bills of exchange aims
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A bill of exchange is an order in writing ,directing a person to pay a sum of money, to a specified person.
Negotiable Instruments Act, 1881 Acts, conclusion, parties involved, specimen examples, essential elements, Difference between promissory note and bills of exchange.
It must contain an express Order to pay Bill of exchange1. BILL OF EXCHANGE Presented by: Praladh Timsina MMAMC BBA – 4th Semester2. Definition • One of the negotiable instruments, • A bill of exchange is an order in writing ,directing a person to pay a sum of money, to a specified person. • Both Nepalese(2034) and Indian(1881), negotiable instruments act of defining bills of exchange are some how similar..3. Section 5 of the Negotiable Instruments Act, 1881 • defines a bill of exchange 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’4. Conclusion • A bill of exchange, therefore, is a written acknowledgement of the debt, • written by the creditor and accepted by the debtor. • There are usually three parties to a bill of exchange • Drawer, Acceptor or Drawee and Payee. (***Drawer himself may be the payee.)5. Parties to a Bill of Exchange • Specimen Rs. 30,000/- Biratnagar August 16, 2016 Five months after date pay Sanjeev or (to his) order the sum of Rupees Thirty Thousand only for value received. To Accepted Stamp Govinda Govinda S/d Address Rashid The above bill is drawn by Rashid, who is ordering Govind to pay Rs. 30,000 to Sanjeev (to whom he is indebted for the same amount) in lieu of goods delivered by Rashid to Govinda.6. Parties to a Bill of Exchange i. The Drawer - The person who makes the order for making payment. He is the maker of the bill. In the above specimen, it is Rashid. ii. The Drawee - The person to whom the order to pay is made. He is generally a debtor of the drawer and when he accepts the bill he becomes the ‘acceptor’ and is liable on it. It is Govinda in the given specimen, to whom the bill of exchange is addressed. iii. The Payee - The person to whom the payment is to be made. In the given specimen ,it is Sanjeev. The drawer can also draw a bill in his own name thereby he himself becomes the payee. Here the words in the bill would be Pay to us or order. In a bill where a time period is mentioned, just like the above specimen, is called a Time Bill. But a bill may be made payable on demand also. This is called a Demand Bill.7. Features of a bill of exchange • Although a bill of exchange and a promissory note are different in form, the essential requirements are more or less the same. 1. It must be in writing. 2. It must be signed by the Drawer. 3. The Drawer, Drawee and Payee must be certain. 4. The sum payable must also be certain. 5. It should be properly stamped, formalities like date ,place etc. 6. It must contain an express Order to pay money and money alone. E.g.. “I shall be highly obliged if you make it convenient to pay Rs. 1000 to Afresh”. (Wrong ) “Please pay Rs. 5000 to the order of ‘P’. (Right) 7. The order must be unconditional.8. Difference between Promissory Note and Bills of Exchange Points of differ Promissory note Bills of Exchange No. of parties Two parties; maker & payee Three parties ; Drawer, Drawee & Payee Promise or Order Promise to pay Order to pay Prior acceptance Not necessary Acceptance by Drawee Liability (maker) Absolute and primary Secondary and conditional Relation The maker of the promissory note stands in immediate relation with the payee The maker or drawer of an accepted bill stands in immediate relations with the acceptor and not the payee. Notice of dishonor To the maker; not necessary To be given by the holder to all the liable persona. Payable to bearer Cannot be drawn Can be done; but in case of ‘payable of bearer on demand’ , it is not drawn.9. Protest Not necessary in case of dishonour of note Foreign bill of exchange must be protested for dishonour when such protest is required to be made by the law of the country where they are drawn Copies Not at all drawn Yes , it can be drawn Provisions of acceptance Not applicable Provisions like presenting for acceptance, acceptance for honour are applicable Difference between Promissory Note and Bills of Exchange