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Promissory Note Payable for Canada

Promissory Note Payable Template for Canada

A Promissory Note Payable is a formal financial instrument governed by Canadian federal law, specifically the Bills of Exchange Act, that documents a written promise to pay a specific sum of money to a named party. The document establishes the terms of repayment, including interest rates (governed by the Interest Act), payment schedule, and default provisions. It serves as a legally binding commitment that can be used in various contexts, from business loans to personal lending, and can be either secured or unsecured. The document must comply with Canadian federal and provincial regulations regarding financial instruments and can be used as evidence of debt in legal proceedings.

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What is a Promissory Note Payable?

The Promissory Note Payable is a versatile financial instrument used in Canadian business and personal transactions to formalize debt obligations. It is commonly employed when one party (the Maker) promises to pay a specific sum of money to another party (the Payee) under defined terms and conditions. This document type is governed by the Canadian Bills of Exchange Act and must comply with federal and provincial regulations regarding interest rates, disclosure requirements, and enforcement mechanisms. A Promissory Note Payable can be secured by collateral or unsecured, may include single or multiple payment schedules, and can incorporate various terms regarding default, acceleration, and assignment rights. It serves as both a proof of debt and a negotiable instrument, making it valuable for businesses and individuals seeking to document and potentially transfer debt obligations.

What sections should be included in a Promissory Note Payable?

1. Date and Place of Execution: Specifies when and where the note is executed, which is crucial for enforcement and limitation periods

2. Parties Identification: Clearly identifies the Maker (Promissor) and Payee (Promissee) with full legal names and addresses

3. Promise to Pay: Contains the unconditional promise to pay a specific sum of money, including the principal amount in both numbers and words

4. Payment Terms: Specifies when and how the payment(s) will be made, including due date(s) and payment method

5. Interest Rate: States the applicable interest rate, calculation method, and compounding frequency in compliance with the Interest Act

6. Default Provisions: Outlines what constitutes a default and the consequences of default

7. Signatures: Space for dated signatures of the maker and witness if required

What sections are optional to include in a Promissory Note Payable?

1. Security Interest: Include when the note is secured by collateral or other assets

2. Prepayment Terms: Include when early payment is allowed, specifying any penalties or benefits

3. Late Payment Penalties: Include when specific penalties for late payment are to be imposed

4. Acceleration Clause: Include when the entire balance becomes due upon default

5. Assignment Rights: Include when specific provisions regarding the right to assign the note are needed

6. Guarantor Provisions: Include when a third party is guaranteeing the payment obligation

7. Joint and Several Liability: Include when there are multiple makers of the note

What schedules should be included in a Promissory Note Payable?

1. Payment Schedule: Detailed breakdown of payment amounts and due dates for installment payments

2. Collateral Description: Detailed description of any assets securing the note

3. Guarantor Information: Details of guarantor(s) and their obligations when applicable

4. Amortization Table: Schedule showing the breakdown of principal and interest for each payment

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions

























Clauses




















Relevant Industries

Banking and Financial Services

Real Estate

Small Business

Commercial Lending

Private Lending

Construction

Agriculture

Manufacturing

Retail

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Relevant Teams

Finance

Legal

Compliance

Treasury

Credit and Collections

Risk Management

Corporate Governance

Accounts Receivable

Business Development

Administrative Services

Relevant Roles

Chief Financial Officer

Finance Manager

Accounts Receivable Manager

Credit Manager

Treasury Manager

Legal Counsel

Compliance Officer

Risk Manager

Business Development Manager

Loan Officer

Financial Controller

Collections Manager

Corporate Secretary

Financial Analyst

Legal Administrator

Industries






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