Learn about the risks concerning friendly loans, why they are so popular, and more. This article guides you on how to carry forward with legal proceedings for the same.
A legal notice is used in multiple procedure. The most high-risk yet widely renowned type of loan is a friendly loan. This type of loan is done in good faith between close friends or relatives. It is rarely legally documented, and the intricacies of the loan are discussed verbally. This lack of legal documentation makes the process shady and risky. This Article tells about Legal Notice For Recovery Of Friendly Loan .
If the party fails to repay the loan, the lender fails to take any successful legal action against them in many circumstances. Since the party is a close associate, the lender may not even try to take any action to maintain relations.
Why Are Friendly Loans So Popular?
A friendly loan can be suggested by personal contact to beat the interest rates that financial institutions charge. But doesn’t this seem like a one-sided profit? Yes, it is. Then why does the lender agree to such an agreement? Socially, it is very hard to disregard such a proposition. People believe if they don’t help out a close one, they won’t receive help when they most need it. These social rules make this kind of loan popular and prevalent still to this date.
What Are the Types of Friendly Loans?
If the borrower fails to pay the loan as per the agreement, legal action can only be taken if the loan is secured. You can never successfully take action against unsecured loans. Let’s take a closer look at the difference between both of them:
- Unsecured friendly loan
This type of loan has no written proof to back it up. It is only discussed verbally, and there is no scope to take legal actions against verbal proceedings. This type of loan is based on familiarity and trust alone.
- Secured friendly loan
If the borrower puts up an asset as collateral, it is a secured deal. If the borrower cannot pay off the loan, the lender can take possession of the item, be it a car or a jewelry item. This system echoes the long-gone system of barter loans.
It is best to include a written agreement for secure transactions, known as a ‘promissory note’. It isn’t an official contract, but it does serve as legal backing. To ensure that both parties have a clear understanding of the friendly loan terms, a promissory note is non-negotiable. This note should describe the basic details of the loan, such as loan amount, interest (if any), repayment schedule, and deadline and consequences (if the loan is not paid).
How to Take Legal Action for the Recovery of a Friendly Loan?
Legal notice can be served from the lender to the borrower to recover a friendly loan. This legal notice precedes taking any official legal action. Contrary to popular belief, it is possible to take legal action based on a promissory note. Any written agreement serves as proof in the eyes of the law. Most recovery cases get resolved after sending a legal notice, so there is no need to take the case to court. For this, one must send a well-drafted and legally sound notice. This will ensure a prompt response, and you will have maximum opportunity to recover your money.
Documents Required to Send a Legal Notice
A legal notice is incomplete with the lack of the following documents:
- Affidavit or proof of money lent/owed to you
- The agreement states the amount that the other party is to give you
- Any proof of money owed to you
The legal notice must be examined and signed by a reputable lawyer. Once the notice is drafted, it should be thoroughly examined by the lender as well.
What Details Should a Legal Notice Cover?
An advocate must draft the legal notice to hold substantial weight. It must contain the address and contact details of the advocate as well. The issue date of the notice, including the name, address, and contact details of the borrower, must be clearly stated. The name and details of the lender must also be stated. It must be mentioned in the notice as to how your right has been infringed due to the act or omission by the other party. What you want in return needs to be mentioned too. A time limit should be imposed on the other party, and if they fail to cooperate with the same, the case can be taken to court. The legal notice must be signed by both the Lawyer and the sender.
The Basic Format for Legal Notice
Ref no. Dated ________
On behalf of my client __________, I do hereby serve you with the following Legal Notice:-
1- My client is a __________ firm/individual under the name of M/s __________.
2- My client is engaged in __________ business of the __________ etc.
3- My client did __________ and helped you in __________ way.
4- My client raised bills for each and every work performed for payment.
5- You have miserably failed to pay the liability of principal amount of Rs. __________/- Hence, you are liable to pay Rs. __________/- alongwith interest @__% p.a.
6- My client is entitled to ₹ __________/- as a recovery from you.
7- My client has given you chance upon chance to make timely payments, but your failure to do so lands you in this position.
I, therefore, through this notice call upon you to pay my client ₹__________/- , along with future interest @__% p.a.
A copy of this notice is saved in my office for record and to take future course of action.
This is how you go about serving legal notice for the recovery of a friendly loan. The most important part of this whole ordeal is getting sound legal advice from professionals. For the best legal advice, trust Vakilsearch. With their team of reputed lawyers, they provide the best of the best service.
Assuming that you are in India and want to send a legal notice to someone, Vakilsearch is the best platform to do so. Here’s why:
1. We have a team of experienced lawyers who can help you with the drafting and sending of your legal notice.
2. We have a simple and user-friendly online platform that makes the process of drafting and sending a legal notice easy and hassle-free.
3. We offer affordable prices for our service, so you don’t have to spend a lot of money on hiring a lawyer to draft your legal notice.
4. We provide timely delivery of your legal notice so that you can take action as soon as possible.
5. We offer 100% satisfaction guarantee for our service, so you can be sure that you’ll be happy with our service.