Promissory Notes:

Question: What’s the difference between a promissory note and a demand note under Canadian law, and when should I get a Lawyer’s help in Ontario?

Answer: A promissory note is an unconditional written promise signed by the maker to pay a specified sum either on demand or at a fixed or determinable future time, as described in Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1). A demand note is essentially a promissory note with no fixed due date, meaning it becomes payable upon the holder’s demand for payment. If you are dealing with a loan document, cheque-like promise to pay, or an unpaid debt in Ontario, Lo Greco Law provides 30+ Year Experienced Lawyer Services & LSO Tribunal Representation to help you understand your obligations, assess enforceability, and respond effectively.   If you want to clarify your next steps, call (416) 488-4110 and get legal guidance from Lo Greco Law today.

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.

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.