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An IOU Agreement is a simple written promise to repay money borrowed from someone else. While less formal than a standard loan contract, it's still a legally binding document under New Zealand contract law when it includes key details like the amount, repayment date, and both parties' signatures.

These agreements work well for straightforward lending between friends, family members, or small business partners. Though they don't require complex legal language, smart Kiwi lenders often include basic terms about interest and late payments to avoid misunderstandings. The courts can enforce IOUs just like other contracts if the borrower fails to pay.

Use an IOU Agreement when lending money informally to friends, family, or business associates in New Zealand. This simple document works perfectly for smaller loans where a full legal contract feels too formal but you still need basic protection. It's especially useful for short-term lending arrangements where trust exists but you want something in writing.

The agreement becomes vital when lending amounts over NZ$500, or anytime repayment might stretch beyond a few months. Many Kiwis use IOUs for emergency loans, small business cash flow help, or sharing costs for major purchases. Having this written record helps prevent misunderstandings and provides legal backup if problems arise.

• Basic IOU: The simplest form with just amount, date, and signatures - perfect for small personal loans between friends
• Interest-Bearing IOU: Includes interest rate terms and payment schedule - common for longer-term arrangements
• Secured IOU: Names specific assets as collateral for the loan - offers extra protection for larger amounts
• Business IOU: Contains more detailed terms and company details - used for informal business-to-business lending
• Installment IOU: Breaks repayment into specific dates and amounts - helps manage larger loans with planned repayment

• Individual Lenders: Friends, family members, or private individuals who loan money and want basic documentation
• Small Business Owners: Entrepreneurs who need quick, informal loans for business expenses or cash flow
• Borrowers: People seeking loans who prefer a simpler alternative to bank financing
• Property Investors: Investors making short-term loans for deposits or renovations
• Business Partners: Partners documenting temporary loans between themselves or their companies
• Legal Advisors: Lawyers who review or draft IOUs to ensure basic legal requirements are met

• Basic Details: Gather full legal names, addresses, and contact information for both lender and borrower
• Loan Amount: Document the exact sum in both numbers and words to prevent confusion
• Payment Terms: Decide on repayment date, any installments, and interest rate if applicable
• Identity Verification: Check valid ID documents of all parties involved
• Witness Planning: Arrange for an independent witness to observe signing
• Documentation: Make copies for all parties and keep records of any related communications
• Digital Tools: Use our platform to generate a legally-sound IOU Agreement template that includes all required elements

• Party Details: Full legal names and addresses of both lender and borrower
• Loan Amount: Clear statement of the principal sum in both numbers and words
• Payment Terms: Specific repayment date or schedule, including any interest rates
• Default Clause: Consequences of missed payments or breach of terms
• Signatures: Dated signatures of both parties plus witness signature
• Governing Law: Statement that New Zealand law applies
• Amendment Terms: How changes to the agreement must be handled
• Notice Details: How formal communications between parties should occur

An IOU Agreement differs significantly from a Loan Agreement, though both deal with borrowed money. While IOUs work well for informal lending between trusted parties, Loan Agreements provide more comprehensive legal protection and detail.

• Formality Level: IOUs are simple promissory notes, while Loan Agreements contain detailed terms, conditions, and legal safeguards
• Legal Complexity: IOUs typically fit on one page with basic terms, whereas Loan Agreements include extensive clauses about default, security, and dispute resolution
• Enforcement Power: Both are legally binding in New Zealand, but Loan Agreements offer stronger enforcement mechanisms and clearer remedies
• Typical Usage: IOUs suit personal lending between friends or family; Loan Agreements are standard for business transactions or larger amounts