Legal Definitions - demand instrument

Definition: A demand instrument is a type of financial instrument that is payable on demand, at sight, or on presentation. This means that the payment must be made immediately or within a short period of time, rather than at a set future date.

Examples: Examples of demand instruments include demand notes, checks, and bank drafts. For instance, a check is a demand instrument because it can be cashed or deposited immediately upon presentation to the bank. Similarly, a bank draft is a demand instrument because it is payable on demand to the person or entity named as the payee.

Explanation: The examples illustrate the definition of a demand instrument because they are all types of financial instruments that require immediate payment or payment within a short period of time. Unlike other types of financial instruments, such as bonds or promissory notes, demand instruments do not have a set maturity date and are payable on demand.