Question

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Answer 1

Answer:

Bill of Exchange Promissory Note

Definition

A negotiable instrument issued to order the debtor to pay the creditor a certain sum of money within a specific date or on demand. A negotiable instrument issued by the debtor with a written promise to pay the creditor a certain amount within a specific date or on demand.

Section

Mentioned in Section 5 of the Negotiable Instruments Act, 1881 Mentioned in Section 4 of the Negotiable Instruments Act, 1881

Issued By

Creditor Debtor

Parties Involved

Three parties involved i.e a drawer, the drawee and a payee. Two parties involved i.e a drawer/maker and the payee

Acceptance

Drawee needs to accept the bill of exchange before payment. No acceptance required from the drawee.

Liability

Liability of drawer is secondary and conditional. Liability of drawer is primary and absolute.

Dishonouring of instrument

Notice served to all the concerned parties involved in the transaction on dishonouring the instrument. No notice served to the drawer in case of dishonouring the instrument.

Copies

Bill of exchange can have copies. The promissory note allows no copies.

Is it Payable to drawer/maker

Yes, the same person can be drawer and payee. The same person cannot be drawer and payee.