BILL OF EXCHANGE
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What is a Bill of Exchange as defined under the Negotiable Instruments Act, 1881?
A Bill of Exchange is an unconditional order in writing, signed by the maker (drawer), directing a certain person (drawee) to pay a specified sum of money to or to the order of a certain person (payee) on demand or at a fixed future date.
What is the maximum validity period of a Bill of Exchange?
A bill can be drawn for any period agreed by parties.
Who are the three parties typically involved in a Bill of Exchange?
The three parties are the Drawer (who draws and signs the bill), the Drawee (who is ordered to pay and becomes the Acceptor upon acceptance), and the Payee (who receives the payment).
Who is the 'drawee' in a Bill of Exchange?
The person on whom the bill is drawn and who must pay.
What distinguishes a Bill of Exchange from a Promissory Note?
A Bill of Exchange is an order made by one party directing another to pay, involving three parties, whereas a Promissory Note is a promise made by the debtor himself to pay, involving only two parties — the maker and the payee.
Who is the 'drawer' in a Bill of Exchange?
The person who creates and signs the bill of exchange.
What is meant by 'acceptance' of a Bill of Exchange?
Acceptance is the act by which the drawee signs the bill and agrees to pay it on the due date, converting himself into the Acceptor and making the bill legally binding on him.
What is a 'payee' in the context of a Bill of Exchange?
The person in whose favour the bill is drawn for payment.
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