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Demand Promissory Note for South Africa

Demand Promissory Note Template for South Africa

A Demand Promissory Note under South African law is a written, unconditional promise made by one party (the maker) to pay a specified sum of money to another party (the payee) upon demand. Governed by the Bills of Exchange Act 34 of 1964, this instrument serves as both a proof of debt and a negotiable instrument. The document must contain specific elements to be legally valid, including an unconditional promise to pay, a definite sum, and the maker's signature. It provides a flexible financing tool that can be enforced through South African courts and is commonly used in both business and personal financial transactions.

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What is a Demand Promissory Note?

A Demand Promissory Note is a crucial financial instrument in South African commercial practice, primarily governed by the Bills of Exchange Act 34 of 1964. This document type is commonly used when one party needs to formally acknowledge and promise to repay a debt to another party, with the distinctive feature that payment can be demanded at any time. The note must include specific elements to be legally valid and enforceable, such as an unconditional promise to pay, a specified sum, and proper execution. It serves multiple purposes in business operations, from securing informal loans to facilitating complex commercial transactions. The document's flexibility and enforceability make it a valuable tool in South African business practices, particularly in situations requiring documented debt obligations without fixed payment schedules.

What sections should be included in a Demand Promissory Note?

1. Date and Place: Specification of the date and location where the promissory note is executed

2. Parties: Clear identification of the maker (promisor) and the payee, including full legal names and addresses

3. Promise to Pay: Unconditional promise to pay a specific sum of money, stated in words and figures

4. Payment Terms: Specification that the amount is payable on demand

5. Interest: Statement of whether interest is payable and if so, the rate and calculation method

6. Execution: Signature block for the maker and witness(es)

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

1. Security Provisions: Used when the note is secured by collateral or other assets

2. Guarantor Details: Included when a third party guarantees the payment

3. Default Provisions: Special terms that apply in case of default, including acceleration clauses

4. Jurisdiction and Governing Law: Included for clarity when parties are in different jurisdictions

5. Transfer Rights: Specific provisions regarding the transferability or negotiability of the note

What schedules should be included in a Demand Promissory Note?

1. Payment Schedule: If applicable, details of installment payments or payment milestones

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

3. Guarantor Undertaking: Separate undertaking document from the guarantor if applicable

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

South Africa

Publisher

Ƶ

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions




















Clauses
















Relevant Industries

Banking and Financial Services

Real Estate

Commercial and Corporate

Small and Medium Enterprises

Agriculture

Manufacturing

Retail

Construction

Professional Services

Mining and Resources

Relevant Teams

Legal

Finance

Treasury

Credit Control

Accounts Receivable

Risk Management

Compliance

Commercial Operations

Corporate Secretariat

Relevant Roles

Financial Manager

Chief Financial Officer

Legal Counsel

Corporate Lawyer

Credit Manager

Treasury Manager

Accounts Receivable Manager

Risk Manager

Commercial Director

Finance Director

Company Secretary

Compliance Officer

Business Development Manager

Contract Administrator

Industries





Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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