with the bank and get cash immediately. . . Definition of bill of exchange According to the Negotiable Instruments Act, , “Bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument”.
. . Features of bills of exchange An analysis of the definition given above, highlights the following important features of a bill of exchange: (i) It is a written document. (ii) It is an unconditional order.
(iii) It is an order to pay a certain sum of money. (iv) It is signed by the drawer. (v) It bears stamp or it is drafted on a stamp paper. (vi) It is to be accepted by the acceptor.
(vii) The amount of the bill is paid to the drawer or the endorsee. . . Specimen of bill of exchange Bill of exchange , Bazaar Street, Saidapet, Chennai- .
. ` , /- Three months after date pay to me or to my order the sum of Rupees Ten Thousand only for value received To Thiru. Jothi Kumar, , Mint Street, Chennai- . Ramesh Babu Stamp .
. Important terms Explanation of some terms connected with bill of exchange is given below: Accountancy - (i) Drawing of a bill The seller (creditor) prepares the bill in the form presented above. The act of preparing the bill by the seller or creditor in its complete form with the signature is known as ‘drawing’ a bill. (ii) Parties There are three parties to a bill of exchange as under: (a) Drawer: The person who prepares the bill is called the drawer, i.e., a creditor (b) Drawee: The person who has to make the payment or who accepts to make the payment is called the drawee, i.e., a debtor (c) Payee: The person who receives the payment is payee.
He may be a third party or the drawer of the bill. In the above specimen, drawer and payee is Ramesh Babu.