Promissory Notes:

Question: Is a demand note considered a promissory note under Canadian law?

Answer: White Law PC can help Ontario borrowers and lenders understand whether a demand note is still a promissory note, since a promissory note is generally an unconditional written promise signed by the maker to pay a sum certain on demand or at a fixed or determinable future time (Bills of Exchange Act, R.S.C. 1985, c. B-4, 176(1)).  A demand note is typically a promissory note with no fixed due date, meaning payment becomes due when the holder makes a demand, so the document’s wording, parties, and interest or payment terms matter for enforcement and timelines.  For guidance on your specific wording and next steps, call (519) 941-9440 to book a consultation with a lawyer serving clients across Ontario.

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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 written document in which one party (the issuer) makes an unconditional promise to pay a certain amount of money to another party (the payor). Under a promissory note, payment is due at the stated time or upon receiving a request for repayment. A promissory note will include information about any applicable terms, such as the rate of interest, if any, that may be accrued.

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

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.