Promissory Notes:

Question: What’s the difference between a demand note and a promissory note for unpaid debts in Ontario?

Answer: Civil Litigations Paralegal Services can help you understand whether your document is a promissory note or a demand note, so you know when payment is actually due and what to do next in an Ontario unpaid-debt matter; under the Bills of Exchange Act, R.S.C. 1985, c. B-4, a promissory note is an unconditional written promise to pay a sum certain on demand or at a fixed or determinable future time, signed by the maker.  A demand note is a promissory note without a specified due date, meaning the amount generally becomes payable when the creditor makes a payment request.  If you are dealing with a possible debt claim or need help reviewing the terms like the amount, interest, parties, and repayment timing, contact (416) 229-1479 for paralegal guidance on your 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 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.

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

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.