Negotiable Instruments - Payable On Time or On Demand
What is Commercial Paper Payable on Time or On Demand?
Written by Jason Gordon
Updated at September 26th, 2021
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Table of Contents
What is payable on demand paper and payable on time paper?Discussion QuestionPractice QuestionAcademic ResearchWhat is payable on demand paper and payable on time paper?
A negotiable instrument must either be payable on demand or payment on time. An on-time instrument is payable at a specific time and date. The date must be able to be determined at the time the instrument is issued. It may be payable after an elapsed period of time that is readily ascertainable at the time the promise or order is issued, subject to rights of prepayment, acceleration, and extensions. If the instrument is not clear, but there is evidence of an intent to make it payable at a specific date and time, the note is not negotiable. An instrument is payable on demand if it states as much or it does not state any time of payment.
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Related Topics
- Negotiable Instrument
- What is Negotiability and why is it important?
- What is required for commercial paper to be negotiable?
- Sum Certain (Contracts)
- Inflation Adjustment Clause
- When does commercial paper contain an Unconditional promise to pay?
- Backup Line of Credit
- What is Payable on Demand or Payable on Time?
- What is Order Paper and Bearer Paper?
- Bearer Form
- How is a payee identified on the negotiable instrument?
- What rules does the court apply in determining negotiability?
Discussion Question
Why do you think it is important to distinguish an instrument as payable on time versus payable on demand? Do you think these attributes affect the value or liquidity of a negotiable instrument? Why or why not?
Practice Question
Donovan receives a promissory note from Elvis. The note does not contain any date or time for payment. Is the note payable on time or demand?