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Our loan department recently discovered that we misspelled the customer’s name on the promissory note for a consumer vehicle installment loan. The customer already has signed the note, and we have disbursed the funds. How should we correct this? – IBA Compliance Connection

Our loan department recently discovered that we misspelled the customer’s name on the promissory note for a consumer vehicle installment loan. The customer already has signed the note, and we have disbursed the funds. How should we correct this?

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We recommend modifying the promissory note with the borrower’s consent, although it may be sufficient to simply notate the change on the note with the borrower’s initials.

Even if you do not modify the promissory note, we believe that it likely would be enforceable. Several Illinois courts have held that a contract is enforceable even if it used a slightly incorrect name for a business, provided that the business remained identifiable.  We have not found any Illinois cases dealing with the same issue with respect to individuals signing contracts on their own behalf, but we believe the same reasoning should apply.

For resources related to our guidance, please see:

  • Sullivan v. Cox, 78 F.3d 322, 326 (7th Cir. 1996) (a contract was enforceable even though it failed to include the full name of a business that was a party to the contract)
  • Bires v. WalTom, LLC, 662 F. Supp. 2d 1019, 1037 (N.D. Ill. 2009) (a contract was enforceable even though it misnamed a business’s name in the contract preamble)
  • Malleable Iron Range Co. v. Pusey, 244 Ill. 184 (Ill. 1910) (a contract was enforceable even though it improperly stated the name of a corporation, where the corporation’s identity was unmistakable and where the misnomer was inadvertent).