Promissory Notes:

Question:How can I tell if my document is a promissory note or just a demand note in Ontario?

Answer:Theresa Forrest, Paralegal can help you determine whether your written document is a promissory note (an unconditional promise in writing to pay a sum certain on demand or at a fixed or determinable future time) or a demand note, since a demand note typically has no fixed due date and becomes payable when the holder makes a request for payment   The distinction matters for payment timing, how you prove the debt, and what options you may have if repayment is disputed, so bring the signed document and any related correspondence to Theresa Forrest, Paralegal at (519) 902-4223.

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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 Theresa Forrest, Paralegal by phone at: (519) 902-4223 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.