According to Reference.com, a legal payment agreement letter must contain the date of the transaction as well as the details of the repayment agreement and any penalties incurred if the borrower defaults on the agreement. Both the payee and borrower must sign the letter, thereby creating a legally binding document.
In situations where one party wishes to borrow a sum of money from another, a payment agreement letter may be necessary to ensure the timely and complete repayment of the loan sum. According to Reference.com, the agreement should contain the date of the initial transaction, the date of the intended repayment of the loan, the names of both parties and information detailing the amounts of money to be exchanged as well as additional amounts, such as borrower fees or interest, to be repaid.
Additionally, the letter should contain any penalties the borrower would incur if the loan is not repaid in the increments and/or dates listed. Reference.com notes that the letter may also contain information allowing the payee to extend the due date by which the repayment is to be fulfilled. Finally, the letter should be signed by both parties and, if required by either party, signed and stamped by a certified notary.