All over the internet, one can find a variety of free loan contract forms to use. However, in using these forms, any person should consider the legitimacy and quality of such forms.
Sometimes, loan contract forms are not as thoroughly written as they should be. A loan contract form is binding, so it is essential both parties have all of the necessary terms and conditions stated within the contract the first time.
One reason parties should draft their own contract forms, as opposed to using free loan contract forms, is to provide for the event of impossibility of completion of a contract. Impossibility is a defense for one party within a contract. Impossibility allows a party to escape its obligations under a contract. Under the doctrine of impossibility, a party is excused from performance for unforeseeable natural events and market circumstances. If a party wants a loan contract to be binding even in the case of a certain market circumstance, then the party should be sure to write this condition into the contract. Using a free loan contract form is a tempting way to avoid thinking about the actual, necessary terms for a contract and putting those terms in the contract.
Parties should also be sure to state any “time is of the essence” clauses within a contract. Without this clause, a party may be able to perform at any time. For a loan to be repaid on time, one party must state that time is of the essence in the contract. When a party fails to state this, then the other party can repay a loan amount at any time he or she pleases.
For the most part, many free loan contract forms are high quality and do contain all of the necessary information parties will need. In everyday life, both parties will typically abide by the perceived terms and conditions of a contract, even if they are not outright stated in the contract. The major reason parties should consider writing their own contract is to protect themselves from that one, rare occurrence where another party may challenge the terms of a contract.
The more thorough a party writes a contract, the more protection that party has for enforcing its rights within a court of law. A party will always be able to uphold a contract in court if a specific term is written in it, and the other party has a duty to perform.