Promissory Notes:

Question:Is a demand note the same as a promissory note in Ontario and when does it become due?

Answer:In Ontario, a promissory note is an unconditional written promise signed by the maker to pay a specified sum of money on demand or at a fixed or determinable future time, which is defined in Bills of Exchange Act, R.S.C. 1985, c. B-4 at section 176(1). A demand note is a type of promissory note with no fixed due date, meaning it becomes due when the issuer makes a demand for payment. At Lippa Legal Services, a paralegal can help you review the wording of your note or related paperwork, identify whether it is payable on demand versus on a set date, and assess practical next steps if you are the maker or the payee, call (416) 241-4529 to get started.

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 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 Lippa Legal Services by phone at: (416) 241-4529 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.  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.