Promissory Notes:

Question: Is a demand note the same as a promissory note, and how does payment become due in Ontario?

Answer: Askew Paralegal Services can help you understand whether your document is a promissory note or a demand note and what “on demand” usually means for when repayment is due in Ontario. Under the Bills of Exchange Act, R.S.C. 1985, c. B-4 at section 176(1), a promissory note is an unconditional written promise to pay a sum certain on demand or at a fixed or determinable future time. A “demand note” is generally a promissory note without a set due date, meaning the amount becomes payable when the holder makes a valid demand for payment. Askew Paralegal Services also reviews common terms like principal, interest, parties, and any bearer or order language so you know what you’re actually agreeing to before you respond. Call (289) 439-4740 for a clear, practical review of your note and next steps.

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 Askew Paralegal Services by phone at: (289) 439-4740 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 negotiable instrument and could consist as a cheque, loan agreement, or other document evidencing indebtedness.