Promissory Note Sample Ontario

SECURED PROMISORRY NOTE

Document ID: PN-ON-202X-01
Effective Date: [Effective Date, e.g., November 1, 202X]
Governing Jurisdiction: Province of Ontario and the federal laws of Canada applicable therein
Version: 1.0 (Institutional Grade)

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1. STATUTORY & LEGAL COMPLIANCE NOTICE

CRITICAL LEGAL DISCLAIMER: This instrument is an institutional-grade promissory note drafted in accordance with the laws of the Province of Ontario and the federal laws of Canada. This document establishes a binding legal obligation and creates a debtor-creditor relationship. It may include provisions for security interests under the Ontario Personal Property Security Act, R.S.O. 1990, c. P.10 (PPSA) and limits on interest rates pursuant to the Criminal Code (Canada). Parties acknowledge that legal counsel should be retained to review and verify the enforceability of this instrument in light of specific commercial circumstances, including corporate authority, solvency considerations, and registration requirements.

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2. PARTIES & RECITALS

FOR VALUE RECEIVED, the undersigned debtor ([Debtor Full Legal Name]), having its principal place of residence or registered office at [Debtor Principal Address] (hereinafter referred to as the "Maker"), unconditionally promises to pay to the order of [Creditor Full Legal Name], having its principal place of residence or registered office at [Creditor Principal Address] (hereinafter referred to as the "Holder"), the principal sum of [Amount in Numbers, e.g., $100,000.00] in lawful money of Canada (CAD) [or insert alternative currency if applicable], together with interest calculated thereon in accordance with the terms of this Promissory Note (the "Note").

Recitals

A. The Maker has requested that the Holder extend financial accommodation to the Maker in the principal amount of [Amount in Words] ([Amount in Numbers]), which the Holder has agreed to provide upon the terms and conditions set forth herein.
B. The Maker acknowledges receipt of the full principal amount of this Note, or the valuable consideration supporting this obligation, and agrees to be bound by all terms, covenants, conditions, and stipulations contained herein.

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3. EXHAUSTIVE OPERATIVE CLAUSES & LEGAL TERMS

1. Principal Sum and Payment Terms

1.1 Principal Repayment. The Maker promises to pay to the order of the Holder the principal sum of [Amount in Numbers] in lawful money of Canada, together with interest accrued thereon, in accordance with the following schedule:

• (a) Installment Schedule: [Insert payment schedule, e.g., Equal monthly installments of $X,XXX.XX commencing on [Date] and continuing on the first day of each month thereafter until [Maturity Date], at which time the entire remaining balance of principal and accrued interest shall be due and payable in full.]
• (b) Maturity Date: The entire outstanding principal balance, together with all accrued and unpaid interest and any other amounts owing under this Note, shall be due and payable in full on [Maturity Date] (the "Maturity Date").

1.2 Application of Payments. All payments made by the Maker under this Note shall be applied first to the payment of any collection costs, fees, or late charges incurred by the Holder, second to the payment of accrued and unpaid interest, and third to the reduction of the outstanding principal balance.

1.3 Method of Payment. All payments under this Note shall be made in immediately available funds by wire transfer to an account designated in writing by the Holder, or by certified cheque delivered to the Holder's address set forth above, or to such other place or account as the Holder may from time to time designate in writing.

2. Interest Rate

2.1 Standard Interest Rate. The principal balance outstanding under this Note from time to time shall bear interest at the rate of [Interest Rate, e.g., 8.5%] per annum, calculated [annually / semi-annually / monthly] and not in advance, both before and after maturity, default, and judgment, until paid in full.

2.2 Default Interest Rate. Upon the occurrence and during the continuance of an Event of Default (as defined herein), the overdue principal amount and, to the extent permitted by applicable law, overdue interest under this Note shall bear interest at the rate of [Default Interest Rate, e.g., 15.0%] per annum (the "Default Rate"), calculated from the date of such default until the default is cured or the indebtedness is paid in full.

2.3 Criminal Rate Limitation. Notwithstanding any provision to the contrary contained in this Note, the effective annual rate of interest charged under this Note shall not exceed the criminal rate of interest as defined under Section 347 of the Criminal Code (Canada). If any provision of this Note would oblige the Maker to make any payment of interest or other amount in an amount or calculated at a rate that would exceed the maximum rate permitted by law, such provision shall be deemed to be automatically amended to limit such interest or amount to the maximum rate permitted under applicable law.

3. Prepayment

3.1 Right to Prepay. The Maker [shall / shall not] have the right to prepay the principal amount outstanding under this Note, in whole or in part, at any time prior to the Maturity Date, [without penalty / subject to a prepayment premium of [X]% of the principal amount being prepaid].

