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A Promissory Note For Lending Money To Friend is essential when individuals wish to formalize a personal loan arrangement in Australia. This document type serves as a legally binding record of the debt and helps prevent misunderstandings by clearly stating the loan terms, repayment schedule, and obligations of both parties. It's particularly useful for significant loan amounts where verbal agreements would be insufficient. The document provides protection for both the lender and borrower while maintaining the friendly nature of the arrangement. Governed by Australian contract law, it includes essential elements such as the loan amount, interest (if any), repayment terms, and default provisions, while remaining simpler than commercial loan agreements. This type of promissory note is commonly used when friends or family members engage in personal lending and want to ensure clear documentation of the arrangement.

1. Parties: Identifies the lender and borrower with full legal names and addresses

2. Background: Brief context of the friendly loan arrangement and purpose

3. Definitions: Key terms used in the document including 'Principal Sum', 'Interest Rate', 'Maturity Date'

4. Promise to Pay: Core promise by borrower to repay the specified amount, including the principal sum and any interest

5. Loan Amount and Interest: Clearly states the principal amount being borrowed and any applicable interest rate

6. Repayment Terms: Specifies payment schedule, installment amounts, and due dates

7. Default: Defines what constitutes default and its consequences

8. Governing Law: Specifies that Australian law governs the agreement

9. Signatures: Space for dated signatures of both parties and witnesses