Last Updated: August 23 2026
What’s the difference between a demand note and a promissory note under Canadian law?
Lo Greco Law can help you understand whether a written promise to pay is a promissory note or a demand note, and what “on demand” means in practice; under the Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1), a promissory note is an unconditional written promise signed by the maker to pay a sum certain to a specified person or bearer on demand or at a fixed or determinable future time; a demand note is a form of promissory note that does not set a fixed due date and becomes payable when the holder requests payment; if you’re dealing with debt collection, enforcement risk, or a payment dispute in Ontario, contact (416) 488-4110 for 30+ year experienced lawyer services and LSO tribunal representation focused on practical next steps.
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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 form of negotiable instrument whereby a party (the issuer) makes an unconditional promise in writing to pay a sum of money to another party (the payee). Payment becomes due under a promissory note at fixed time stated within the promissory note or upon receipt of a demand for repayment. A promissory note will also contain details of any applicable terms such as a rate of accruing interest, if any.
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, addresses promissory notes as a form of financial instrument, along with currency, cheques, among other things, and specifically defines a promissory note as:
176 (1) A promissory note is an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.
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
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 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.
