Many people wouldn`t think twice before lending money to a family member or close friend in times of distress. If you have a written agreement, make sure it sets out a process for changing the terms. Otherwise, you can add an ”addendum”. It is a complement to an agreement that sets more conditions. A supplement should be signed by you and the borrower and appended to the original contract. Be sure to check your state`s laws or fraud law if you`re not sure whether or not you need a written agreement. To be enforceable, an oral contract must be an agreement between two competent adults, characterized by an offer and acceptance. The contractual conditions must be sufficiently clear for a court to enforce them and the treaty must not have an unlawful purpose. Without a witness to the deal, the aunt could be out of $200 and an honest relationship with her nephew. The proof of their case is really the moment when hard work comes alive.
Without written consent, the ”burden of proof” is on you. You must prove that the amount you claim is due to you. The person who owes you money can get away with it without saying anything. This is because they do not need to prove that they are innocent. If you`ve fallen into a business transaction or lent money to a friend in distress and haven`t been reimbursed, you might have questions about continuing the money owed without a contract. Just watch an episode of People`s Court or Judge Judy, and you`ll see that you can file a complaint for an oral agreement. But you have to prove your case, which can be difficult. Just like the aunt in our imaginary scenario, you`re probably better off documenting an agreement in writing. Something as simple as a promission note, which details the nephew`s promise to repay his aunt, could have prevented any dispute over his agreement. Finally, it is less complicated to ask family members for a written credit agreement than to bring them to justice. One of the most common defenses when arguing over a loan to friends or family is that the money was a gift and not a loan. A simple mistake to make in granting money is to assume that if you have documented the credit in writing, with a detailed credit agreement or not, this is conclusive.
If you do not have a written agreement, discuss the revision of the terms. Ask the borrower to come up with a new payment plan that works for them. Once you have accepted the changes, submit the new terms in writing. Sign the written agreement and have it signed by the borrower.