Earth Sharing | Definition of Lending Parties in Civil Lending Disputes - [How to Determine the Subject of a Legal Representative's IOU]

01

When writing a promissory note, clearly state the borrower in the main text. If it's a company loan, write the full name of the company below the note. If the legal representative signs, indicate their status before their signature. To ensure the validity of the note, having the company stamp the borrower's section clarifies the borrowing entity and demonstrates the company's intention to borrow.

If it's a personal loan by the legal representative, only the borrower's name needs to be written in the main text and below the borrower's section; no company name is needed to avoid confusion.

02

Some companies, when borrowing, have the legal representative handle all borrowing matters. The company is stated as the borrower in both the main text and the signature section of the promissory note, but the signature section lacks the company's seal, only the legal representative's signature. If the company denies its intention to borrow, the legal representative's authority becomes crucial. Therefore, it is necessary to check the company's articles of association or other documents to determine the legal representative's relevant authority.

03

To determine the company's intention to borrow, the most important thing is whether the company's seal is on the promissory note. If not, other evidence must be gathered for comprehensive proof.

04

The flow of funds for borrowing and repayment is important evidence for proving the borrowing entity and is the most effective evidence reflecting the actual borrowing situation. For example, whether the lender transferred the loan to the legal representative's personal account or the company's account.

05

Did the lender require the borrower to provide the legal representative's ID card and company documents.

Of course, lenders should clarify this matter with the other party when lending money and create a written document to avoid giving the other party an opportunity to exploit ambiguities regarding the borrowing entity in the future.

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