Promissory notes are often issued in the course of business
arrangements and financial transactions to record indebtedness and
financial obligations. People who use these instruments, however,
should be aware of the specialized nature of promissory notes.
A promissory note is an unconditional promise to pay made by one
person to another, which must be signed by the person giving the
promise. The indebtedness contemplated in the promissory note may
be repaid either on demand or at a fixed time in the future,
depending on the specific wording of the note. Promissory notes are
governed by federal legislation, specifically, the Bills of
Exchange Act, RSC 1985, c. B-4.
The Bills of Exchange Act provides that promissory
notes, along with bills of exchange and cheques, are negotiable
instruments. "Negotiable" means that the title to the
promissory note can be transferred by the original creditor who
holds the note to a third party, without the consent or knowledge
of the
