Bill of exchange
A bill of exchange or "draft" is a written order by the drawer to the drawee to pay money to the payee. A common type of bill of exchange is the cheque (check in American English), defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange. They are not used as often today.
Bill of exchange, 1933 A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at fixed or determinable future time a sum certain in money to order or to bearer. (Sec.126) It is essentially an order made by one person to another to pay money to a third person. A bill of exchange requires in its inception three parties—the drawer, the drawee, and the payee. The person who draws the bill is called the drawer. He gives the order to pay money to the third party. The party upon whom the bill is drawn is called the drawee. He is the person to whom the bill is addressed and who is ordered to pay. He becomes an acceptor when he indicates his willingness to pay the bill. (Sec.62) The party in whose favor the bill is drawn or is payable is called the payee. The parties need not all be distinct persons. Thus, the drawer may draw on himself payable to his own order. (see Sec. 8) A bill of exchange may be endorsed by the payee in favour of a third party, who may in turn endorse it to a fourth, and so on indefinitely. The "holder in due course" may claim the amount of the bill against the drawee and all previous endorsers, regardless of any counterclaims that may have disabled the previous payee or endorser from doing so. This is what is meant by saying that a bill is negotiable. In some cases a bill is marked "not negotiable" – see crossing of cheques. In that case it can still be transferred to a third party, but the third party can have no better right than the transferor.
Types of Bill of Exchange on the Basis of Period:
On the basis of period bills are of two types: 1. but it is acceptedcalled Foreign bill. It is als2 2)ACCOMODATION BILL: These bills are drawn in order to borrow certain sum of mone3 3)INLAND BILL : Inland bill means the bill which is drawn & payable within the same co4 4)FOREIGN BILL : The bill which is written in one country like Pakistan.Definition
An unconditional order issued by a person or business which directs the recipient to pay a fixed sum of money to a third party at a future date. also calleddraft.DOCUMENTARY BILL : When there is no documents are attached with the bill is know7 7)DEMAND BILL : When bill is paid immediately on demand it is known as demand bill. The future date may be either fixed or negotiable. It8 8)TIME BILL : A bill which is payable at fixed period on a specified day is known as ti9 9)ORDER BILL: The payment of the bill is restricted to the person whose name has been mentio10 10)BEARER BILL: These bills are payable to any person whose carries them."for acceptance. A bill of exchange must be in writing and signed and dated.5 5)DOCUMENTARY BILL: When documents are attached with a bill is known as " Documentary b(i) Railway receipt (ii) Marine insurance policy (iii) Invoices (iv) Bill of 6 6)NON. There is nocarries the bill can get the payment against the bill. Demand bills
TYPES OF BILLS OF EXCHANGE
1)BILL IN SETS: When bill is made in one or more in number is known as " Bill in sets. The third part of bill are sent due to safety transmission.
ii. this type of bill of exchange is called a foreign bill. Commercial Bill A bill which is drawn for business purposes is called a Commercial bill. They become payable at ay time. Term bills
Demand Bills of Exchange:
There is no fixed date for the payment of such bill.
Types of bills of exchange :->
A bill of exchange is of the following types. Inland Bill A bill of exchange which is drawn in a country and is payable anywhere in the same is called an Inland Bill. For example it has been drawn by a businessman in Pakistan in the name of other businessman living in Japan. The period after which these bill become due for payment is called tenor.2. the payment of the bill of exchange will be among the two businessman of different nations therefore this kind of bill of exchange is called Foreign Bill.
Tem Bills of Exchange:
These bills are payable after specified period of time. For example if a bill is drawn in Pakistan and is payable in any city of the country it will be considered as an Inland Bill.
iii. Sometimes a businessman does not pay in cash but issues a bill which is payable in some future
. Foreign Bill If a bill is drawn in one country but is payable in any other country. when they are presented before payee by the holder.
date such type of a bill is called a Commercial Bill.
v. Accomodation Bill An accommodation bill is a bill whereof the acceptor according to the terms of the instrument stands as a surety for some other person who may or may not be a party thereto. Time Bill These are such type of bills which are payable on demand on some specified dates.
vi. Such type of bills are generally used for specific purposes. These specified dates may be of present or future.
iv. Demand Bill The bills which are payable on demand are called demand bills.