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Understanding Promise (Banking): Legal Obligations and Definitions
Definition & Meaning
A promise in banking refers to a commitment made by one party to another to perform a specific action or refrain from doing so. The individual who makes the promise is known as the promisor, while the recipient of the promise is called the promisee. In legal terms, particularly under the Uniform Commercial Code (U.C.C.) § 3-103, a promise is defined as a written agreement to pay a specified amount of money, which must be signed by the person agreeing to make the payment. It is important to note that simply acknowledging an obligation does not constitute a promise unless the obligor explicitly agrees to pay it.
Table of content
Legal Use & context
Promises are commonly used in various legal contexts, particularly in contracts and banking. In civil law, they form the basis of many agreements, including loans, mortgages, and other financial transactions. Users can often manage these agreements themselves using legal templates provided by services like US Legal Forms, which are drafted by experienced attorneys. Understanding the nature of a promise is crucial for individuals entering into any financial commitment.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A bank offers a loan to a customer, promising to lend a specific amount of money at a defined interest rate. The customer signs a loan agreement, thereby accepting the bank's promise.
Example 2: A business promises to pay a supplier upon delivery of goods. This promise is documented in a purchase order, which serves as a legal commitment. (hypothetical example)
Relevant laws & statutes
The primary statute governing promises in financial transactions is the Uniform Commercial Code (U.C.C.) § 3-103. This law outlines the requirements for a promise to be considered valid in the context of commercial transactions.
State-by-state differences
State
Key Differences
California
Requires specific disclosures in loan agreements.
New York
Enforces stricter regulations on promissory notes.
Texas
Allows oral promises in certain situations, with limitations.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Contract
An agreement between parties that creates mutual obligations.
A promise is a component of a contract but not all promises are contracts.
Agreement
A mutual understanding between parties about their rights and responsibilities.
An agreement may not always be legally enforceable, while a promise can be.
Common misunderstandings
What to do if this term applies to you
If you find yourself in a situation involving a promise, consider the following steps:
Review any written agreements to understand your rights and obligations.
If you're unsure about the terms, consult with a legal professional for advice.
Explore US Legal Forms for templates that can help you create or manage your agreements effectively.
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