Notes and Loan Agreements

Question 1

If there is a discrepancy between the numerical and written amount owing on a note, which one controls?

Answer 1

Under UCC 3.114 if a note contains contradictory terms, the typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.

Question 2

How is a default defined in a note?

Answer 2

“Default” should be defined in the note. If not, default is left to the agreement of the parties. If there is no written agreement, parties conduct must be analyzed to determine if an implied agreement can be evidenced by their behavior.

Question 3

What is an implied agreement?

Answer 3

An unwritten agreement that arises from the regular course of conduct between parties showing a “meeting of the minds” accepted by corresponding conduct.

Question 4

What is the effect of an acknowledgment of a claim on the statute of limitations?

Answer 4

An acknowledgment of debt creates a new obligation under Tex. Civ. Prac. Rem. C. 16.065