Promissory Notes:

Question: What is the difference between a demand note and a common promissory note in Ontario?

Answer: A promissory note is an unconditional written promise to pay a specified sum either at a fixed or determinable future time or on demand, and Canada’s Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1) defines it that way   A demand note is still a promissory note, but it has no set due date and becomes payable when the issuer makes a payment demand, while a common (term) promissory note becomes due on the date or timing stated in the document   Because wording, signatures, interest terms, and how the note is structured can affect enforceability and next steps, a lawyer at Lo Greco Law with 30+ year experienced lawyer services and LSO tribunal representation can review your document and advise on your options in Ontario, call (416) 488-4110.

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 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.

Note: Please contact Lo Greco Law by phone at: (416) 488-4110 to discuss any specific questions that you may have.

The Law

The Bills of Exchange Act, R.S.C. 1985, c. B-4, governs financial instruments such as currency, cheques, among other things, and 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 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.