Jagran Josh Logo

Bill of Exchange

14-NOV-2014 11:33

    Section 5 of the Negotiable Instruments Act, 1881 defines, “A 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”.

    A bill of exchange, as a result, is a written acknowledgement of debt, written by the creditor & accepted by debtor. There are generally 3 parties to a bill of exchange drawer, acceptor, or drawee & payee. Drawer himself can perhaps be the payee.

    Essential conditions of bills of exchange

    1. It must be in writing.
    2. It must be signed by drawer.
    3. The drawee, drawer, & payee must be definite.
    4. The sum payable must also be definite.
    5. It should be appropriately stamped.
    6. It must enclose an express order to pay money & money alone.
    7. The order must be unconditional.

    Classification of Bills

    Bills can be classified as:

    1. Inland & foreign bills
    2. Time & demand bills
    3. Trade and accommodation bills.

    (1) Inland & Foreign Bills

    Inland bill: A bill is, named as an inland bill if:

    (a) it is drawn in India on a person dwelling in India, whether payable outside or in India, or

    (b) it is drawn in India on a person dwelling outside India but payable in India.

    Foreign Bill

    Following are the foreign bills:

    1. A bill drawn outside India & made payable in India
    2. A bill drawn outside India on any person dwelling outside India
    3. A bill drawn in India on a person residing outside India & made payable outside India
    4. A bill drawn outside India on a person dwelling in India
    5. A bill drawn outside India & made payable outside India

    (2) Time and Demand Bill

    Time bill: A bill payable after a fixed time is a time bill.

    Demand bill: A bill payable on demand or at sight is a demand bill.

    (3) Trade & Accommodation Bill Trade bill

    Trade bill: A bill drawn & accepted for an authentic trade transaction is a “trade bill”.

    Accommodation bill: A bill drawn & accepted not for an authentic trade transaction but only to endow with financial help to some party is an “accommodation bill”.

     

    Source: http://www.ddegjust.ac.in/

    Latest Videos

    Register to get FREE updates

      All Fields Mandatory
    • (Ex:9123456789)
    • Please Select Your Interest
    • Please specify

    • By clicking on Submit button, you agree to our terms of use
      ajax-loader
    • A verifcation code has been sent to
      your mobile number

      Please enter the verification code below

    Newsletter Signup
    Follow us on
    This website uses cookie or similar technologies, to enhance your browsing experience and provide personalised recommendations. By continuing to use our website, you agree to our Privacy Policy and Cookie Policy. OK