3.2 Notice of Prepayment. The Maker shall provide the Holder with not less than [Number, e.g., thirty (30)] days prior written notice of any intended prepayment of principal. Any partial prepayment shall be applied against the principal installments due under this Note in the inverse order of their maturity.

4. Events of Default

The occurrence of any one or more of the following events shall constitute an "Event of Default" under this Note:

• (a) Failure to Pay: The Maker fails to pay any installment of principal or interest, or any other sum payable under this Note, within [Number, e.g., five (5)] business days of the date when due;
• (b) Breach of Covenants: The Maker defaults in the observance or performance of any other covenant, term, or condition contained in this Note or any related security agreement, and such default continues unremedied for a period of [Number, e.g., fifteen (15)] days after written notice thereof has been given by the Holder to the Maker;
• (c) Insolvency and Bankruptcy: The Maker ceases to carry on business, makes an assignment for the benefit of creditors, commits an act of bankruptcy, files a petition or proposal under the Bankruptcy and Insolvency Act (Canada) (BIA) or the Companies' Creditors Arrangement Act (CCAA), has a receiver, receiver and manager, or trustee appointed over all or any substantial part of its assets, or if any proceedings are instituted against the Maker for its liquidation, winding-up, or dissolution;
• (d) Cross-Default: Any default occurs under any other promissory note, credit agreement, or material debt instrument to which the Maker is a party and which results in the acceleration of such indebtedness; or
• (e) Misrepresentation: Any representation or warranty made by the Maker in this Note or in any certificate or document delivered in connection herewith proves to have been materially false, incorrect, or misleading when made.

5. Acceleration of Remedies

5.1 Acceleration. Upon the occurrence of any Event of Default, and at any time thereafter during the continuance of such Event of Default, the Holder may, at its sole option, declare the entire unpaid principal balance of this Note, together with all accrued and unpaid interest thereon and all other sums payable under this Note, to be immediately due and payable, without presentment, demand, protest, notice of dishonor, or notice of acceleration, all of which are hereby expressly waived by the Maker.

5.2 Enforcement Costs. The Maker promises to pay all costs and expenses incurred by or on behalf of the Holder in connection with the collection of any sums due under this Note and the enforcement of any rights or remedies hereunder, including, without limitation, reasonable legal fees and disbursements on a full indemnity basis.

6. Security Interest (PPSA)

6.1 Grant of Security. To secure the prompt and complete payment and performance of all obligations of the Maker under this Note, the Maker hereby grants to the Holder a continuing security interest in all of the Maker’s right, title, and interest in, to, and under [describe collateral, e.g., all present and after-acquired personal property, equipment, inventory, and accounts receivable of the Maker / specific asset] (the "Collateral"), pursuant to the Personal Property Security Act (Ontario).

6.2 Further Assurances. The Maker authorizes the Holder to file financing statements and any other documents necessary to perfect, protect, and maintain the security interest granted herein under the PPSA, and the Maker agrees to execute and deliver any further instruments, security agreements, or documents reasonably requested by the Holder to effectuate the purposes of this Section 6.

7. Representations and Warranties

The Maker represents and warrants to the Holder, acknowledging that the Holder is relying upon such representations and warranties in extending financial accommodation, that:

• (a) Due Organization and Power: If the Maker is a corporation, it is duly incorporated, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to execute, deliver, and perform its obligations under this Note;
• (b) Authorization: The execution, delivery, and performance of this Note have been duly authorized by all necessary corporate or personal action on the part of the Maker;
• (c) Binding Obligation: This Note constitutes a legal, valid, and binding obligation of the Maker, enforceable against the Maker in accordance with its terms, subject to applicable bankruptcy, insolvency, and similar laws affecting creditors' rights generally; and
• (d) Absence of Conflicts: The execution, delivery, and performance of this Note do not and will not violate, conflict with, or constitute a default under any provision of any constating documents, bylaws, material contract, court order, or statutory enactment binding upon the Maker.

8. Waiver and Indulgence

No failure or delay on the part of the Holder in exercising any right, power, or privilege under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies of the Holder expressly set forth in this Note are cumulative and are not exclusive of any rights or remedies which the Holder would otherwise have.

9. Assignment and Binding Effect

9.1 Assignment by Holder. The Holder may freely assign, transfer, negotiate, or pledge this Note, in whole or in part, to any third party without the consent of the Maker, and any such assignee shall succeed to all rights and remedies of the Holder hereunder.

