HopefullyInLawSchool
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Simple English definitions for legal terms
demand note
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A quick definition of demand note:
A demand note is a type of loan that can be paid back whenever the person who lent the money asks for it. This is different from other loans that have a specific due date or payment schedule. Banks may give demand loans to people they trust, and friends or family may also give them to people they know well. The person who borrowed the money and the person who lent it can sign a contract that says how much was borrowed, if there is any interest, and if the lender needs to give notice before asking for the money back. Sometimes, these contracts are legally binding.
A more thorough explanation:
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.