Promissory Notes:

Question: What’s the difference between a demand note and a promissory note with a fixed due date in Ontario?

Answer: In Ontario, a promissory note is an unconditional written promise to pay a specific sum of money either on demand or at a fixed or determinable future time, with terms like the principal and any interest.   A demand note is different because it does not state a fixed due date, so payment becomes due when the holder makes a demand.   If you are reviewing a note’s wording to confirm when payment is actually due or what “demand” means in your situation, Sharda Paralegal can help explain the terms and document basics with clear next steps; call for guidance, including how to organize facts and evidence for an Ontario matter.   At this time, Sharda Paralegal is not offering public legal services, but it can still be a practical starting point for broadly applicable, consumer-friendly clarity in Ontario.

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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.

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 promissory notes without a specific due date as such a note becomes due upon demand 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.