• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Legal Templates

Legal Templates
  • Business Forms
    • Business Formation
      • LLC Operating Agreement
      • Articles of Incorporation
      • Shareholder Agreement
      • Partnership Agreement
      • Business Purchase Agreement
      • Joint Venture Agreement
      • Single-Member LLC Operating Agreement
    • Business Operations
      • Letter of Intent
      • Non-Disclosure Agreement (NDA)
      • Non-Compete Agreement
      • Invoice Template
      • Purchase Order
      • Hold Harmless Agreement
      • Release of Liability Form (Waiver)
      • Buy-Sell Agreement
      • Construction Contract
      • Licensing Agreement
    • Employment
      • Independent Contractor Agreement
      • Employment Contract
      • Freelance Contract
      • Leave of Absence Letter
      • Leave of Absence Agreement
    • Cease and Desist Letter
      • Copyright Infringement
      • Debt Collection
      • Defamation
      • Harassment
      • Trademark Infringement
  • Real Estate Forms
    • Lease Agreements
      • Lease/Rental Agreement
      • Sublease Agreement
      • Room Rental Agreement
      • Month-to-Month Lease Agreement
      • Commercial Lease Agreement
      • Short Term Lease Agreement
      • Land Lease Agreement
      • Lease Renewal Agreement
      • Lease Amendment
    • Lease Termination Letter
      • Eviction Notice
      • Notice to Vacate
      • Early Lease Termination Letter
      • Late Rent Notice
    • Deeds & Property
      • Warranty Deed
      • Mortgage Deed
      • Quitclaim Deed
      • Deed of Trust
      • Mechanic’s Lien
      • Property Management Agreement
    • Rental Application
    • Real Estate Purchase Agreement
    • Employment Verification Letter
  • Estate Planning Forms
    • Power of Attorney
      • Medical Power of Attorney
      • Durable Power of Attorney
      • Revocation of Power of Attorney
    • Wills
      • Living Will
      • Last Will and Testament
      • Codicil to Will
    • Advance Directive
    • Living Trust
    • DNR Form
  • Finance Forms
    • Loans
      • Promissory Note
      • Loan Agreement
      • IOU
      • Demand For Payment Letter
    • Bill of Sale
      • Vehicle Bill of Sale
      • Boat Bill of Sale
      • Firearm Bill of Sale
      • Horse Bill of Sale
      • Trailer Bill of Sale
    • Sales & Purchases
      • Sales Agreement
      • Purchase Agreement
      • Gift Affidavit
      • Stock Purchase Agreement
  • Personal/Family Forms
    • Affidavits
      • Affidavit of Death
      • Affidavit of Domicile
      • Affidavit of Heirship
      • Affidavit of Identity
      • Affidavit of Residence
      • Affidavit of Service
      • Affidavit of Title
      • Financial Affidavit
      • Gift Affidavit
      • Small Estate Affidavit
    • Marriage
      • Divorce Agreement
      • Prenuptial Agreement
      • Cohabitation Agreement
      • Separation Agreement
      • Postnuptial Agreement
    • Child & Pet Forms
      • Child Medical Consent
      • Child Travel Consent Form
      • Child Custody Agreement
      • Pet Care Agreement
    • Medical Records Release Form
  • Resources
    • Legal Dictionary
    • All Legal Documents
    • Article Categories
      • Business
      • Estate Planning
      • Financial
      • Personal & Family
      • Real Estate
  • Help
    • Email Us
    • Contact Us
    • About Us
  • Sign In
  • :email
    • Dashboard Home
    • My Account
    • My Billing History
    • Sign Out
  • Help
    • Contact Us
    • Email Us
    • About Us
    • (855) 335-9779 Monday-Friday, 10AM - 6PM EDT
  • Sign In
  • :email
    • Dashboard Home
    • My Account
    • My Billing History
    • Sign Out

Home Legal Documents IOU

Free IOU Template

Use our IOU Template to detail how borrowed money will be repaid.

Updated November 16, 2020

An IOU, or “I Owe You”, is used by someone borrowing money (the “borrower”) to officially document that they owe someone (the “lender”) a debt.

While an IOU is less formal than a promissory note, it is still a legally binding document that can be used in court, if necessary.

Table of Contents
  1. What Is an IOU?
  2. When Do You Need an IOU?
  3. The Consequences of Not Using an IOU
  4. The Most Common IOU Relationships
  5. What Should You Include in Your IOU?

1. What Is an IOU?

An IOU is a written promise to repay a debt owed. Like a promissory note, this document recognizes a legally binding relationship between two parties — a Lender and a Borrower.

As a reference, people often call this form by other names:

  • “I Owe You” Form
  • Debt Acknowledgement Form
  • Registered Warrants

Sample IOU

The IOU Sample Form below is a contract between “Lender” Peter Wilson and “Borrower” Luke Dodson. Luke promises to pay Peter back the principal sum of $2,5000 by July 04. If Luke does not make the payment by July 04, he will have to pay a 10% late fee.

