When consolidating loans, it does not necessarily have to take the form of a monetary liability granted by a non-bank institution. The law also allows a loan for other entities – for example, between private individuals. Even if the parties trust each other, it is worth to sign a contract. It is worth to have this in mind especially when borrowing, for example, a high value cash amount. The loan agreement clearly defines the rights and obligations of both parties. What should I remember and how to fill in a loan agreement correctly?
A private loan contract is an extensive document that requires meticulous and careful preparation. It is also worth to get to know the definition and its role in order to be aware of everything that is connected with signing – even if it is concluded between befriended, well-known parties. First, let’s define the type of loan agreement – it is called consensual agreement, the feature of which is the requirement for a consistent statement of both parties.
Quick answer to short questions
Does the loan agreement have to be concluded only in writing? Contrary to appearances – no. However, the condition must be a value that does not exceed the ceiling of PLN 500. For liabilities incurred for larger amounts, it is recommended that the fact that they are collected by a written contract is confirmed. However, there are documented cases when the court proved the fault of the debtor who failed to repay the private loan. In such situations, the most common proof is a transfer to a bank account, and the title of a transfer, eg a loan.
What about the currency? If the object of the loan is a foreign currency liability, the person collecting the loan may settle it in the Polish currency, unless otherwise stated in the provisions of the contract. The monetary amount should be in PLN exactly the same as its conversion rate on the day the loan is repaid. This is determined by the exchange rate table of the National Bank of Poland.
What should a loan agreement contain?
Each loan agreement is based on the following diagram, which contains seven basic elements.
1. Date, place of conclusion of the loan agreement
2. Indication of the subject of the contract – in this case, of course, it is a cash loan, but it should be clearly marked by adding the currency and amount. The law allows for different ways of borrowing and financial institutions have no monopoly in this matter.
3. Indication of the amount of money borrowed and the repayment period – it is necessary to state how much exactly we borrow and to what day the private loan can be returned exclusively.
4. Declaration on the Borrower’s property status – this element serves as security for the lender when the client is unable to return the amount borrowed.
5. Consequences of untimely repayment – the lender must also inform the other party about the consequences of the lack of timely repayment of the liability. If we conclude a contract with a foreign but private person, the activities here may be similar to loan companies. These are, in turn, penalty interest accrued from the first day of non-repayment, sending reminders, and then bailiff and court action, ending in effect entering the debtor’s data into the relevant KRD type registers.
6. Signatures of the parties – two legible signatures of the parties to the loan agreement must be made on the contract, which will be a clear proof of its conclusion on a given date and on specific terms.
Discussing the contents of the loan agreement
- The contract’s compilation is a preliminary part, defining the place, time, circumstances and parties to the activities described in the further part of the contract. A party to the contract may in principle be any civil law entity, i.e. a natural person, a legal person, an entity without legal personality, as referred to in art. 33 1 1 of the Civil Code, provided that it has legal capacity. There may be more entities on each side of the contract. In the comparison, each party to the contract should be specified very precisely, by giving it: name and surname / company / name; address of the place of residence / registered office; PESEL / KRS number, NIP, REGON number; the designation of the registry court in which the company documentation is kept and by indicating its share capital in order to avoid any possible difficulties in identifying the parties. You can also include other data that are required by specific regulations, or that facilitate contact with the site, or its suing or debt enforcement. In a situation where the party is not a natural person, the entity representing such a party should also be designated. The identification of the entrepreneur should be accompanied by a current copy in the printed version issued by the Central Information of the National Court Register or information corresponding to a current copy from the register of entrepreneurs downloaded from the website of the Ministry of Justice, and in the case of an entrepreneur being a natural person printout from the Central Register and Information about the Activity website Economic or other documents proving that the entity is authorized to represent the party. In the comparison, it is also possible to conclude a preamble of the contract, specifying the main goals or circumstances of concluding the contract, which may have a significant impact on the interpretation of statements made by the parties to the contract.
