Characteristics of a Bill of Exchange

Characteristics of a Bill of Exchange i. A bill of exchange is a document in writing. ii. The document must contain an order to pay. iii. The order must be unconditional. iv. The instrument must be signed by the person who draws it. v. The name of the person on whom the bill is drawn must be specified in the bill itself. vi. The drawer, drawee and payee must all be certain. A bill cannot be drawn on two or more drawees in the alternative because where liability lies, ‘no ambiguity must lie’. However, alternative payees are permitted in the law. vii. The amount that is required to be paid must also be specified in the bill. viii. The bill may be payable on demand or after a specified period. ix. It must comply with formalities regarding date, consideration, stamps etc., A bill of exchange can be made payable on demand to a person. It can be made payable after a specified period. But it cannot be payable to bearer on demand.