Is a Promissory Note the Same As An I.O.U.?

A Promissory Note Is a Document As a Negotiable Instrument Commonly Compromising Part of a Loan Agreement. The Promissory Note Contains Certain Details Regarding Payment Terms Which May Be Scheduled Terms or Upon Demand Terms. An I.O.U. Is Just a...


Understanding What Constitutes As a Promissory Note and What Is Meant By a Demand Note Versus a Common Note

Promissory Notes Are Negotiable Instruments Containing Express Terms Regarding Repayment 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, 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 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.

Need Help?Let's Get Started Today

ATTENTION: Do not send any confidential information through this web form.  Use this web form only to make an introduction.

Send a Message Directly to To Your Defence

ATTENTION: Confidential details about your case must not be sent through this website.  Use of this website does not establish a legal-representative/client relationship.  Do not include confidential details about your case by email or phone.  Use this website only for an introduction with To Your Defence. 
Privacy Policy & Cookies | Terms of Use Your IP Address is: 3.235.199.19
Mailing Address

Post Office Box 99
Britt, Ontario,
P0G 1B0

P: (705) 346-4644
E: info@toyourdefence.com

Meeting Location

1500 Paris Street, Unit 13
Sudbury, Ontario,
P3E 3B8

P: (705) 346-4644
E: info@toyourdefence.com

Hours of Business:

9:00AM – 5:00PM
9:00AM – 5:00PM
9:00AM – 5:00PM
9:00AM – 5:00PM
9:00AM – 5:00PM
Monday:
Tuesday:
Wednesday:
Thursday:
Friday:

By appointment only.  Please call for details.

Providing Legal Help within these Areas and More:

Among other areas in Ontario, Canada








ASK
Sign Up
Ernie, the AI Bot