Promissory Notes:

Question: Who can help me understand whether my document is a promissory note or a demand note in Ontario?

Answer: A promissory note is an unconditional promise in writing, signed by the maker, to pay a sum certain on demand or at a fixed or determinable future time, as defined in Bills of Exchange Act, R.S.C. 1985, c. B-4 (promissory note), 176(1) (on demand or at a set future time with specified terms like principal, interest, and payment conditions). A demand note is a type of promissory note where there is no fixed due date, meaning it becomes payable when payment is requested. If you need Ontario-focused help to interpret the wording, identify key terms, and understand how these instruments typically differ (without sharing confidential details), Sharda Paralegal can assist you with document review guidance and next-step clarity, and you can call for support since no public services are offered at current time across Ontario.  

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, 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

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.