Legal Definitions - demand note

A demand note is a type of promissory note that can be paid back at any time the holder of the note requests payment. Unlike other types of notes, demand notes do not have a specific due date or repayment schedule.

• A bank may issue a demand loan to a customer they have a long-standing relationship with and who has good credit.
• A friend or family member may issue a demand loan to someone they have a close relationship with.

When a demand note is issued, both parties sign a contract that outlines the loan amount, any interest rate, and whether advanced notice is required before requesting full payment of the loan. These contracts are sometimes enforceable under the law, especially when the agreement is between a bank and another party.

The examples illustrate that demand notes can be issued by both banks and individuals, and that they are often used in situations where there is an existing relationship of trust between the parties involved.