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Payable on demand refers to a financial instrument, such as a note, that can be paid at any time upon the holder's request. This means that the holder can ask for payment whenever they choose, without needing to wait for a specific date. According to the Uniform Commercial Code (UCC), an instrument is considered payable on demand if it explicitly states this or if it does not specify a payment date. This type of instrument provides flexibility for the holder, allowing them to receive payment as needed.
Table of content
Legal Use & context
Payable on demand is commonly used in various legal contexts, particularly in finance and commercial law. It is relevant in situations involving loans, promissory notes, and other financial agreements. Users may encounter this term when creating or managing financial documents, and they can utilize legal templates from US Legal Forms to draft agreements that include payable on demand provisions. Understanding this term is crucial for individuals and businesses engaged in lending or borrowing activities.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A business issues a promissory note to a lender stating that the amount is payable on demand. The lender can request payment at any time.
Example 2: A personal loan agreement includes a clause that allows the lender to demand repayment at any time, making it a payable on demand instrument. (hypothetical example)
Relevant laws & statutes
The primary legal framework governing payable on demand instruments is the Uniform Commercial Code (UCC), specifically Article 3, which deals with negotiable instruments. This code is adopted in various forms across many states and provides guidelines for the creation and enforcement of such financial instruments.
State-by-state differences
State
Key Differences
California
Generally follows UCC guidelines, with specific state amendments.
New York
Has additional requirements for certain types of demand instruments.
Texas
Similar to UCC, but emphasizes written agreements more strongly.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Payable on Demand
Instrument that can be paid at any time upon request.
Flexible payment timing.
Payable at a Definite Time
Instrument that specifies a fixed payment date.
Payment is only due on the specified date.
Promissory Note
A written promise to pay a specified amount at a specified time.
Can be either payable on demand or at a definite time.
Common misunderstandings
What to do if this term applies to you
If you are involved in a financial agreement that includes a payable on demand clause, it's essential to understand your rights and obligations. You may want to:
Review the terms of your agreement carefully.
Consider using US Legal Forms to find templates for drafting or modifying financial agreements.
If you have questions or if the situation is complex, consult with a legal professional for tailored advice.
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