Promissory Notes:

Question: Do I have a promissory note or a demand note, and when does payment become due in Ontario?

Answer: To determine whether your document is a promissory note or a demand note in Ontario, look for an unconditional written promise to pay a specified sum, the maker’s signature, and whether it is payable “on demand” versus at a fixed or determinable future time; a demand note has no specific due date and becomes due when the holder makes a demand for payment.   If you need help reviewing the wording, parties, and repayment terms (including interest) for enforceability and next steps, Vescio Legal Services can help as a paralegal firm serving clients across Ontario, including Toronto and surrounding communities, and you can call (416) 400-8255 to book a free 15-minute consultation today.

Add this website to Google Preferred Sources

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.

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:

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 negotiable instrument and could consist as a cheque, loan agreement, or other document evidencing indebtedness.