Promissory Notes:

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

Answer:A promissory note is an unconditional written promise to pay a set money amount on demand or at a fixed or determinable future time, and the Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1) definition helps explain what counts as a promissory note.  A demand note is a type of promissory note that has no fixed due date and becomes payable when the holder makes a request for payment.  In Ontario, the key practical issues are the exact wording on the note, who signed it, whether it states a sum certain and the payer’s obligations, and whether the holder followed the note’s terms before suing or pursuing collection.  If you’re dealing with a demand note, loan document, or repayment request, DebtLitigation.Help™ can connect you with a professional legal advocacy team to review the document and advise on next steps; call (855) 808-6510.

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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.

Note: Please contact DebtLitigation.Help™ by phone at: (855) 808-6510 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

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.