Bill of Exchange

Easy transferability : A debt can be settled by transferring a bill of exchange through endorsement and delivery. Test Your Understanding - II Fill in the blanks with suitable word(s) (i) The person to whom the amount mentioned in the promissory note is payable is known as . (ii) Transfer of a negotiable instrument to another person by signing on it, is known as . (iii) In a promissory note, the person who makes the promise to pay is called as .

(iv) A person who endorses the promissory note in favour of another is known . The term maturity refers the date on which a bill of exchange or a promissory note becomes due for payment. In arriving at the maturity date three days, known as days of grace, must be added to the date on which the period of credit expires instrument is payable. Thus, if a bill dated March is payable days after date it, falls due on April , i.e.

days after March If it were payable one month after date, the due date would be April , i.e. one month and days after March . However, where the date of maturity is a public holiday, the instrument will become due on the preceding business day. In this case if April , falls on a public holiday then the April will be