A simple money bond is a document wherein lender advances loan to the borrower on certain terms and conditions. The object of the simple money bond is that it determines the terms and conditions between the lenders and the borrowers. The bond is binding on both parties and is enforceable by law when entered into by both parties.
A simple money bond ensures that the lender has a record of the transaction entered into between the lender and the borrower. It also records the terms and conditions in accordance with which the transaction has taken place. The document acts as proof as to what transaction has taken place between the lender and the borrower along with the consideration amount as well as the terms in accordance with which the transaction has taken place that eliminates foul play. The bond acts as an agreement between the parties and can be enforced by the law in case of a breach.
A simple money bond must contain the following:
DRAFT OF SIMPLE MONEY BOND
I, X, son of __________ resident of _______________ confirm that I am indebted to Y son of __________ resident of __________________ to the extent of Rs. _________ ( Rupees __________________________ ) on account of the price of __________________ purchased by me from the said Y and I hereby agree and covenant to pay the said sum on demand of Rs. ________________ with interest at the rate of ____ percent per annum to Y.
No specific documents are required in order to draft and execute a simple money bond. However, ID proofs of the parties in order to confirm the names and permanent addresses of the lender and the borrower must be scrutinized. Documents evidencing clear title of the property being mortgaged (if any) of the borrower in question could also be examined.
There is no specific procedure applicable in the making of the simple money bond. However, it is always recommended to consult a lawyer before drafting a simple money bond with all the necessary details as stated above. Once the bond is drafted it should be thoroughly analyzed by the lender and should be executed as per the guidance received from the lawyer. The rules related to registration of the bond must also be followed while executing, as may be applicable as per the prevalent law.
A person executing a simple money bond must make sure that both parties have the legal authority to enter into the bond. Both the parties executing the bond must be of legal age to sign the bond and must do so without coercion or any undue influence. The parties signing the bond must be sane at the time of execution and should do so in the presence of witnesses.
While drafting bonds, it is important to know as to what terminology should be used while drafting the same as a small ambiguity in the terms can also jeopardize the claim of the parties. This is why it is crucial to have a documentation lawyer to assist you with the drafting of the bond. Being an expert in the area of documentation law, a documentation lawyer knows the nitty-gritty of the legal procedures and the requirements involved in drafting a bond. With the experience attained in the field, he/she can guide you with the right advice while entering into a bond and can make sure that such mistakes are eliminated that cannot be resolved even through further legal procedures.