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Debra, Lawyer
Category: Canada Law
Satisfied Customers: 97999
Experience:  Lawyer
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A promissory note containing clause" pay back at your

Customer Question

A promissory note containing clause " pay back at your earliest convenience" and " no interest"
As the lender can i make a legal demand for payment and can charge interest
Submitted: 1 year ago.
Category: Canada Law
Customer: replied 1 year ago.
In addition to previous question
If the payee doesnt have copy of note how do i present the note on demand for payment
Expert:  Debra replied 1 year ago.

Are you saying you said there was never an obligation to pay interest and you said they only had to pay when it was convenient to pay and there is nothing else there about any deadline at all?

Customer: replied 1 year ago.
Note in full
I lender and payee have entered into an agreement that payee will pay back x amount of dollars with no interest at his earliest convenience
Customer: replied 1 year ago.
no interest and no other deadline to pay
Expert:  Debra replied 1 year ago.

As you provided an interest free loan it is not likely that you can now seek interest.

At the same time it is quite likely that if you were to go to court you could get a court order compelling the borrower to pay you back. That is because while you use the phrase " when it's convenient" there comes a time when it is not fair or reasonable to continue to say paying back a debt is not convenient.

The court would consider what the intentions were at the time the agreement was entered into but would also consider what is reasonable.

What is clear is that you did not intend to make a gift. unfortunately, what is also clear is that you did not protect yourself appropriately and did not consider what would happen if you wanted to be paid back and had not been.

In my view your next best step will be to consult with a lawyer face to face with the review to retaining the lawyer to send the borrower a letter demanding payment by a reasonable deadline that you set.

Customer: replied 1 year ago.
But what if within the 2 year limitation of note
The lenders company was invoiced for work done by borrower for more than amount of note
Lender lent money personally
And the lender sent demand letter by registered mail but did not include copy of promissory note. So did not present note with demand to pay
Customer: replied 1 year ago.
To add
The demand letter was sent 4 to 5 months after borrower sent invoice
Borrower replied by saying it is conveinient to credit the lenders business the amount of note from invoice and has asked for balance of invoice to be paid
So who pays
Lender hasnt paid any of invoice from borrower
Also lender has not denied validity of invoice
Expert:  Debra replied 1 year ago.

The limitation period starts when the demand is made.

The borrower has to pay what is owed less what is owed to the borrower.

If lender actually owes the borrower more than what was loaned then the borrower doesn't owe anything.

Customer: replied 1 year ago.
That is what i thought
But lender defense is denies credit(offset) can be made on a business owner who has lent money personally
Pre trial judge says offset is not legally allowed
And has issued a summary order for lender ( plantiff) on a motion to add a counterclaim ( oustanding invoice which is past the 2 year limitation but was not when claim started) by borrower(defendant) and does not see case going to trial
Sounds like borrower is going to hosed
Does any of this make sense and what do you think will be outcome
Expert:  Debra replied 1 year ago.

If the business is incorporated then the court is right because an incorporation is a separate legal entity.

Then a counter-claim would be needed.

Customer: replied 1 year ago.
What about the question regarding presentation of note
Promissory note was included in mailing with demand to pay notice
Borrower never had copy of note
Under the " bills exchange act" there seems to be specific rules regarding presentaion of note when demand for payment
Customer: replied 1 year ago.
Sorry note was not included
Expert:  Debra replied 1 year ago.

If should have been included but the demand was still made and even if there was a verbal agreement a demand can be made on it so it's not really going to help.

Customer: replied 1 year ago.
But lenders company will not pay invoice
So borrower still has to pay note
Doesnt seem fair
Borrower can provide atleast 10( a few of which lenders company owes in excess of $100000.00 and has not paid)witnesses saying work was carried out by borrower
Lender can provide himself and wife other owner of company.
Will witnesses help in the court favouring the borrower(defendant)
Expert:  Debra replied 1 year ago.

It just depends on whether the invoice was for a corporation or the same person.

I don't know if witnesses are needed.

If you have to prove something then witnesses are good but if the facts are in dispute but this is just about whether there is a right of set-off then you may not need witnesses.

Customer: replied 1 year ago.
Invoice was to corporation
Customer: replied 1 year ago.
Corporation owned by lender
Expert:  Debra replied 1 year ago.

Then you cannot set off as the corporation is a separate legal entity and they have to be sued by way of counter-claim.

