IOU

A simple and informal agreement often developed around debt.

IOU is the initialism for ‘I Owe You’ and describes an informal prompt regarding the servicing of a debt. The term is a crude contract with no severe implications in the event of a defaulting party. Thus, individuals usually sign IOUs knowing that they have nothing to hold the other party by outside a hopeful expectation of mutual goodwill.

There is nothing particularly distinctive about IOUs. Because they are informal, they have no agreed-upon structure. As a result, they may only contain the name of the involved parties, the purpose of the contract, as well as the date for latest fulfillment.