Bills of Exchange
BILLS OF EXCHANGE
According to Indian Negotiable Instrument Act, “ A bill of exchange is an instrument in writing, an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of certain person or to the bearer of the instrument.” CHARACTERISTICS Bills of exchange has got the following features:
1. An Unconditional order It is an order by the drawer (creditor) to his drawee {debtor) without any condition. It becomes binding upon the acceptor of the bill to carry out the order.
2. Written document Bill of exchange must be in writing. It is a document, which can be produced in the court as evidence.
3. Order to pay certain amount It is an unconditional order to make payment of certain specified amount. The amount must be specified in figures and words.
4. Payment on specified date The amount is payable after the expiry of certain period. Normally 2 to 3 days of grace are allowed
5. Signed by the drawer The bill must be signed by its maker. Without signature, it will not be a legal document.
IMPORTANT NOTES REGARDING BILL OF EXCHANGE.
1. Bill of exchange is drawn by a creditor upon his debtor.
2. It is legal valid document.
3. It is also an evidence of debt.
PARTIES TO THE BILL OF EXCHANGE
Bill of exchange involves the following three parties:
1. Drawer Drawer means the person who draws/or makes the bill for receiving certain amount from the drawee. He must be the creditor or supplier or seller.
2. Drawee Drawee is the person or the party who has to make the payment or who accepts to make the payment against the bill drawn by the creditor.
3. Payee Payee is the person who receives the payment. In the case of bill of exchange. If the bill is retained by drawer till due date then Drawer is a ‘payee’; if
According to Indian Negotiable Instrument Act, “ A bill of exchange is an instrument in writing, an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of certain person or to the bearer of the instrument.” CHARACTERISTICS Bills of exchange has got the following features:
1. An Unconditional order It is an order by the drawer (creditor) to his drawee {debtor) without any condition. It becomes binding upon the acceptor of the bill to carry out the order.
2. Written document Bill of exchange must be in writing. It is a document, which can be produced in the court as evidence.
3. Order to pay certain amount It is an unconditional order to make payment of certain specified amount. The amount must be specified in figures and words.
4. Payment on specified date The amount is payable after the expiry of certain period. Normally 2 to 3 days of grace are allowed
5. Signed by the drawer The bill must be signed by its maker. Without signature, it will not be a legal document.
IMPORTANT NOTES REGARDING BILL OF EXCHANGE.
1. Bill of exchange is drawn by a creditor upon his debtor.
2. It is legal valid document.
3. It is also an evidence of debt.
PARTIES TO THE BILL OF EXCHANGE
Bill of exchange involves the following three parties:
1. Drawer Drawer means the person who draws/or makes the bill for receiving certain amount from the drawee. He must be the creditor or supplier or seller.
2. Drawee Drawee is the person or the party who has to make the payment or who accepts to make the payment against the bill drawn by the creditor.
3. Payee Payee is the person who receives the payment. In the case of bill of exchange. If the bill is retained by drawer till due date then Drawer is a ‘payee’; if