Promissory Notes:

Question:When is a demand note due compared to a common promissory note in Canada?

Answer:A promissory note is an unconditional written promise to pay a sum certain, signed by the maker, on demand or at a fixed or determinable future time, under terms like principal and interest; Bills of Exchange Act, R.S.C. 1985, c. B-4, s. 176(1).  A demand note is the same type of negotiable instrument, but it does not list a specific due date, so it becomes payable when the payee requests payment (or otherwise makes a demand consistent with the note’s wording).  If you’re reviewing whether your document is a true demand note or a common note with a stated maturity date, Pollock Paralegal can help you understand the key terms and next steps, call (519) 694-0363.

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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 Pollock Paralegal by phone at: (519) 694-0363 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:

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.