Customer: replied 1 year ago.
So let me summerize a little
Lender lends borrower sum of money
Issues a promissory note to borrower approx 13 months after lending money and after borrower asked and lender agreed to meet with borrower about monies lenders company owes borrower but not yet invoiced for
Lender holds cheque to borrowers company until borrower signs promisdory note for lent money
Now lender issues demand to pay note 2013 several months after borrower invoices lenders corp. starting 2 year limitation time. borrower offers to credit lenders company the amount of note which leaves a large amount of money still owing to borrower.
Hires different lawyer 12 months later 2014 makes statement of claim now we are in September 2015. Borrowers invoice is now past the 2 year limitation.
So has lenders 2 years ran out also now September 2015 sent demand in may of 2013 or does the court proceedings extend his 2 years and if so does it extend borrowers 2 years of invoice since it is still not paid and part of defense
Expert:  Debra replied 1 year ago.

If the demand was made over two years ago then it is too late to sue.

There is no extending the limitation period.

If there is an action the the counter-claim may be able to go ahead with leave of the court as it arises out of the claim.

Customer: replied 1 year ago.
Good mews for borrower me maybe i will get money owed to me finally but i should deduct note.
Really confused why would lender continue with case if 2 years ( demand sent may 2013) has ran out and court proceedings ( started in 2014 june) dont extend the limitation period now sept 2015
Makes no sense
All this advice for just over $60
Expert:  Debra replied 1 year ago.

The court proceedings has to start within the two years, not be finished.

So if the demand was made in May 2013 then he had to May 2015 to start. Did he start in 2014 or 2015?

Customer: replied 1 year ago.
Started in 2014
Expert:  Debra replied 1 year ago.

Then it's not too late.

The claim has to be started before the end of the limitation period.

Customer: replied 1 year ago.
So as the borrower and the person who gave invoice the only chance i have of getting my money is counterclaim.
But i asked for payment of invoice many times and was never paid
Wont the judge at the motion decision look at that
Also what about the fact that note wasnt issued until a over a year later after lender agreed to meet with to discuss money owed to me but not yet invoiced
And the fact that the lender with held a cheque payable to my company until note was signed
Also lender was not present when note was issued and there is no signing witness
In the end lender wins on note and i lose because he decided to not pay invoice even though my 2 years on invoice hadnt run out when he started claim and unpaid invoice is part of my defense for not paying note
Customer: replied 1 year ago.
Or if lender had paid invoice i could have paid note
Seems unfair that our court system works this way
How long do you have as borrower to pay note is it immediately or payments since no terms of payment are on note
Customer: replied 1 year ago.
Could you please explain last sentence in your reply of 3:08 sept. 28 in simpler terms,its a bit confusing
Customer: replied 1 year ago.
Legal Ease Legal Ease
If should have been included but the demand was still made and even if there was a verbal agreement a demand can be made on it so it's not really going to help.
What do you mean by verbal agreement?
The demand letter was sent registered mail without note and there was no verbal conversation regarding demand, there was a few emails, my response, credit offer, and asking for copy of note
Expert:  Debra replied 1 year ago.

I am not sure where the confusion lies.

The limitation period starts to run when a claim arises and it is for two years and the lawsuit must be started within the two years.

Demands don't start a lawsuit or stop the limitation period from applying.

Customer: replied 1 year ago.
One last question
Who writes the note borrower or lender
Under the bills exchange act 176. (1) signed by maker
Also states engaging to pay, on demand, or at a fixed time or determinable future time, so the last statement a judge can rule what is determinable amount of time essentially changing the wording of note to fit in with the 2 year limitation
Expert:  Debra replied 1 year ago.

The borrower would sign the promissory note because it is an agreement to pay.

The courts have held that the limitation. Does not start until the demand is made.

Customer: replied 1 year ago.
On another topic
I own pizza store, lease store and equipment, including name to another business
The lease is for 2 years with the option to purchase for a set amount of money, and an option to lease for 3 more years
Now do i have to let them lease for 3 more years or can i cancel lease after the 2 year term
There is a monthly lease payment due to my corp. but leasee doesnt always pay so they have already breached agreement
Expert:  Debra replied 1 year ago.

Please write my answers on this post.

Then, if you want me to answer any question I would be happy to do so but you have to start a new post.

Thank you very much

Customer: replied 1 year ago.
I understand borrower has to sign, but does it matter who writes the note? I guess not since you can get a generic note
Customer: replied 1 year ago.
Ok sorry
Expert:  Debra replied 1 year ago.

Yes you're correct as it does not matter who drafts it.

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