If you enter into a loan agreement with somebody, and there is an agreement that the money will be repaid without any specific date for payment or payments, when is payment due? When does the statute of limitations start to run?
If you enter into a loan agreement with somebody, and there is an agreement that the money will be repaid without any specific date for payment or payments, when is payment due? When does the statute of limitations start to run?
A good promissory note will include a date upon which payment is due (or payments begin), or provide for payment on demand of the lender.
In the absence of such a clause, it can be difficult to enforce the note.
Technically speaking a breach does not occur until payment is due and is not tendered -- so it can be difficult to establish a breach without such a provision. The statute of limitations may potentially run on the underlying contract, the promissory note itself, without the payment actually having become due -- and while it may be possible to sue on the note to try to collect money as the statute of limitations approaches, a court may be skeptical.
If you have entered into such a note and are trying to get payment, you can try to get the borrower to either agree to start payment or make full repayment as of a specific date, or try to get them to state that they do not intend to repay the debt. If at all possible, get that commitment in writing, as if you try to enforce oral statements you may find that they are denied by the debtor. If they confirm that they won't pay, that can be used as a basis to bring a breach of contract action (anticipatory breach of contract); if they do, and they don't pay as promised, then a court would likely accept a breach of contract action as having accrued based upon the date of the agreed, missed payment.