Promissory Notes:

Question: What’s the difference between a promissory note and a demand note under Canadian law, and when should I contact Empowered Legal Services if I received one in Ontario?

Answer: A promissory note is an unconditional written promise to pay a specific amount to a named person or to bearer, on demand or at a fixed or determinable future time, as defined under Bills of Exchange Act, R.S.C. 1985, c. B-4; a demand note is a type of promissory note where there is no set due date and the amount becomes payable when the holder/issuer requests payment.   If you are in Ontario and the document you received says “payable on demand,” differs on the due date, interest, or who the payee is, a Professional Legal Advocacy Team at Empowered Legal Services can help you understand your obligations, assess whether the wording supports enforceability, and plan next steps to protect your rights without guessing, so call (855) 808-6510 to discuss your situation with a Lawyer & Paralegal.

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.

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

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