Canada Promissory Note
Also known as: Loan Agreement · Note Payable
Generate a promissory note tailored to Canada law. Our AI incorporates Canada-specific statutory requirements, disclosure obligations, and legal standards into every clause.
Promissory Note
Also called: Loan Agreement, Note Payable
Legal Requirements
Canada Legal Requirements
Key Canada statutes and obligations that apply to your promissory note.
Governed by the Bills of Exchange Act (Canada), R.S.C. 1985, c. B-4
Must include: unconditional promise to pay, fixed sum certain, payee's name or 'bearer', maker's signature
Interest provisions should specify rate, calculation method, and compounding period
Consumer notes may be subject to provincial Consumer Protection Acts (Ontario CPA 2002 requires disclosure of borrowing cost)
Limitation period: 2 years from date of default in most provinces under provincial Limitations Acts
For amounts under $35,000 in Ontario, collection can be pursued through Small Claims Court
Restrictions & Key Considerations
Criminal interest rate under the Criminal Code: effective annual rate cannot exceed 60% — exceeded rates are void
Consumer protection legislation may cap fees and require cost-of-credit disclosure for consumer loans
Quebec promissory notes used as consumer credit agreements require prescribed disclosures under the Consumer Protection Act
A note that is not properly stamped (if applicable provincially) may be inadmissible as evidence
FAQ
Canada Promissory Note FAQ
Common questions about the promissory note under Canada law.
Is a promissory note enforceable in Canada?
Yes. A properly executed promissory note that meets the requirements of the Bills of Exchange Act is a negotiable instrument enforceable in Canadian courts. The creditor can sue for the outstanding principal plus agreed interest within the applicable limitation period.
What is the maximum interest rate on a Canadian promissory note?
Section 347 of the Criminal Code prohibits charging an effective annual interest rate exceeding 60%. This includes all fees and charges. Note: the federal government proposed reducing this cap to 35% effective annual rate for most consumer loans in 2023.
How long do I have to collect on a promissory note in Canada?
Most provinces have a 2-year basic limitation period from the date the debt became due. Ontario's Limitations Act 2002 imposes a 2-year limit from when the claimant discovered (or ought to have discovered) the claim. The ultimate limitation period is 15 years.
Does a Canadian promissory note need to be notarized?
Notarization is not legally required for a promissory note to be enforceable under the Bills of Exchange Act. However, notarization may be required by lenders, financial institutions, or for cross-border enforceability. Witnesses are also not required by statute but are recommended for large amounts.
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Promissory Note by Country
Laws vary significantly by country. Find the right form for your jurisdiction.
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