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The Standby Promissory Note serves as a contingent payment instrument in commercial and financial transactions under Canadian law. It is commonly used when parties need a payment commitment that only becomes active upon specific conditions or events, such as default under a primary obligation, failure to perform specified duties, or other predetermined triggers. The document provides security to the payee while allowing the maker to maintain liquidity until the triggering event occurs. This instrument must comply with the Canadian Bills of Exchange Act and relevant provincial legislation, particularly regarding formalities, interest rates, and enforcement. The Standby Promissory Note is especially valuable in complex commercial transactions, credit support arrangements, and international trade, where it can serve as a backup payment mechanism or security instrument.

1. Promise to Pay: Unconditional promise to pay a specific sum of money, including the principal amount and currency

2. Interest Rate: Specification of the applicable interest rate, calculation method, and payment frequency

3. Payment Terms: Details of when and how payment must be made, including the maturity date and payment location

4. Triggering Events: Specific conditions or events that will trigger the payment obligation under the standby note

5. Default Provisions: Definition of events of default and consequences of default

6. Notice Requirements: Procedures for giving notice of triggering events or payment demands

7. Maker's Details: Full legal name and address of the person/entity promising to pay

8. Payee's Details: Full legal name and address of the person/entity to whom payment is promised

9. Governing Law: Specification of Canadian law as the governing law

10. Execution: Signature blocks and witnessing requirements