Also known as: payable upon demand · on demand
Written by attorneys · grounded in primary & secondary sources — see below
A feature of a promise or order to pay that renders the instrument due immediately upon presentment or at the holder's option. The absence of any stated time of payment or explicit language making payment due at the holder's will produces this result. Dishonor occurs if presentment is made and payment is refused on that day.
Pedro Pacheco is charged with a crime in State A and flees to State B. State A's governor issues a formal demand for his return. State B officials must deliver Pedro on that demand so the prosecution in State A can proceed without delay.
Pulse Media, a limited partner, delivers a record demand to the general partner for detailed financial exposure tables. The partnership must furnish the information on that demand unless the request is unreasonable under the circumstances.
Philip Powell signs a note that contains no maturity date. Pacific Bank, the holder, presents the note for payment. Because the note states no time of payment, it qualifies as payable on demand and is due at once.
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Pamela Phillips issues a note payable on demand to Prime Logistics. Prime presents the note on Tuesday. When Pamela refuses payment that same day, the note is dishonored and Prime may pursue the maker immediately.
A note is payable on demand when it states it is payable on demand or at sight, indicates it is payable at the will of the holder, or states no time of payment at all. This classification makes the instrument due upon proper presentment.
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A demand note is dishonored if it is duly presented to the maker and the maker does not pay on the day of presentment. Presentment on any business day starts the clock for that day's payment obligation.
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In a promise to pay money that is otherwise unconditional, the phrase 'on demand' fixes the time when interest begins to run rather than creating a condition that must be satisfied before suit can be brought. The payee may sue without first making a demand.
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An instrument payable on demand becomes overdue at the earliest of the times specified in UCC § 3-304(a). After that point a subsequent holder cannot qualify as a holder in due course.
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