Bills Of Exchange

Introduction

Negotiable Instrument

According To Section 13(1) Of The Negotiable Instrument Act, 1881, A Negotiable Instrument Means A Promissory Note, Bill Of Exchange Or Cheque Payable Either To Order Or To Bearer

Types Of Negotiable Instrument

Recognized By Statute
Bills Of Exchange Promissory Notes Cheques

Recognized By Usage Or Custom

Hundis Share Warrants Dividend Warrants Bearer Debentures

1.
2. 3.

1.
2. 3. 4.

Bills Of Exchange

According to section 5 of Negotiable Instrument Act,

A Bill Of Exchange is an instrument in writing containing an unconditional order, signed by the maker , directing a certain person to pay a sum of money only to or to the order of a certain person or to the bearer of the instrument

Specimen Of A Bill Of Exchange

JAMMU 27th Nov. 2006

Three months after due date, pay XYZ or order, the

Sum of Rs 1000(one thousand only) for value received. To, M/S ABC Gandhi Nagar Jammu Stamp

Parts Of A Bill Of Exchange

Date Term Amount Stamp Parties

Special features
1. 2. 3. 4. 5. 6.

7.
8.

A Bill Of Exchange is an instrument in writing It must be signed by the maker It contains an unconditional order The order must be to pay money and money only The sum payable must be specific The amount must be paid within a stipulated time The name of the drawee must be clearly mentioned It must be dated and stamped

Parties to a Bill Of Exchange

Drawer
The person who draws or writes the Bill Of Exchange is called the Drawer. The Drawer must be the seller or creditor to whom the money is owing

Drawee

The Drawee is the person on whom the bill is drawn. He is the purchaser or debtor who is ordered by the Drawer to pay the amount

Payee

The person who has the right to receive the amount of the bill is called the Payee, the Payee may be a third person or the Drawer himself

Advantages of Bill of Exchange

1. 2. 3.

4.

5.

A Bill of Exchange is used in settlement of debts It fixes the date of payment It is a written and signed acknowledgement of debt A debtor enjoys full period of credit A drawer can convert the bill into cash by getting it discounted with the bank

Thank You