TeachMeFinance.com - explain IOU
IOU -- I owe you ; a written acknowledgment of debt ; a
memorandum of an obligation. The letters I O U are followed
by the amount of the indebtedness and then by the signature.
When the I O U simply specifies the amount of the debt it
is a mere acknowledgment of the obligation, but when to it is
added a promise to pay at a certain future time it is a promissory
note and is enforceable as such.
IOU -- This is a mere acknowledgment of indebtedness. There is no special form in which it is required to be made, but it should be dated, state the amount of the loan, be addressed to the creditor, and be signed by the debtor. Although, as just stated, no special form is necessary, the document is generally worded somewhat as follows
" 1st March, 2007
To James Jones. IOU 50 pounds.
No stamp is required. No action can be brought upon it. But it is useful as evidence of a state of indebtedness existing between Jones and Brown if the former is compelled to bring an action against the latter for the recovery of the money, and the latter denies that there is any money owing by him to Jones. But although useful as evidence of a debt existing, it does not prove the amount of the debt, as Brown may give evidence aliunde that he has paid off a portion or the whole of the debt.
About the author
Copyright © 2007 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.