an unsecured debt. No specific property or collateral is pledged to secure this Debt, unless the parties enter into a separate written security agreement.
11. Confirmation of Understanding
By signing this Agreement, both parties confirm that:
They understand the amount owed and the repayment terms.
The Debtor intends to repay the Debt in good faith according to this Agreement.
The Creditor agrees to accept repayment according to these terms unless the parties later agree in writing to different terms.
12. Changes to This Agreement
Any change to this IOU Agreement must be in writing and signed by both the Debtor and the Creditor.
If either party does not enforce a part of this Agreement at a particular time, that does not mean that part is waived or cannot be enforced later.
13. Notices
Any notices or demands related to this Agreement must be in writing and sent to the addresses or email addresses shown in Section 1, unless a party provides new contact details in writing.
Permitted notice methods include:
Personal delivery
Mail or courier
Email, if both parties use email and agree to receive notices electronically
14. Governing Law
This Agreement is governed by the laws of [State/Province, Country], unless the parties specify a different governing law here: [Alternative Governing Law, if any].
15. Entire Agreement
This Agreement contains the entire understanding between the Debtor and Creditor regarding the Debt described in it and replaces any prior oral or written understandings about this specific amount owed.
Signatures
Debtor:
Signature: _______________________________
Printed Name: [Debtor Full Legal Name]
Date: [MM/DD/YYYY]
Creditor:
Signature: _______________________________
Printed Name: [Creditor Full Legal Name]
Date: [MM/DD/YYYY]
Witnesses (If Used)
Witness 1:
Signature: _______________________________
Printed Name: [Witness 1 Full Legal Name]
Address: [Witness 1 Address]
Date: [MM/DD/YYYY]
Witness 2:
Signature: _______________________________
Printed Name: [Witness 2 Full Legal Name]
Address: [Witness 2 Address]
Date: [MM/DD/YYYY]
Notary Acknowledgment (If Required)
State/Province of [State/Province]
County of [County]
On [Date], before me, [Notary Full Name], a Notary Public, personally appeared [Debtor Full Legal Name] and [Creditor Full Legal Name], who proved their identities on the basis of satisfactory evidence and acknowledged that they executed this IOU Agreement for the purposes stated in it.
Notary Public Signature: _______________________________
Notary Public Printed Name: [Notary Full Legal Name]
My Commission Expires: [Date]
Notary Seal: ☐
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Learn more about
IOU Agreement Template
Click below for detailed info on the template.
For quick answers, scroll below to see the FAQ.
Click below for detailed info on the template.
For quick answers, scroll below to see the FAQ.
IOU AGREEMENT TEMPLATE FAQ
What is an IOU Agreement?
An IOU Agreement is a short written document where one person or business acknowledges that they owe a specific amount of money to another. It usually states the amount owed, the reason for the debt, and when or how it will be repaid.
How is an IOU Agreement different from a promissory note or loan agreement?
An IOU Agreement is typically simpler and more informal. It focuses on the basic acknowledgment of debt and essential repayment terms. A promissory note or full loan agreement often adds more detailed clauses about interest, default, collateral, and legal rights.
When should I use an IOU instead of a longer contract?
Use an IOU when you need a quick, clear written record of money owed — often between friends, family, or small businesses — where the arrangement is simple and low to moderate in value. For larger, complex, or high-risk loans, a more detailed loan agreement may be more appropriate.
Does an IOU Agreement need to include interest or a payment schedule?
Not necessarily. Some IOUs are just an acknowledgment of a fixed amount to be paid back on one date. Others include interest and a simple schedule. This template lets you choose between a single due date or basic installment payments and to include interest or keep it interest-free.
Is an IOU Agreement legally binding?
An IOU can be legally binding if it clearly shows that the debtor acknowledges the debt and promises to repay under agreed terms, and if it meets basic contract requirements under local law. It can serve as written proof of the debt if there is a disagreement later.
Can AI Lawyer help me customize this IOU Agreement?
Yes. AI Lawyer can help you tailor this IOU Agreement with your names, amount owed, reason for the debt, and repayment terms so you have a simple, readable document ready to review and sign.
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