Legal Definitions - on demand

The term on demand refers to an obligation, typically a payment, that is due immediately upon request by the person or entity to whom the obligation is owed. Unlike an obligation with a fixed due date in the future, an "on demand" obligation becomes active and payable the moment the entitled party asks for it.

• Personal Loan Agreement: Imagine your friend, Alex, lends you $200 for an unexpected expense. You both agree that you will pay him back whenever he needs the money, rather than setting a specific date. A few weeks later, Alex calls you and says he needs the $200 back by the end of the day.

  How this illustrates "on demand": In this scenario, your obligation to repay Alex became due "on demand" the moment he requested the money. There was no pre-set repayment schedule; the payment was triggered solely by his request.

• Business Demand Note: A small business secures a flexible line of credit from a bank. The loan agreement specifies that the outstanding balance is payable "on demand." This means the bank has the right to call for full repayment of the loan at any time, usually with a reasonable notice period, even if the business has been making regular interest payments.

  How this illustrates "on demand": If the bank decides to exercise its right and sends a formal notice requiring the business to repay the entire loan balance within a specified short timeframe, the loan becomes immediately due "on demand." The bank's request, not a pre-determined maturity date, triggers the repayment obligation.

• Refundable Security Deposit: When renting a specialized piece of equipment, a customer pays a $500 security deposit. The rental agreement states that the deposit is fully refundable "on demand" once the equipment is returned in good condition. After using the equipment, the customer returns it undamaged.

  How this illustrates "on demand": Once the conditions for the refund (returning the equipment undamaged) are met, the customer can request their $500 deposit back, and the rental company is legally obligated to return it "on demand" without delay.