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What are the penalties you mention?
He will pay £100.00 per day that he his late over the Term or the arrangement which is for one month
A loan agreement, whether formally drawn up, or just handwritten on a piece of paper can be equally binding on both parties. In fact, you do not even need anything in writing to have a legally binding agreement for this, although of course it would help if there was a document in place which detailed the terms of the agreement you and the borrower had entered into.
So it is entirely feasible for this agreement, once accepted and signed by both parties to become a legally binding document, which you may try and enforce in the event of a default by the borrower.
In terms of enforcement, this is where it may not be that easy to do and it would depend on the circumstances. You always have the county court available to pursue the money but even if you win your claim, if the other party refuses or cannot repay you, that is when you have to consider which enforcement option to try and use to take this further. The success of these enforcement options would always depend on the circumstances and the debtor’s position as some would be more effective in certain situations, others would not be appropriate. You have options such as bailiffs, charging orders, attachment of earnings orders and so on – plenty of options, it is just about establishing which is the best one to use at the time and based on the particular circumstances.
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