Promissory Notes:

Question: How do I tell the difference between a demand note and a common promissory note in Ontario?

Answer: In Ontario, a promissory note is an unconditional written promise to pay a specified sum of money, either on demand or at a fixed or determinable future time, as defined in Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1)   a demand note is a promissory note without a fixed due date, meaning it becomes payable when the holder/issuer makes a demand, while a common note typically states a due date or repayment schedule   If you are reviewing a debt document, planning to enforce payment, or concerned about what you owe, Lynxs Paralegal helps with Ontario debt and payment disputes and can guide you through the terms, next steps, and evidence to protect your position, call (647) 249-6676.

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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 Lynxs Paralegal by phone at: (647) 249-6676 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 negotiable instrument and could consist as a cheque, loan agreement, or other document evidencing indebtedness.