What Are Some Important Legal Terms To Know Before Signing A Loan Agreement? These days, many people obtain a loan for financing a home purchase, to buy a car, covering a medical emergency, paying for college education etc. Loans are being taken almost every day and loan agreement in Texas forms are used for guaranteeing the repayment of the same. General terms, which define the legal obligations by either party, must be specified by all loan agreements. In loan agreements, there are some common legal terms which are involved and all sides need to be aware of the same - irrespective of whether the agreement is between customers and lending institutions or between friends and family members. These include:
Entire agreement clause It makes a mention of what the final agreement would be, and any type of prior agreement - whether oral or written that was made previously during negotiations - would be superseded. To put it simply, it is the final say and any other thing that was written or said before would not be applicable anymore. Severability clause This term in a personal loan agreement document ensures that contract terms are independent of one another. In case any condition of the agreement is regarded by a court of law as not possible to be enforced legally, it does not automatically mean that all other conditions cannot be enforced as well. Involved parties It makes a reference to personal details about the lender and borrower, and the loan agreement should state this clearly. The information about the parties involved should include the names, phone numbers, social security numbers and addresses for both sides. Choice of law It refers to the variation between laws in two jurisdictions or more. For instance, the laws that regulate a particular section of a loan agreement in one state might be different from the same law in some other state. Naturally, it is essential to identify the laws of which jurisdiction or state would be applicable. This term is also referred to as a "Conflict of Law". A proper understanding of all these terms of loan agreement is essential to ensure that the right choice is made, and a borrower knows what he / she is getting into.
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