On Demand Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of On Demand, written in plain English, along with examples of how it is used.
What is On Demand?
Condition to make payment to the holder of a note when he makes a request or demands payment of the amount due for which he has legal rights.
History and Meaning of "On Demand"
The term "On Demand" refers to a condition in a legal agreement wherein payment must be made to a holder of a note or an investor in a security upon demand or request. This means that the holder of the note or security has the legal right to demand payment at any time, without needing to wait for a specified date or event.
This term is commonly used in the context of financial transactions, such as loans or bonds. It allows the holder of the note or security to have more control over their investment and ensures that they can receive payment when they need it.
Examples of "On Demand"
- A borrower takes out a loan with an "On Demand" clause requiring them to repay the loan as soon as the lender demands payment.
- A bond issuer includes an "On Demand" provision in the bond agreement, allowing bondholders to demand repayment of the principal amount before the maturity date.
- An investor purchases a security with an "On Demand" feature, which allows them to sell the security back to the issuer at any time for the full purchase price.
Legal Terms Similar to "On Demand"
- Demand Note: a promissory note that requires the borrower to pay the loan amount upon demand rather than at a specified date.
- Call Option: an agreement that gives the holder the right (but not the obligation) to purchase an asset or security at a specified price at any time before a pre-determined expiration date.
- Put Option: an agreement that gives the holder the right (but not the obligation) to sell an asset or security at a specified price at any time before a pre-determined expiration date.