Promissory Notes:

Question:How are demand notes different from promissory notes under Ontario law?

Answer:Thamar Bilingual Legal Services Ontario can help you understand what a promissory note is, what makes it enforceable, and how a demand note differs because it has no fixed due date and becomes payable when the holder requests payment.   In Canada, a promissory note is an unconditional written promise to pay a specified money amount on demand or at a fixed or determinable future time, as defined in Bills of Exchange Act, R.S.C. 1985, c. B-4.   A typical note sets out key terms like the principal, interest (if any), parties, issue date, and payment terms, while a demand note is triggered by demand rather than a set maturity date.   If you need bilingual (English, français) paralegal support with note wording, repayment disputes, or next steps in Ontario, call (647) 818-7974 for guidance.

Add this website to Google Preferred Sources

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 Thamar Bilingual Legal Services Ontario by phone at: (647) 818-7974 to discuss any specific questions that you may have.

The Law

The Bills of Exchange Act, R.S.C. 1985, c. B-4, governs financial instruments such as currency, cheques, among other things, and defines a promissory note as:

A promissory note is a contract between two parties, the borrower and the lender.  A bank note is a type of promissory note issued by a bank or other financial institution.  In either circumstance, a promissory note is a written promise to pay a certain amount of money to a specific person or a specific entity at a specific time and under certain conditions.  However, unlike a promissory note, a bank note is backed by the assets of a bank and is therefore more secure.

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 legal document that states a promise to pay a certain amount of money. A promissory note may take the form of a cheque, loan agreement, or other document, that serves as proof of an outstanding debt.