This content was published prior to the combination of Dentons Sirote. Learn more about Dentons Sirote. 

The consumer Promissory Note and the Retail Installment Sales Contract are the basic documents that set forth the obligations of the creditor and the debtor in a consumer loan and sales transaction. The purpose for the creation of the debt—the borrowing of money, or the purchase of goods and services—is detailed in the document, including the very important term as to how the extension of credit is to be repaid to the creditor by the debtor.

Then, there are all kinds of bells and whistles that are often imbedded in the forms as well. For example, both forms generally include a Uniform Commercial Code Security Agreement. They may include an Arbitration Agreement.  

These forms also generally include the federal Truth-in-Lending Disclosures together with the federal Amount Financed Itemization. And, the forms also include various federal law and regulatory notices, such as the Holder in Due Course Notice, the two Fair Credit Reporting Act Notices, and, when applicable, the FTC Cosigner Notice, the Right of Rescission Notice, Home Solicitation Sale Notice and Used Car Notice. There is a lot of information that may need to be included.

But, wait, there’s more!

The various states have their own substantive law requirements, and their own disclosure requirements as well. As a result, many of the state law limitations have to be addressed and disclosed as contract terms in the Note and Contract, such as late charge, default and deferral charge, bad-check fee, attorneys fee, and so forth. Some states require Spanish (or another) language disclosure of all contract terms. All of these many requirements lead to the breadth and complexity of our Note and Contract forms.

My point in writing this blog is to remind us that our form notes and contracts carry significant data points. These data points include not only the substance of the consumer finance transaction, but also the substantive law “boundaries” that are inherent in the creditor/debtor relationship under state law, and the disclosures required by state and federal law.

And, don’t even get me started on those few jurisdictions in which municipalities or counties also require contract terms!