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 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 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, 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

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.