question!
What is bill of exchange and characterstic of bill of exchange.
Answers
What is Bill of Exchange?
A bill of exchange refers to a written interest that does not bear any interest. A bill of exchange is generally used in international trade and aims at binding one party to pay a fixed amount of money to another party at a predestined future date. As explained by Investopedia, bills of exchange are just like checks and promissory notes. This implies that they can be drawn by banks or individuals and are also commonly transferable through the way of endorsements. In case of being endorsed by a bank, they can be called as bank drafts and in case of being issued by individuals, they are called as trade drafts.
Features/Characteristics of the Bill of Exchange
The main features or characteristics carried by a bill of exchange include:
A bill of exchange needs to be in writing.
It should essentially include an order to pay.
It is required for the order to pay to be unrestricted. If it is, in any case, subject to the occurrence of some events, it will not be considered as a bill of exchange.
It is required to be duly signed and stamped by the drawer.
The parties to the bill (the drawer, the drawee, and the payee) should be certain and definite individuals.
There should be a definite amount to be paid.
The payment needs to be paid in cash than in kind.
The bill can be either on demand or after a specific time period.
The bill can be payable either to the bearer as well as to the order of payee
• Bill of Exchange is an instrument in writing an unconditional order signed by the Drawer directing the drawee to pay a certain sum of money to him or his order of a certain person to the bearer.
• Bill of Exchange must be in writing or it must in black and white
• It is an order for payment, not a request.
• This order must be unconditional.
• It contain an order for payment of specified sum of money.
• The Date of payment must be certain or a Fixed date.