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Promissory Note Seller Financing for India

Promissory Note Seller Financing Template for India

A Promissory Note with Seller Financing is a legally binding financial instrument under Indian law that documents a promise to pay a specified sum of money under agreed terms. This document combines elements of a standard promissory note as governed by the Negotiable Instruments Act, 1881, with specific provisions for seller financing arrangements. It details the payment schedule, interest rates, security arrangements (if any), and default provisions. The document must comply with Indian stamp duty requirements and may need registration depending on the transaction value and local state laws. It serves as both evidence of debt and a security instrument, particularly useful in business transactions where the seller agrees to accept payment over time rather than upfront.

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Promissory Note Seller Financing

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What is a Promissory Note Seller Financing?

A Promissory Note Seller Financing is commonly used in Indian business transactions where a complete upfront payment is not feasible or desired. This document type combines the legal framework of a promissory note under the Negotiable Instruments Act, 1881, with seller financing arrangements, allowing sellers to finance the purchase of their assets or business while maintaining security over the transaction. It's particularly useful in business sales, property transactions, and equipment purchases. The document includes essential details such as payment terms, interest rates, security arrangements, and default provisions. It must comply with Indian legal requirements, including appropriate stamp duty payment and possible registration requirements. This instrument provides sellers with a legally enforceable document while giving buyers the flexibility to complete purchases through installment payments.

What sections should be included in a Promissory Note Seller Financing?

1. Date and Place of Execution: Clearly states when and where the promissory note is executed, which is crucial for enforcement and limitation periods

2. Parties: Identifies the maker (buyer/borrower) and the payee (seller/lender) with full legal names and addresses

3. Promise to Pay: Contains the unconditional promise to pay a specific sum with clear payment amount in words and numbers

4. Payment Terms: Details the principal amount, interest rate, payment schedule, and maturity date

5. Mode of Payment: Specifies how payments will be made and to what account or location

6. Default Provisions: Outlines what constitutes default and the consequences of default

7. Prepayment Terms: States whether early payment is allowed and any associated penalties or benefits

8. Representations and Warranties: Basic declarations about the maker's ability to pay and legal capacity to enter into the agreement

What sections are optional to include in a Promissory Note Seller Financing?

1. Security/Collateral: Include when the note is secured by specific assets or property

2. Guarantor Provisions: Required when there is a third-party guarantor for the note

3. Insurance Requirements: Include when specific insurance must be maintained on collateral

4. Late Payment Penalties: Optional section detailing additional charges for late payments

5. Assignment Rights: Include when either party needs specific rights to assign the note

6. Acceleration Clause: Optional provision allowing the entire amount to become due upon specific triggers

7. Cross-Default Provisions: Include when default on other obligations should trigger default on this note

8. Jurisdiction and Dispute Resolution: Optional section specifying specific courts or arbitration requirements

What schedules should be included in a Promissory Note Seller Financing?

1. Payment Schedule: Detailed amortization schedule showing all payment dates, principal, and interest amounts

2. Property Description: If secured by property, detailed legal description of the collateral property

3. Collateral List: Detailed inventory of any other assets serving as collateral

4. Guarantor Details: If applicable, complete information about guarantors and their obligations

5. Purchase Agreement Reference: Summary or reference to the main purchase agreement that this note is financing

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

India

Publisher

Genie AI

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions

































Clauses




























Relevant Industries

Real Estate

Manufacturing

Retail

Construction

Agriculture

Technology

Automotive

Industrial Equipment

Small and Medium Enterprises

Healthcare

Education

Hospitality

Relevant Teams

Legal

Finance

Treasury

Credit Control

Risk Management

Commercial Operations

Business Development

Accounts Receivable

Corporate Secretarial

Compliance

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Business Development Manager

Credit Manager

Risk Manager

Treasury Manager

Financial Controller

Company Secretary

Commercial Director

Business Owner

Accounts Receivable Manager

Contract Manager

Investment Analyst

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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