( a) Drawer (b) Drawee (c) Payee (d) Bill Receivable (e) Bill Payable (f) Drawing of a Bill (g) Acceptance of a Bill (h) Payment of a bill Summary with Reference to Learning Objectives . Bill of exchange as an Instrument : A bill of exchange is a device by which the purchaser or debtor in a credit transaction is not required to make immediate payment but satisfies the seller or creditor by accepting in writing the liability to pay the amount due from him. . Meaning of bill of exchange and promissory note: A bill of exchange is an acknowledgement of debt given by one person to another, incorporating all the terms and conditions of payments.
A promissory note is an undertaking in writing given by the debtor to the creditor to pay the latter a certain sum of money in accordance with the conditions stated therein. . Difference between a bill and a note. (a) A bill is prepared by the creditor and accepted by the debtor; a note is prepared by the debtor.
(b) There are three parties to a bill; there are only two parties to a note. (c) A bill requires acceptance to acquire financial status; a note in itself has financial status. . Features and advantages of a bill : A bill is a written unconditional order; it is signed by the creditor and accepted by the debtor; the amount of the bill is payable either on demand or at a fixed period.
Questions for Practice Short Answers . Name any two types of commonly used negotiable instruments. . Write two points of distinction between bills of exchange and promissory note.
. State any four essential features of bill of exchange. . State the three parties involved in a bill of exchange.
. What is meant by maturity of a bill of exchange? . What is meant by dishonour of a bill of exchange?
. Name the parties to a promissory note . What is meant by acceptance of a bill of exchange? .
What is Noting of a bill of exchange. .