I loaned my sister $5000. She signed a note that says "I owe you $5,000 to be paid back sometime" She lives in Oregon

I would like to enforce this now and get repaid soon. I could wait until I know that she has the money (She is about to receive an inheritance).

If she refuses to pay me, and I file a Small Claims Court action, what are the chances that a reasonable judge would insist that she pay me back. Are there standards for how to handle a loan with no due date?


1 Answer 1


In the US, such an IOU may be grounds for suit

The Uniform Commercial Code (UCC) which has been enacted (with minor variations) in every UIS staye, governs such matters.

UCC § 3-104 provides that:

(a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(a)(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(a)(2) is payable on demand or at a definite time; and

(a)(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money

UCC § 3-106 provides that:

(a) Except as provided in this section, for the purposes of Section 3-104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another record, or (iii) that rights or obligations with respect to the promise or order are stated in another record. A reference to another record does not of itself make the promise or order conditional.

UCC § 3-108 provides that:

(a) A promise or order is "payable on demand" if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (ii) does not state any time of payment.

Thus it appears that the IOU described in the question would be a negotiable instrument under the UCC. Since it has no specified date, it is treated as payable on demand, in the absence of any specific language to the contrary.

UCC § 3-301 provides that:

"Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

UCC § 3-303 provides that:

(a) An instrument is issued or transferred for value if: ...

(3) the instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;

Thus the person to whom the IOU was originally given would be entitled to enforce it, assuming it had not been negotiated to some other person. The IOU w3as security for the loan, and thus was issued for value, and is binding.

UCC § 3-501 provides that:

a) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument (i) to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank, or (ii) to accept a draft made to the drawee.

UCC § 3-502 provides that:

(a) Dishonor of a note is governed by the following rules:

(1) If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment.

A note that has been dishonored may be sued on to enforce payment. The specific procedures, and what courts such a suit may be brought in, will vary significantly by state. Not all states have smal claims courts, and those that do have significant differences in what cased they will hear.

  • For bonus credit, there is a special way of calculating that statute of limitations on a demand note that does not apply to other money debts.
    – ohwilleke
    Oct 25, 2021 at 19:12

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