cognovit-promissory-note

name	cognovit-promissory-note
description	Drafts a U.S. cognovit promissory note with confession of judgment clause, enforceability gate, and execution formalities. Use when preparing a commercial loan note with cognovit language, confession of judgment, warrant of attorney, or waiver of notice/hearing rights. Triggers: cognovit, confession of judgment, warrant of attorney, waiver of defenses.

Cognovit Promissory Note

Draft an enforceable cognovit promissory note compliant with governing-state law. A cognovit clause lets a borrower authorize entry of judgment without prior notice or hearing — most states prohibit or heavily restrict this, so enforceability must be confirmed before drafting.

Prerequisites

Collect before drafting:

• Governing law / forum — state and venue for enforcement
• Parties — legal names, entity types, formation states, addresses, authorized signers
• Loan terms — principal, rate, term, payment schedule, fees, prepayment
• Transaction type — commercial vs consumer classification; any statutory exemptions
• Authority docs — resolutions, incumbency certificates, consents (if entity borrower)
• Collateral / guaranties — summary of related security documents, if any

Quick Start

1. Run the Enforceability Gate (below) — if cognovit is prohibited, stop and output a standard note + guaranty + security agreement instead.
2. Draft the note using the Document Sections outline.
3. Walk the Checks list before finalizing.

Enforceability Gate (Do First)

Check	Action	Output
Cognovit permitted?	Research governing-state statutes + recent case law	Allow / deny with citations or [VERIFY]
Consumer restriction?	Confirm borrower classification	If consumer or mixed-use, treat as prohibited unless clear statutory exception
Required warnings / format?	Identify mandatory warning text, font size, capitalization, separate acknowledgment	Insert exact statutory warning or [VERIFY]
Execution formalities?	Check witness / notary / affidavit / attorney requirements	Add required signature formalities

If prohibited or materially restricted: output alternative structure (standard note + guaranty + security agreement) and stop.

Document Sections

1. Preamble and Parties

• Date, principal (numeric and words)
• Lender and Borrower: legal name, entity type, formation state, address, signatory title
• Authority evidence: resolution/consent, incumbency, power/authority certification

2. Economic Terms

Term	Details
Principal	Amount; fees/points treatment
Interest	Fixed/variable; index, margin, caps/floors; accrual method; day-count
Payments	Amounts, dates, schedule type, grace period
Application	Order: fees → interest → principal (or specified)
Prepayment	Permitted? Penalty? Formula; usury compliance

3. Confession of Judgment Clause

Include all of:

• Authority grant — borrower authorizes any attorney to confess judgment after default
• Scope — principal, interest, fees, costs, attorney fees
• Timing — upon default or after cure period
• Forum — permitted courts; must align with governing-law / venue clause
• Waivers — notice, hearing, defenses, discovery, jury trial (if allowed)
• Statutory warning — exact required text and formatting per governing state

4. Defaults and Remedies

• Monetary default (failure to pay; grace period)
• Cross-default (thresholds, if applicable)
• Insolvency events (bankruptcy, assignment for benefit of creditors)
• Misrepresentation (material statements)
• Collateral events (if secured: impairment, transfer, insurance failures)
• Remedies: acceleration, confession of judgment, collection costs

5. Governing Law, Jurisdiction, Venue

• Governing law with substantial relationship to transaction
• Consent to jurisdiction and venue
• Waiver of forum non conveniens (if allowed)
• Jury trial waiver — must be conspicuous

6. Execution and Acknowledgments

• Signature blocks with titles and entity capacity
• Witness / notary blocks (if required by state)
• Separate cognovit acknowledgment (if required by state)

7. Exhibits (as needed)

• Amortization schedule
• Authority documents
• Collateral schedule

Template Skeleton

COGNOVIT PROMISSORY NOTE

Date: [Date]
Principal Amount: $[Amount] ([Words])

FOR VALUE RECEIVED, [Borrower] ("Borrower") promises to pay to the
order of [Lender] ("Lender") the Principal Amount plus interest:

1.  Interest.
2.  Payments.
3.  Application of Payments.
4.  Prepayment.
5.  Events of Default.
6.  Remedies; Acceleration.
7.  Confession of Judgment. [Full clause + statutory warning + waivers]
8.  Governing Law; Jurisdiction; Venue.
9.  Jury Trial Waiver. [CONSPICUOUS]
10. Notices.
11. Miscellaneous.

BORROWER:                         LENDER:
By: ______________                By: ______________
Name/Title:                       Name/Title:
Date:                             Date:

[Notary / Witness Blocks if required]
[Separate Cognovit Acknowledgment if required]

Checks

• Enforceability gate passed — cognovit is permitted for this transaction type in the governing state
• Consumer / mixed-use classification confirmed; if consumer, cognovit clause omitted
• Statutory warning language is exact, conspicuous, and placed per statute
• Confession clause forum aligns with governing law and has substantial relationship to transaction
• Usury analysis complete — includes all fees/charges treated as interest; exemptions noted
• Waivers are conspicuous and not buried in boilerplate
• Execution formalities match governing-state requirements (witnesses, notary, acknowledgment)
• If enforceability is unclear, alternative structure (standard note + guaranty + security agreement) recommended instead