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Promissory Notes:
Negotiable Instruments Containing Express Terms Regarding Repayment
Last Updated: June 11 2026
Question: What’s the difference between a promissory note and a demand note in Ontario?
Answer: In Ontario, a promissory note is a written, signed promise to repay a specific sum either on demand or at a fixed or determinable future time, while a demand note is a promissory note that’s payable whenever the lender formally demands payment rather than on a set due date; key terms usually include the principal, interest (if any), the parties, and repayment conditions, and Bills of Exchange Act, R.S.C. 1985, c. B-4 defines core requirements. For help reviewing, drafting, or enforcing a note and protecting your rights across Ontario, SFG Paralegal Services LLP Paralegal offers clear, cost-effective support; call (888) 398-0121 to get started.
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:
176 (1) A promissory note is an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.
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 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.
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