IOU Sample

A Lender and Borrower are also known by other names:

LenderBorrower
SellerBuyer
PayeePayer
ObligeeObliger
PromiseePromisor
HolderDebtor
BearerEndorser
Service ProviderCustomer
CreditorDebtor

An IOU is similar to a promissory note and a loan agreement, but it is usually not a negotiable document and does not contain details about repayment and consequences of not repaying.

Here is a simple chart explaining the difference between an IOU, promissory note, and loan:

IOUPromissory NoteLoan
promise to paypromise to repaypromise to repay
steps for repaymentsteps for repayment
timeline to repaytimeline to repay
legally bindinglegally binding
signature of borrowersignature of borrower
signature of lender
repay in installments
consequences of defaulting (i.e. right to foreclose)

2. When Do You Need an IOU?

An IOU allows both parties to record the amount of money borrowed and clarify when the money should be repaid. Even if you are family, friends, or colleagues, it helps everyone remember exactly how much money was borrowed in case memories fade.

Here are some common situations when this document may be needed:

  • You have done business with someone in the past and are willing to take an IOU
  • You do not have enough for an item so you give an IOU for the remaining amount
  • You want to borrow money for a down payment for an event like a wedding or party

3. The Consequences of Not Using an IOU

What happens if I don’t use an IOU?

A basic IOU clearly spells out how much money was borrowed, as well as when it should be repaid and with interest, if any.

Without this document, either the lender or the borrower may become frustrated if the other party does not fulfill his or her promise to give money or repay money.

Here is a chart of some of the preventable suffering an IOU could prevent:

LenderBorrower
Unable to enforce a verbal promiseUnpaid expenses
Expensive lawyer fees to:
1. defend undocumented promise to pay
2. recover money unpaid
Expensive lawyer fees to:
1. demand undocumented promised money
2. pursue money promised
Loss of friendship or family trustLoss of friendship or family trust
Personal safety & wellbeing Personal safety & wellbeing

4. The Most Common IOU Relationships

Who needs to use an IOU?

Anyone lending or borrowing money for business or personal reasons should use a written form to protect themselves from unnecessary headache. Further, lenders and borrowers do not have to be individuals. Because of the debt crisis, governments like Greece could even issue temporary IOUs or “scrip” for its outstanding debts. Also known as “registered warrants”, these documents help the government conserve cash for outstanding debts.

Legal Templates provides a free IOU template for everyday situations where you want a written record that money was borrowed or loaned.

5. What Should You Include in Your IOU?

A simple IOU will identify the following basic elements:

    • The “Amount”: the amount of money being borrowed
    • The “Due Date”: when the Borrower should pay back the Lender
    • Name of “Lender”: the party giving the money and will get repaid
    • Name of “Borrower”: the party receiving the money and will repay the Lender

If you are thinking of lending money to a friend or family member there are other, more formal options than this form including a promissory note or loan agreement. Learn the difference between an IOU form, a promissory note, and a loan agreement.

Related Financial Documents

View All Documents

Borrow/Lend Money

  • Demand For Payment Letter
  • Loan Agreement
  • Promissory Note
IOU Template
PDF Word

Free IOU Template

Create Your IOU in Minutes!

Legal Documents

  • All Legal Forms
  • Bill of Sale Forms
  • Quitclaim Deed
  • Cease and Desist
  • Last Will and Testament
  • Articles of Incorporation

Popular Forms

  • Lease Agreements
  • Power of Attorney Forms
  • Eviction Notice
  • Living Will
  • Non-Disclosure Agreement

Resources

  • Legal Dictionary
  • Business
  • Estate Planning
  • Financial
  • Personal & Family
  • Real Estate

Company

  • Home
  • Pricing
  • Blog
  • About Us
  • Contact Us
  • Partner With Us

Users

  • Account
  • Terms of Use
  • Privacy Policy
  • Do Not Sell My Personal Information
  • Cookie Preferences
McAfee - Together is power.
Trustpilot
BBB Accredited Business

(855) 335-9779, Monday-Friday, 10AM - 6PM EDT

Facebook Twitter LinkedIn

Copyright 2021 Legal Templates LLC. Legal Templates LLC is not a lawyer, or a law firm and does not engage in the practice of law. Legal Templates cannot and does not provide legal advice or legal representation. All information, software and services provided on the site are for informational purposes and self-help only and are not intended to be a substitute for a lawyer or professional legal advice. Use of this site is subject to our Terms of Use.

Thank you for downloading one of our free legal templates!

Leave us a review?

We hope you've found what you need and are able to avoid the time, costs, and stress associated with dealing with a lawyer.

If you have a moment, a review would mean the world to us (it only takes about 15 seconds).

Thanks again, and good luck!

Leave My Review