What are bills of exchange?
A “bill of exchange” is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay on demand or at fixed or determinable future time a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.
What are the 3 types of bill of exchange?
Types of Bills of Exchange
- Trade bill: Where the bill of exchange is drawn and accepted to settle a trade transaction, it is called Trade bill.
- Accommodation bill: Where a bill of exchange is drawn and accepted for mutual help, it is called Accommodation bill.
Who introduced bill of exchange?
(1) Drawer is the maker of the bill of exchange. A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor. The drawer after writing the bill of exchange has to sign it as maker of the bill of exchange.
What are the examples of bill of exchange?
A bill of exchange is of real use if it is accepted by the person directed to pay the amount. For example, X orders Y to pay ₹ 50,000 for 90 days after date and Y accepts this order by signing his name, then it will be a bill of exchange.
What is unconditional bill of exchange?
A bill of exchange contains an unconditional promise to pay a certain sum of money on an agreed date to the drawer or the bearer by the drawee of the bill. Unconditional order implies no condition should be attached by the acceptor regarding the payment.
How many types of Bills of bills of exchange are there?
There are mainly two types of bills of exchange: Bills of Exchange Payable at Sight – They are payable on demand. When the Bill is given to the drawee, he or she must pay the amount. Bills of Exchange after a Certain Period– This is also called term draft and becomes payable after a certain time period.
What are the four types of bill of exchange?
Types of BoE
- 1) Documentary bill of exchange :
- 2) Demand bill :
- 3) Usance bill :
- 4) Inland bills :
- 5) Clean bill :
- 6) Foreign bills :
- 7) Accommodation bill :
- 8) Trade Bill :
Who can issue bill of exchange?
A bill of exchange is issued by the creditor and orders a debtor to pay a particular amount within a given period of time. The promissory note, on the other hand, is issued by the debtor and is a promise to pay a particular amount of money in a given period.
Who are the parties to a bill of exchange?
There are 3 parties involved in a payment by bill of exchange: the drawer is the party that issues a bill of exchange – the ‘creditor’; the beneficiary or payee is the party to which the bill of exchange is payable; the drawee is the party to which the order to pay is sent – ‘the debtor’.