9.2 Assignment by Maker. The Maker may not assign, transfer, or delegate any of its rights, obligations, or duties under this Note without the prior written consent of the Holder, and any attempted assignment in violation of this provision shall be null and void ab initio.

9.3 Binding Nature. This Note shall be binding upon the Maker and its respective heirs, executors, administrators, successors, and permitted assigns, and shall enure to the benefit of the Holder and its successors and assigns.

10. Notices

Any notice, demand, request, or other communication required or permitted to be given under this Note shall be in writing and shall be delivered personally, sent by pre-paid registered mail (return receipt requested), or transmitted by electronic mail (with confirmed receipt) to the respective addresses of the parties set forth on page one of this Note, or to such other address as either party may designate by notice given in accordance with this Section. Any such notice shall be deemed to have been received on the date of personal delivery, on the third business day following mailing, or on the date of transmission if sent by electronic mail during normal business hours on a business day.

11. Severability

If any provision of this Note is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be severed from this Note and deemed modified to the minimum extent necessary to make it valid, legal, and enforceable. The remaining provisions of this Note shall remain in full force and effect and shall not be affected hereby.

12. Entire Agreement and Amendments

This Note constitutes the entire agreement between the Maker and the Holder with respect to the subject matter hereof and supersedes all prior negotiations, understandings, representations, and agreements, whether oral or written. No modification, amendment, waiver, or discharge of any provision of this Note shall be valid unless executed in writing by both the Maker and the Holder.

13. Governing Law and Attornment

This Note, and all claims or causes of action (whether in contract, tort, or statute) that may be based upon, arise out of, or relate to this Note, shall be governed by, and enforced in accordance with, the internal laws of the Province of Ontario and the federal laws of Canada applicable therein, without regard to conflict of laws principles. Each party irrevocably and unconditionally attorns and submits to the exclusive jurisdiction of the courts of the Province of Ontario sitting in the City of Toronto [or alternative judicial district], in any action or proceeding arising out of or relating to this Note.

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4. EXECUTION & FORMAL SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Maker has executed this Promissory Note as of the Effective Date first written above.

FOR MAKER ([Maker Full Legal Name]):

Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role, e.g., President / Sole Proprietor]
Company: [Maker Full Legal Name]
Date: [Date]

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FOR HOLDER ([Creditor Full Legal Name]):

Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Company: [Creditor Full Legal Name]
Date: [Date]

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5. STEP-BY-STEP EXECUTION & FILING GUIDE

Step 1: Document Customization (Drafting Phase)

1. Open this template in a text editor or word processing application (e.g., Microsoft Word, Google Docs).
2. Locate all bracketed placeholders formatted as [Bracketed Text] and replace them with accurate, verified information:
   • Insert exact legal names of the Maker (Debtor) and Holder (Creditor) as registered with provincial or federal corporate registries.
   • Insert exact principal amounts, interest rates, payment frequencies, and maturity dates.
3. Remove all instructional text, operational guidance notes, and markdown formatting guides prior to execution.

Step 2: Verification of Authority

1. Corporate Makers: Verify via corporate resolutions (Board of Directors' resolutions or unanimous shareholder agreements) that the individual signing on behalf of the Maker possesses the requisite signing authority to bind the corporation to debt obligations.
2. Personal Makers: Ensure individual signatories sign in their personal capacity if acting as primary debtors or guarantors.

Step 3: Security & PPSA Registration (If Applicable)

1. If this Note is secured by collateral, ensure a separate General Security Agreement (GSA) or specific security agreement is executed concurrently.
2. Instruct legal counsel or a paralegal to file a financing statement against the Maker in the Ontario Personal Property Security Registration System (PPSR) pursuant to the Personal Property Security Act to perfect the Holder's security interest.

Step 4: Digital or Wet-Ink Execution

1. Wet-Ink Signature: Print two (2) identical original copies of the executed Note. Each party signs both originals, allowing each party to retain a fully executed wet-ink original.
2. Electronic Signature: If executing via electronic signature platforms (e.g., DocuSign, Adobe Sign), ensure the platform complies with the Ontario Electronic Commerce Act, 2000, S.O. 2000, c. 17, ensuring tamper-evident audit trails and secure cryptographic hashes of the executed document.

Step 5: Record Retention and Post-Closing

1. Store the fully executed original Promissory Note in a secure, fireproof corporate records room or encrypted digital repository.
2. Maintain exact amortization and payment ledgers tracking principal reductions, interest accruals, and compliance with the installment schedule. Upon full repayment, issue a formal Release and Discharge of Promissory Note and discharge any associated PPSR registrations.