What Is the Difference Between a Promissory Note and An I.O.U.?

A Promissory Note Is a Document As a Negotiable Instrument Commonly Compromising Part of a Loan Agreement. The Promissory Note Contains Certain Details Regarding Payment Terms Which May Be Scheduled Terms or Upon Demand Terms. An I.O.U. Is Just a...


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

Promissory Notes Are Negotiable Instruments Containing Express Terms Regarding Repayment A promissory note is a form of negotiable instrument whereby a party (the issuer) makes an unconditional promise in writing to pay a sum of money to another party (the payee).  Payment becomes due under a promissory note at fixed time stated within the promissory note or upon receipt of a demand for repayment. A promissory note will also contain details of any applicable terms such as a rate of accruing interest, if any.

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:


176 (1) A promissory note is an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.

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

A promissory note will typically include details of the principal amount due, the applicable interest rate, the parties involved including a "bearer of note" if a party is unspecified, the date of issue, the repayment terms, and the due date.

Payable Upon Demand

Demand notes are promissory notes without a specific due date as such a note becomes due upon demand 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.

Need Help?Let's Get Started Today

ATTENTION: Do not send any confidential information through this web form.  Use this web form only to make an introduction.

“Challenges are not barriers but gateways, redefining what’s possible through the power of creative thinking.”

Thamar Bilingual Legal Services Ontario

8-60 Bristol Road E., Suite 127
Mississauga, Ontario,
L4Z 3K8

P: (647) 818-7974
P: (514) 979-6822
E: thamar@thamarabdu.com

Business
Hours:

09:00AM - 05:00PM
09:00AM - 05:00PM
09:00AM - 05:00PM
09:00AM - 05:00PM
09:00AM - 05:00PM
Monday:
Tuesday:
Wednesday:
Thursday:
Friday:

By appointment only.  Call for details.
Messages may be left anytime.








Sign Up