So I lent a large sum of money to a private investor that promised a 9% return on investment.
The term was for 5 months and they ended up paying back my money with the correct interest, 2 months late.
The Promissory Note they signed has a section that reads:
3.Late Charge: In the event that a payment due under this Note is not made within ten (10) days of the time set forth in Section 1 of this Note, Borrower shall pay an additional late fee in the amount of five percent (5.0%) of said payment.
My questions is how this is interpreted "of said payment". Does that mean 5.0% on top of the final amount I was paid, or does it only apply to the interest I earned?
You need to consult with a business attorney who will thoroughly review the note and also take into consideration the lending rules in your state.
My response above is only general, legal and business analysis. It is not "legal advice." It is my own analysis based on the limited brief summary you presented. Other attorneys may have a different analysis and opinion especially if more facts are considered. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in the State of New Jersey.
This sounds like a 5 month loan with the entire loan due at once...it also sounds like the Promissory Note was probably one bought at your local office supply company.. If this were a long term loan with multiple payments a 5% late fee ($5 on a hundred dollar payment) might have some relationship to the damages or expenses for additional collections costs etc... However let's say this was a 10,000 loan repaid back at 10,900 and you want to add $500 in penalties... I am not sure that would be reasonable to offset the the administrative or accounting costs that you may have had and could be seen as unreasonable. If unreasonable they are not enforceable... I'm not an expert in this so I could be wrong....
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You accepted their payment along with the interest. Irrespective of your interpretation they could easily argue accord and satisfaction and the note is paid in full. But your facts are not too clear. Without careful reading of your note which doesn't appear to have been prepared by an attorney, it is impossible to answer the late penalty payment. Consider yourself lucky to have been paid back with interest on a unsecured note and don't be greedy on the late payment which may not even be enforceable.
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