Promissory Notes:

Question: Is a demand note the same as a promissory note, and when can a lender in Ontario demand payment?

Answer: A demand note is a type of promissory note where there is no fixed due date, so the amount becomes payable when the holder/issuer makes a formal demand for payment, while a common note typically has a specific or determinable payment date; under the Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1), a promissory note is an unconditional written promise signed by the maker to pay a sum certain on demand or at a fixed or determinable future time, so the wording on your document matters for enforceability and timing.   If you have paperwork that looks like a note (or you are being asked to pay based on one), Cross Legal Services can help a paralegal assess the terms, identify whether the document is payable on demand, and explain practical next steps to protect your position in Ontario; book a free 1/2 hour consultation at (289) 443-0675 to review what you received and what the demand requires.

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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 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.

Note: Please contact Cross Legal Services by phone at: (289) 443-0675 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, 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 promissory notes without a specific due date as such a note becomes due upon demand of payment.

Summary Comment

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