In this article, We learn about “IOU”.Let’s Go!
IOU is the abbreviation, which stands for “I Owe You”.
It refers to an informal document that acknowledges a debt owed by one party to another.
Debts usually involve monetary value, but may also be related to other goods, such as physical products or property.
Due to the informal nature of IOUs, they tend to carry a degree of uncertainty and, unlike bonds and promissory notes, are not considered legal negotiable instruments.
This means that the debtor has no legal obligation to actually repay the debt simply because the IOU was written and signed.
An IOU can be as simple as a piece of paper or even a verbal transaction between members of the same family.
In some cases, a business may also use an IOU as a way to informally record the amount of money it owes another company or its employees.
Essentially, an IOU is nothing more than a random note that people create to remind them that they need to pay off a debt at a future date.
Sometimes they include the names of the parties (or company names), values, signatures, and the date of creation.
However, as an informal document, an IOU does not contain any information about the consequences of non-payment or the specific date by which payment is due.
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