Question

Difference between trade bill and accommodation bill

Answer 1

Trade Bill:

1. It is a real bill.

2. Rightly used for financing trade

3. Drawer is a creditor

4. Drawer is a debtor.

5. Valuable consideration is there by backing real transitions

6. Bankers are willing to buy such documents.

7. Documents of title to goods are to the bill

Accommodation

1. It is an imaginary bill

2. Misused for raising a loan.

3. Drawer is pretended creditor (Really creditors is the real debtor)

4. Drawer is a pretended debtor.(really a creditor)

5. No value consideration is there because there is no backing of real transaction

6. Bankers are reluctant or unwilling to buy accommodation bills.

7. No documents are attached because of no transitions existed.

Answer 2

There are many differences between the trade bill and accommodation bill.

Trade Bill:

•  Trade bill is real which are used for "financing trade".
•  These bills are issued by or brought from bankers.
•  In trade, the bill drawer is both creditor and debtor.

Accommodation Bill:

•   Accommodation bill is an "imaginary bill" and is misused to raise the loan.
•   In accommodation, bill drawer is pretended as creditor and debtor.
•   Bankers do not want to buy accommodation Bill.
•   There is no banking transaction.