Also known as: principal amounts · principal · principal sum
Written by attorneys · grounded in primary & secondary sources — see below
The base sum of money borrowed or owed under a debt instrument, exclusive of interest and other charges. This amount forms the foundation for calculating payments, interest accruals, and any deficiency or surplus upon enforcement or satisfaction of the obligation.
Parker Phillips borrowed funds from a lender to purchase equipment. After default, the lender sought repayment. The court calculated the principal amount of the outstanding loan separately from interest when determining the net value available to satisfy creditors.
Phuong Pham, a federal contractor, defaulted on a government loan with a substantial principal amount. A negotiated reprieve reduced the enforceable principal amount while leaving accrued interest intact, allowing Phuong to restructure repayment without full discharge.
Patrick Phan authorized an agent to negotiate a loan on his behalf. The agent secured financing with a stated principal amount that the principal later challenged as exceeding the scope of manifested consent. The court enforced the loan only up to the authorized principal amount.
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Penelope Price borrowed money under a contract whose principal amount was tied to developing a specific property. A supervening regulation destroyed the project's viability without fault. The court discharged Penelope's remaining duty to repay the principal amount because the non-occurrence of the regulatory event was a basic assumption of the loan agreement.
Pioneer Energy borrowed substantial funds under a note. After default the lender sued in federal court. The court treated the full principal amount of the debt as the amount in controversy when assessing jurisdiction over the recovery action.
Peak Performance loaned funds to a debtor under a note. The complaint alleged that the principal amount exceeded the jurisdictional threshold. The court confirmed that the amount in controversy included the principal amount sought for recovery of the debt.
The principal amount is the base sum borrowed or owed, while interest represents the additional cost of borrowing calculated on that base. Courts and statutes treat the two separately when determining payments, deficiencies, or tax consequences.
The remaining duty to pay the principal amount is discharged if a supervening event substantially frustrates the contract's principal purpose without the party's fault and the non-occurrence of that event was a basic assumption. The discharge applies unless the contract language indicates otherwise.
Yes. The amount in controversy for diversity jurisdiction includes the principal amount sought, and a corporation's citizenship is determined by its state of incorporation and principal place of business when the claim involves recovery of that amount.
…act, passed 27 July 1789, established an executive department denominated the Department of Foreign Affairs and appointed a principal officer to perform duties enjoined or intrusted to him by the President relative to correspondences, commissions, instructions, negotiations with public ministers, memorials and other…