Promissory Note And Security Agreement: Fill & Download for Free

Why Businesses Enter into Security AgreementsSecured transactions are vital to growing a business. Nearly all individuals and organizations need to take on debt at some point, but getting creditors onboard can be a struggle. Security interest provides reassurance to the creditor, who is then more likely to provide much-needed funding for a given debtor. Additionally, the debtor is more likely to obtain a low-interest rate if some form of collateral is available to the creditor. Security agreements play a central role in this arrangement by outlining the terms under which debt can be secured, and what will happen if the debtor defaults.Drafting a Security AgreementAt a minimum, a valid security agreement consists of a description of the collateral, a statement of the intention of providing security interest, and signatures from all parties involved. Most security agreements, however, go beyond these basic requirements. Many include covenants (or obligations of the debtor) and warranties (guarantees). Examples of covenants or warranties could include the following:The property to be used as collateral is currently free of outside liens.The debtor must notify the secured party immediately about changes in address.The debtor must notify the secured party if the property's value decreases or the property is somehow damaged.The property should not be wasted by the debtor.The debtor must keep the property in excellent condition.The property cannot be used in violation of any federal, state, or local laws, or in violation of an associated insurance policy.Once the security agreement is created, it should be attached. To be deemed 'secured,' the agreement should be perfected. These terms are outlined in detail below. Additionally, the agreement should be authenticated, ideally before a notary or witness (or both).Describing CollateralAs mentioned earlier, a security agreement cannot be deemed valid if the collateral is not adequately described. Specifically, descriptions of collateral should not be overly broad or generic. An overly broad description might involve a blanket description or invoke 'all assets' owned by the debtor.In general, descriptions of collateral should "reasonably [identify] what is described.” In the UCC, examples of a reasonable description include:specific listings,quantity of collateral,categories of collateral, anddescription by type.Types of CollateralA variety of tangible and intangible goods can be used as collateral. These include the following goods:Inventory (raw materials held by a business for sale or lease)Farm products (livestock, crops, or other goods produced via farming operations)Fixtures (items such as windows or doors that, if removed from real property, would require extensive reconstruction)Equipment (any goods other than inventory, consumer goods, or farm products)Accession (defined as any good so united with previously mentioned goods that the identity would be lost upon removal)Accounts (such as accounts receivable, promissory notes, or insurance policy proceeds)General intangibles (including some software rights)Some security agreements include a middle ground of sorts: indispensable paper. Not exactly tangible or intangible, this involves any paper that is absolutely necessary for securing the value of tangible goods.Floating liens may also appear in security agreements. This type of security interest may not be in the debtor's possession at the time of the security agreement's creation. A floating lien may involve after-acquired property, proceeds from the collateral's disposition, or future advances.

First point:— Your ‘secured’ promissory note is pledged with collateral that you don’t own — an issue that’s highly likely to lead into the potential issue of fraud. That problem already surpasses your potential issues of inability to repay the loan and/or ability to present the shopping vouchers.Secured promissory notes are legally recognised in U.S. law — just that the way your promissory notes are collateralised is problematic.You’re not keeping things straightforward and aboveboard enough. All you want is a loan from a friend. Obtain it with a loan agreement collateralised with something of some value that you actually own. If you don’t have valuables, then do an uncollateralised loan and pay the wretched higher interest rate. Getting too clever in this kind of stuff tends to backfire down the line.Thanks for the A2A.

The following is merely educated speculation (I do not know whether anyone can provide a definitive answer):My sense is that full justification has existed, and in many instances continues to exist, to instill in the reader a sense of formality. This strikes me as especially true in financially-oriented documents - securities offerings, share certificates, promissory notes, loan agreements, etc.I have read, and I believe, that left justification makes text easier to read, so that is what I use in many documents that I prepare.Subsequent addition: The Wikipedia entry at http://en.wikipedia.org/wiki/Justification_%28typesetting%29#History discusses the history of text justification (generally, not legal-specific).