Promissory Notes:

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

Answer: In Ontario, a promissory note is a signed, unconditional written promise to pay a sum certain to a named person or bearer either on demand or at a fixed or determinable future time, so the key test is whether it includes a payment obligation plus the terms of repayment and who gets paid. A demand note is a promissory note without a specified due date, meaning it becomes payable when the holder makes a demand for payment. The definition in the Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1) is a common starting point for deciding if the document functions as a negotiable instrument. If you need a paralegal review of the wording, parties, interest terms, and enforceability signals, Defend-it Legal Services can help with private investigation, background searches & fingerprinting agency support where relevant, so you can move faster with less risk. Call (289) 275-3513 for a prompt Ontario intake.

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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 Defend-it Legal Services by phone at: (289) 275-3513 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.  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 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.