Document background
The Friendly Loan Agreement is designed for use in Australia when individuals wish to formalize a lending arrangement while maintaining a personal or informal relationship. This document type bridges the gap between completely informal lending and commercial loans, providing legal protection while avoiding the complexity of commercial lending documents. The agreement includes essential elements such as loan amount, repayment terms, and any applicable interest, while complying with Australian contract law requirements. It's particularly useful when lending between family members, friends, or small business associates where parties want to maintain clear records and prevent future misunderstandings while avoiding formal financial institutions. The Friendly Loan Agreement should be used whenever any significant sum is being lent, even between close relations, to ensure both parties' interests are protected and expectations are clearly documented.
