If you are considering borrowing money from your child who is married or who is in fact in a relationship, it is important that there be documents that sufficiently prove that the money made available must be treated as a loan. The documentation may contain the following: In addition to these four elements, a binding agreement must have a legitimate purpose and clear conditions. Therefore, the contract cannot provide money to someone who is doing something illegal or who has ambiguous or incomplete terms. While a written agreement or contract would be compelling evidence, the British courts can and will consider all the circumstances, the borrower could demand a verbal agreement that the money was actually a gift. There could be emails or text messages or other evidence that could disturb the water about the exact conditions agreed. In a valid contract, one party makes an offer and the other party agrees. This is commonly referred to as the “meeting of minds” because both parties agree with these conditions. In our example, the aunt proposes to lend money to her nephew, provided that he rem scholarship within a reasonable time. The nephew accepts their offer and promises to pay it back in full after buying his new tire. In our experience, agreements between family or friends regarding the loan or donation of money are rarely documented in writing or in the case of an oral agreement on the terms of granting or accepting the advance. By not setting clear conditions for the advance from the outset, the parties have aligned themselves with confrontation in the event of differing expectations about the method of repayment or other conditions such as interest. Emotions are high if you have financially helped a family member or friend and then become insolvent.
It`s very tempting to want to teach them a lesson and get tough. However, as with any form of litigation, a civil court judgment does not mean that you will receive your money. In other words, the success of executing a debt does not automatically follow, even if you have a verdict. Even though it is quite clear that the money was advanced as a loan and not as a gift, implementation problems can arise if, as a lender, you have not insisted on total compliance. Legally, the borrower can argue that the terms of the contract have been changed or that you have waived a violation of the agreement. The parties must exchange something of value (monetary or not) called consideration. In addition, the item exchanged must be legal. In our example, the $200 and the promise to return it are both examples of legitimate consideration. The nephew, for example, could not replace his reimbursement with illicit drugs. Many oral contracts are legally binding, but the possibility that a party will not respect its commitment still exists; That`s why people often prefer to make their deals in writing.