Promissory Note Template Ontario

PROMISSORY NOTE (UNSECURED/SECURED)

Document ID: PN-ON-[YYYYMMDD]-001
Effective Date: [Date]
Version: 1.0
Governing Jurisdiction: Province of Ontario, Canada

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STATUTORY & LEGAL COMPLIANCE NOTICE

DISCLAIMER: This document is a template provided for informational and drafting purposes only. It does not constitute legal advice or create a solicitor-client relationship. Promissory notes in Ontario are governed by the Bills of Exchange Act (Canada) and provincial common law. Users are strongly advised to consult with qualified Ontario legal counsel to ensure compliance with the Interest Act (Canada), potential consumer protection legislation, and to determine if security registration (e.g., PPSA) is required for their specific risk profile.

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1. PARTIES AND RECITALS

This Promissory Note ("Note") is made and entered into as of the Effective Date by and between:

BORROWER: [Full Legal Name of Borrower], an individual/corporation with a principal address at [Full Address] ("Borrower").

LENDER: [Full Legal Name of Lender], an individual/corporation with a principal address at [Full Address] ("Lender").

RECITALS: WHEREAS, the Borrower desires to borrow from the Lender, and the Lender agrees to lend to the Borrower, the principal sum of [Amount in CAD] (the "Principal"), subject to the terms and conditions set forth herein.

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2. PROMISE TO PAY

For value received, the Borrower unconditionally promises to pay to the order of the Lender the Principal sum of [Amount in CAD], together with interest on the unpaid Principal balance at the rate of [Percentage]% per annum, calculated [annually/monthly], not in advance.

3. REPAYMENT TERMS

The Principal and all accrued but unpaid interest shall be due and payable in full on [Maturity Date] (the "Maturity Date"). Payments shall be made in lawful money of Canada by [e-transfer/wire transfer/certified cheque] to the account designated in writing by the Lender.

4. PREPAYMENT

The Borrower reserves the right to prepay the Principal, in whole or in part, at any time without premium or penalty. Any partial prepayment shall be applied first to accrued interest and then to the reduction of the Principal balance.

5. DEFAULT AND ACCELERATION

The occurrence of any of the following shall constitute an "Event of Default": (a) Failure to pay any amount due under this Note within [Number] days of the due date; (b) The filing of bankruptcy, insolvency, or reorganization proceedings by or against the Borrower; (c) A breach of any material covenant contained in this Note. Upon an Event of Default, the Lender may, at its option, declare the entire unpaid Principal balance and all accrued interest immediately due and payable without further notice or demand.

6. INTEREST ACT COMPLIANCE

In accordance with the Interest Act (Canada), where interest is made payable at a rate per annum, the annual rate of interest to which each payment of interest is equivalent shall be the rate of interest as set out in Section 2, calculated yearly or half-yearly, not in advance.

7. GOVERNING LAW AND JURISDICTION

This Note shall be governed by, construed, and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The parties irrevocably submit to the exclusive jurisdiction of the courts of the Province of Ontario for any dispute arising out of or related to this Note.

8. ENTIRE AGREEMENT

This Note constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior agreements or understandings, whether written or oral. No modification or amendment to this Note shall be effective unless in writing and signed by both parties.

9. 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, and the remaining provisions shall continue in full force and effect.

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10. EXECUTION AND SIGNATURE BLOCKS

FOR BORROWER: Signature: _____________________________________ Printed Name: [Name of Authorized Signatory] Title: [Title / Role] Date: [Date]

FOR LENDER: Signature: _____________________________________ Printed Name: [Name of Authorized Signatory] Title: [Title / Role] Date: [Date]

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11. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Document Preparation: Copy the text above into a word processor. Replace all bracketed text [ ] with actual data. Ensure the interest rate complies with the Criminal Code (Canada) regarding maximum allowable interest (prohibition of criminal rate of interest exceeding 60% per annum).
2. Review: Ensure the "Maturity Date" is specific. If this note is "Demand," change Section 3 to state "due upon written demand by the Lender."
3. Execution:
   • Print two copies (one for each party).
   • Signatures must be witnessed by a third party (optional but recommended for evidentiary purposes).
   • If executing digitally, use a platform compliant with the Electronic Commerce Act (Ontario), such as DocuSign or Adobe Sign.
4. Registration (Security): If this loan is secured by assets (e.g., equipment or inventory), you must file a financing statement under the Personal Property Security Act (PPSA) at the Ontario Service portal to protect your priority interest against third-party creditors.
5. Record Retention: Store the executed Note in a secure, fireproof location or a digital vault. Retain the original for the duration of the loan plus 7 years post-repayment for tax and limitation period purposes (typically 2 years for contract claims in Ontario).