Question

Difference between usance and co-acceptance bills of exchange

Answer 1

Section 22 of Negotiable instrument act 1881 provides that “every promissory note, bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the date on which is expressed to be payable”.

Thus, in the case of Usance bills, three days of grace is available to drawee for payment, after the date which it is expressed to be payable in the bill. Hence, Usance due date of bills will be the last day of grace.

Usance bills are the bills payable by the drawee at a specified period ‘after date’ or ‘after sight ’of the bill. The term ‘after date’ means the due date will be calculated from the date of the bill. The term ‘after sight’ means the due date will be calculated from the date of presentation of a bill for the acceptance of the drawee. A Usance bill shall be adequately stamped at the time when it is drawn as it attracts stamp duty which varies according to the value of the bill and usance period.