Enforce a Promissory Note by Suing in Court

A bank customer says his signature on a promissory note was forged. The loans officer who gave him the money claims she witnessed him signing it. Who do you trust?  

Promissory Notes Are Proof

Even putting a debt in writing may not be enough to protect you from fraud. Without any proof you’re owed money, how in the world do you expect to get it back? When Louise Talbot loaned Jeffrey Nourse $280,000 for his business, she thought the two promissory notes he signed would ensure she got repaid. But two years later, their partnership collapsed. All that was left was for Talbot to pursue him in court.

A Deceit Uncovered

Pursue him she did. Besides the $127,843 Nourse still owed, she asked for $500,000 in punitive damages. Like most promissory notes, Talbot’s were secured only by Nourse’s word and signature. Not surprisingly, Nourse shot back, asking the court for $2 million for breach of contract and an order preventing Talbot from competing with him. Nourse claimed to have signed one promissory note for $80,000, but not the second for $200,000.

When a Defendant Twists the Truth

What was the truth? A loans officer swore in court she had witnessed Nourse’s signature on two promissory notes, totalling $280,000. Confusingly, when Nourse met with the bank official two years later, he claimed Talbot had forged his signature. But as Nourse told the court when cross-examined, the bank had indeed transferred $200,000 to his account. The money was an investment, not a loan, he testified. 

Hiring an Expert to Testify in Court

Although Nourse denied signing both promissory notes, a handwriting expert’s report told a different story. It supported the bank officer’s version of events. Nourse’s claim the loan was actually an investment held no water for the court. The two signed promissory notes were proof of his debt. The court narrowed its decision, awarding Talbot the money Nourse had yet to repay and leaving his other, wide-ranging complaints for another day.

Why Get Debts in Writing

Their case goes to show how easily your money can disappear if you fail to get a legally binding, written contract. Outlining your expectations in a formal “IOU” is a wise choice, especially if the loan is unsecured by any asset other than a signature.

What to Include in a Promissory Note

A promissory note typically includes:

  • the total amount owing
  • any interest and how it is calculated (monthly or annually)
  • the lender’s and borrower’s names
  • whether the borrower is an individual, corporation or partnership
  • when the note is repayable, called a term note
  • or that it is payable on demand, called a demand note.

Demand notes must be repaid upon request, usually made by writing or emailing the borrower.

Things to Know About Promissory Notes

  • You can hold a promissory note as long as you want. 
  • You have two years to go to court after you demand repayment. The clock starts ticking from the day you give notice payment is due. If you receive a payment after starting a lawsuit, the clock can be reset.
  • Collateral used to secure the loan, like a vehicle, should be specified in the note. The court can’t help collect on collateral if it’s not in writing.
  • State how the money will be advanced, all at once or in stages.
  • Indicate if interest is charged for late payments and who pays for bounced cheques.
  • Insist the borrower get independent legal advice to prevent arguments they didn’t understand what they signed.
  • Have signatures witnessed and dated. That will help your case in court.
  • Get a notary public to witness the signatures and stamp the note to show it was notarized. A notary’s seal helps protect your legal interests. 
  • Just like cash, you can transfer a promissory note to someone else to pay a debt or secure a loan. The borrower owes the note holder. 

Preparing an Affidavit of Documents

You’re definitely watching too many Suits reruns if you think you can imitate Harvey Specter in a courtroom. If you must go to court to enforce a promissory note, at least show the judge you’re organized by submitting an affidavit of documents you need to prove your case. You must share anything you have, control or could produce, except privileged communications you have with your lawyer. An Axess Law Ontario lawyer can help you organize your evidence to satisfy the court’s civil rules. Our lawyers are notary publics and can swear or affirm the contents are true. 

Keeping It Legal

Including a lawyer’s certificate confirms you understand how the affidavit will be used. Your lawyer can also advise you on serving copies on other parties to your dispute. It’s just one more step to getting justice.

Make a Valid Promissory Note

Axess Law’s Ontario virtual notary publics can put their seal on your promissory note online or in person. Get documents e-signed anywhere in Ontario with our convenient video conferencing technology. Dial 1-877-522-9377 or in Greater Toronto 647-479-0118 or use our online booking form to make a video call appointment for any day of the week. Notary publics can meet with you in person at our Ottawa, Toronto, Scarborough, Vaughan, Etobicoke, Mississauga Winston Churchill or Mississauga Heartland law offices.

Click here to learn more about Axess Law’s notary public services.

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