A Delaware promissory note documents a loan between a lender and borrower and is aimed at facilitating timely repayment of the loan balance. The form requires specific details for validation, including the parties’ names and addresses, interest rates, and payment terms.
Additional clauses, such as prepayment, acceleration, payment allocation, severability, and notice, may also be included. This type of document can be issued by individuals, companies, or financial institutions and is commonly used for lending smaller amounts of money.
Laws: While there isn’t a specific statute dedicated solely to promissory notes in Delaware, there are several articles that apply to their interpretation and enforcement. These include Article 3 of the Uniform Commercial Code, with provisions regarding such negotiable instruments, and Article 9, which references secured promissory notes.
Statute of Limitations: Six years (§8109).
Usury Laws and Interest Rates
Promissory notes must adhere to the state’s usury laws in the Delaware Code, Title 6, Chapter 23.
- Loans Insured by the Federal Housing Association (§ 2301(a)): Not more than 5% over the Federal Reserve discount rate.
- For Unsecured Loans Over $100,000 (§ 2301(c)): No maximum.
- For Life Insurance Policy Loans (§ 2911(b)(1)): Not more than 8% per annum or an adjustable legal maximum if there is a provision in the contract.
- For Secured Pawnbroker Loans (§ 2316): Not more than 30% per month.
