Question

When is the bill is said to be dishonoured? (Answer in one sentence)

Answer 1

WHEN DRAWEE NOT PAID AMMOUNT OF THE BILL.

Answer 2

Answer:

Explanation:

The bill is said to be dishonoured when the drawee fails its obligation of making payment on the due/maturity date. This leads to restoration of liability of the acceptor. A dishonoured bill is as good as a bounced cheque.

A bill of exchange can be dishonoured  either because of two reasons:

• Non-acceptance of bill
• Non-payment of bill.

Dishonour by Non-Acceptance

A bill is considered to be dishonoured  by non acceptance when the bill presented is not accepted by the drawee. This lead to dishonour as each and every bill of exchange needs acceptance by its drawee at the time of presentation.

Dishonour by Non-Payment

A bill is considered to be dishonoured by non payment when the drawee makes a default in making the payment of the bill of exchange to the drawer at the time of its maturity .

Hope this helps.