Is a promissory note that payable on demand, and includes interest, valid if the borrower never received a monthly statement of interests charges until demand was made 6 years after?

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Is a promissory note that payable on demand, and includes interest, valid if the borrower never received a monthly statement of interests charges until demand was made 6 years after?

I signed a demand, open ended, promissory note to my employer of 30 years in lieu of a bonus. As in the past, I was told it would be forgiven. For 6 years I never received a monthly statement from my employer including the interest and principle, which lured me into not thinking about. Then, 2 months ago, I resigned from the company after 36 years and 2 weeks later I received a demand for payment of the note plus the 6 years of interest. Included in their letter was a statement backdated to the date of signing of the note, for every month, including the principle. I could understand paying just the principle, because I did get the money. However, if I would have known that they would expect to be repaid someday and were getting monthly interest charges, I would have paid it off right away years earlier and saved on the interest charges. What does the law say about not providing interest charges on a promissory note during a period were the note holder had stated they would never collect it.

Asked on December 8, 2017 under Business Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

A promissory note is a contract; like any contract, it is enforcable as per its plain terms--no more, but also no less. If the note could be called (payment demanded) at any time and you agreed to that, that you have to repay the principal: you contractually agreed to repay the principal. It does not matter if you thought the amount was foregiven, since if there was a written note, the note's principal could only be foregiven in writing--without some document stating the principal was foregiven, you were still liabl for it as per the terms of the note.
Failing to send statements is irrelevant unless the note said that statements were required to enforce it. Otherwise, if the note said nothing about the necessity of statements, the failure to send them does not change anything
However, if the note did not specify interest, you would not have to pay it: only interest in the note is enforceable against you.


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