- According to the provisions of art. 720 1 of the Act of 23 April 1964. The Civil Code (hereinafter: kc) by a loan agreement granting a loan undertakes to transfer to the owner of a recipient a certain amount of money or things marked only to the species, and the taker undertakes to return the same amount of money or this same amount of things of the same species and the same quality. Based on Article. 720 § 2 of the loan, the value of which exceeds one thousand zlotys, requires maintaining the documentary form. According to this provision, the subject of the loan agreement may be money or movable property marked as to the genre. Items designated for a species can be agricultural crops (eg rye quintal), raw materials (eg a ton of coal), industrial goods like gasoline or cement, etc. It must be said that these can be tangible objects, unidentified as to the identity that defines using units of measure (weight, quantity). It is necessary, however, that they have a material form. However, the subject of the loan agreement can not be company shares, because they are not money, or things marked only as to the genre. The most popular subject of the loan agreement is “a certain amount of money”. According to the latest jurisprudence and doctrine, the term “specific amount of money” should be interpreted broadly as money units, and therefore also non-cash money and banking money, expressing a certain economic value, including foreign money. In addition, in the case of a loan agreement, the value of which exceeds PLN 1,000, the documentary form must be preserved. This is an ad-probation form for evidentiary purposes, which means that the failure to comply with the form does not invalidate the contract, but leads to obstacles in the evidentiary proceedings, as in such a situation the parties can not plead before the court for a legal action based on on evidence from interrogation of witnesses or parties.
- The lender may transfer to the Borrower the cash amount specified in the contract at the time of its conclusion, but also after the conclusion of the loan agreement, on the date indicated by the parties. An important act is the acknowledgment of receipt of the indicated loan amount by the Borrower. The receipt of the loan amount may be made by the conclusion of the loan agreement itself (as in the contract template) or by a receipt on a separate document attached to the contract.
- The borrower should undertake to return the loan subject within the specified time. According to art. 723 of the Civil Code, if the date of returning the loan is not marked, the debtor is obliged to return the loan within six weeks after being terminated by the loan grantor. The principle is that the parties can freely specify in the contract the repayment of the loan subject, though they are not obliged to do so, as the deadline it is not a necessary element of this agreement. Sometimes the term is defined in a descriptive way or it can be deduced from other contractual provisions.
- The parties to the contract may, but are not obliged to specify in the contract the capital interest, constituting remuneration for using the subject of the loan agreement. It can not be ruled out that the loan agreement will be concluded free of charge. In addition, possible failure to return the subject of the loan agreement in a contractually agreed time or after termination, within 723 kc, causes the borrower to fall into delay or delay and results in the obligation to pay interest to the lender for delay in accordance with art. 481 kc- irrespective of the determined capital interest constituting remuneration for using the subject of the loan – as well as repairing the resulting damage for the lender.
- The return of the loan is carried out in the same way as when issuing the loan. In other words, it is not necessary to personally provide the borrower and this does not always mean having to transfer ownership. It is sufficient only to create a legal lender for the possibility of using the object of the returned loan, as the owner of the thing can do. The transfer of ownership of money or items marked with respect to a species may take place in any law provided for example by transfer to the lender’s account, handing over a promissory note, etc., in which case the repayment of the subject of the loan agreement will take place only upon cash withdrawal. If the refund is made not by physical handing over or handing over, the moment of return is to acknowledge the lender’s account, cash withdrawal or obtaining power over the thing.
- The parties may include additional statements and obligations in the contract to ensure the proper performance of the contract. The lender may, for example, declare that he has sufficient financial resources to grant the Borrower, in a situation when the subject of the loan agreement is issued after the conclusion of the contract, as well as may be a deadline for obliging the lender to issue the subject of the contract to the borrower.
- The parties are entitled to include in the text of the contract provisions regarding the possibility of terminating the contract in the event of special circumstances. It should be noted that if the deadline for returning the loan object in the parties’ agreement is not marked, 723 kc is applicable, on the basis of which the borrower is obliged to return the loan subject within six weeks after the lender’s termination. Termination is a one-sided declaration of will, which should be clearly justified by the fact that the lender demands the return of the loan. In the statement, there is no need to indicate the date of return, because it is defined by the provision of art. 723 kc. The lender may, however, set a longer and more advantageous date of return for the borrower.
- Final provisions regarding important issues such as the possibility of applying specific provisions in cases of non-compliance with given issues in the text of the contract, forms of contract amendment and rules for incurring costs related to the conclusion of a contract. In addition, they should specify the court before which all disputes related to the performance of the contract will be resolved. An important aspect is the mentioning of annexes in the text of the contract, which should be attached to it. The contract should be prepared in as many copies as there are entities on each side of the contract, although the parties may end with one copy for each party.