Promissory Notes:

Question: Do I have a promissory note or a demand note, and how does payment get triggered in Ontario?

Answer: A promissory note is an unconditional written promise by the maker to pay a sum certain to the payee on demand or at a fixed or determinable future time, while a demand note is effectively a promissory note with no fixed due date so the amount becomes due when payment is demanded; under the Bills of Exchange Act R.S.C. 1985, c. B-4, a promissory note must be signed and clearly promise payment either “on demand” or at a determinable time, and it typically sets out principal, interest (if any), and parties’ details. If you’re in Ontario and need help identifying what your document means for payment timing, enforcement, and next steps, DK Legal Practice assists with paralegal support for debt and payment issues, so call (416) 906-6663 today to get clear, practical guidance.

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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 DK Legal Practice by phone at: (416) 906-6663 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 promissory notes without a specific due date as such a note becomes due upon demand of payment.

Summary Comment

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