The Unsecured Demand Promissory Note is commonly used in Nigerian business and financial transactions where parties need a formal, legally binding document to evidence a debt obligation without requiring collateral. It is particularly useful in situations involving trust-based lending, short-term financing, or business transactions where immediate payment is not required but the ability to demand payment at any time is desired. The document must comply with the Nigerian Bills of Exchange Act and related financial regulations, including requirements for stamp duty and proper execution. This type of promissory note differs from secured notes or term notes as it is payable on demand and does not require asset backing, making it a more flexible but potentially higher-risk instrument for the payee.
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1. Promise to Pay: Clear statement of the unconditional promise to pay a specific sum of money
2. Principal Amount: The exact amount of money being promised to be paid, stated in both numbers and words
3. Interest Rate: Specification of the applicable interest rate and how it is calculated
4. Payment on Demand: Statement confirming that the amount is payable on demand by the holder
5. Place of Payment: Specification of where the payment should be made
6. Maker Details: Full legal name and address of the person/entity making the promise
7. Payee Details: Full legal name and address of the person/entity to whom payment is promised
8. Date: Date of execution of the promissory note
9. Governing Law: Statement that the note is governed by Nigerian law
10. Signature Block: Space for maker's signature and witness attestation
1. Default Interest: Additional interest rate applicable in case of default, include when parties want to specify penalty interest
2. Prepayment Terms: Terms allowing early payment of the note, include when early payment is contemplated
3. Late Payment Penalties: Additional penalties or fees for late payment, include when specific penalties are desired
4. Assignment Clause: Terms regarding the transfer or assignment of the note, include when negotiability is intended
5. Joint and Several Liability: Include when there are multiple makers of the note
6. Waiver of Presentment: Waiver of formal presentment requirements, include to simplify enforcement
7. Security Interest Disclaimer: Explicit statement that note is unsecured, include when clarity about security status is important
1. Payment Schedule: Optional schedule showing any agreed payment installments or milestones
2. Interest Calculation Examples: Examples showing how interest will be calculated in various scenarios
3. Specimen Signature Page: Page containing specimen signatures of authorized signatories if maker is a corporation
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