What is an IOU & how does it work?

An IOU is a written, but largely informal, acknowledgement that a debt exists between two parties, and the amount the borrower owes the lender. Signed by the borrower, it often indicates a date for repayment of the debt, but often omits other specifics, like the payment schedule or any interest charged.

What is an 'I Owe You' (IOU)?

An “I owe you” (IOU) is a document that records the existence of a debt. It is typically considered an informal agreement and is less likely to be legally binding than a formal contract. An IOU is an informal document that records the existence of a debt that one party owes to another.

What is an IOU & a promissory note?

An IOU ( abbreviated from the phrase " I owe you " ) is usually an informal document acknowledging debt. An IOU differs from a promissory note in that an IOU is not a negotiable instrument and does not specify repayment terms such as the time of repayment. IOUs usually specify the debtor, the amount owed, and sometimes the creditor.

Is an IOU a legal document?

An IOU is a legal document that can be introduced in a court of law—though whether or not it is binding is open to dispute. Some authorities feel an IOU isn't binding at all; it's merely the acknowledgement that a debt exists. Others feel it is binding, though whether it can actually be enforced is a different story.