Promissory Notes:

Question:Do I have to pay a demand note immediately, and how is it different from a common promissory note in Ontario?

Answer:DefendCharges.ca™ can help explain whether a demand note is payable immediately upon request and how it differs from a common promissory note with a fixed or determinable due date;   Under the Bills of Exchange Act, a promissory note is an unconditional promise in writing to pay a sum certain on demand or at a fixed or determinable future time, and a demand note generally has no stated maturity date because repayment becomes due when the holder requests payment;   If you’re dealing with a loan, debt claim, or written payment demand, review the document’s wording on “on demand,” the parties, principal, interest, and signatures, then speak with a paralegal for practical next steps at (647) 559-3377.

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Understanding What Constitutes As a Promissory Note and What Is Meant By a Demand Note Versus a Common Note

A promissory note is a legal document that binds one party (the issuer) to pay a specified amount of money to another party (the payor). The payor is legally obligated to make payment at the predetermined time or upon receiving a demand for repayment from the issuer. A promissory note will detail any applicable terms, including the rate of interest, if applicable, that may be accrued.

Note: Please contact DefendCharges.ca™ by phone at: (647) 559-3377 to discuss any specific questions that you may have.

The Law

The Bills of Exchange Act, R.S.C. 1985, c. B-4, addresses promissory notes as a form of financial instrument, along with currency, cheques, among other things, and specifically defines a promissory note as:

A promissory note is a contract between two parties, the borrower and the lender, where the borrower agrees to pay a certain amount of money to the lender at a specific time and under certain conditions. A bank note is a type of promissory note issued by a bank or other financial institution; but, it is backed by the assets of the bank which makes a bank note more secure than a regular promissory note.

Terms Upon Notes

Usual terms that may be shown upon a note include the principal amount due, the applicable interest rate, the parties to the note including a party who may be unspecified and simply known as a "bearer of note", the date of issue, the repayment terms, and the due date.

Payable Upon Demand

Demand notes are a type of promissory note but differ whereas a demand note lacks a specified due date and instead becomes due upon request of payment.

Summary Comment

A promissory note is a negotiable instrument and could consist as a cheque, loan agreement, or other document evidencing indebtedness.