Accountancy, asked by Kalden3905, 1 year ago

Acknowledgments on Bill of exchange

Answers

Answered by devansh25
0
According to the Negotiable Instruments Act 1881, a bill of exchange is defined
as an instrument in writing containing 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 a certain person or to the bearer of the instrument. The following
features of a bill of exchange emerge out of this definition.
• A bill of exchange must be in writing.
• It is an order to make payment.
• The order to make payment is unconditional.
• The maker of the bill of exchange must sign it.
• The payment to be made must be certain.
• The date on which payment is made must also be certain.
• The bill of exchange must be payable to a certain person.
• The amount mentioned in the bill of exchange is payable either on
demand or on the expiry of a fixed period of time.
• It must be stamped as per the requirement of law.
A bill of exchange is generally drawn by the creditor upon his debtor. It has to
be accepted by the drawee (debtor) or someone on his behalf. It is just a draft
till its acceptance is made.
For example, Amit sold goods to Rohit on credit for Rs. 10,000 for three months.
To ensure payment on due date Amit draws a bill of exchange upon Rohit for
Rs. 10,000 payable after three months. Before it is accepted by Rohit it will be
called a draft. It will become a bill of exchange only when Rohit writes the word
“accepted” on it and append his signature thereto communicate his acceptance.
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