: This is payable immediately “at sight” or “on presentment” to the drawee. A billon which no time of payment or “due date” is specified is also termed as a demand bill.
: This is also called time bill. The term usance refers to the time period recognized by custom or usage for payment of bills.
These are the B/Es that are accompanied by documents that confirm that atrade has taken place between the buyer and the seller of goods. These documents include theinvoices and other documents of title such as railway receipts, lorry receipts and bills of ladingissued by custom officials.Documentary bills can be further classified as: (i) Documents against acceptance (D/A) bills and(ii) Documents against payment (D/P) bills.D/ A Bills: In this case, the documentary evidence accompanying the bill of exchange isdeliverable against acceptance by the drawee. This means the documentary bill becomes a clean bill after delivery of the documents.D/P Bills: In case a bill is a “documents against payment” bill and has been accepted by thedrawee, the documents of title will be held by the bank or the finance company till the maturityof the B/E.
: These bills are not accompanied by any documents that show that a trade has taken place between the buyer and the seller. Because of this, the interest rate charged on such bills ishigher than the rate charged on documentary bills.
CREATION OF A B/E
Suppose a seller sells goods or merchandise to a buyer. In most cases, the seller would like to be paid immediately but the buyer would like to pay only after some time, that is, the buyer wouldwish to purchase on credit. To solve this problem, the seller draws a B/E of a given maturity onthe buyer. The seller has now assumed the role of a creditor; and is called the drawer of the bill.The buyer, who is the debtor, is called the drawee. The seller then sends the bill to the buyer whoacknowledges his responsibility for the payment of the amount on the terms mentioned on the bill by writing his acceptance on the bill. The acceptor could be the buyer himself or any third party willing to take on the credit risk of the buyer.