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, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a certain sum of money to or to the order of a specified person, or to the bearer.
What is the maximum number of days of grace allowed on a Bill of Exchange in India?
Three days of grace are allowed under NI Act.
Who are the three parties involved in a Bill of Exchange?
The three parties are the Drawer (who draws the bill and is the creditor), the Drawee (who is ordered to pay and is the debtor), and the Payee (who receives the payment, which may be the drawer himself or a third party).
Who is the 'Payee' in a Bill of Exchange?
Person to whom payment is directed or ordered.
What is the distinction between a Bill of Exchange and a Promissory Note?
In a Bill of Exchange, the drawer orders a third party (drawee) to pay, making it a three-party instrument; in a Promissory Note, the maker himself promises to pay, making it a two-party instrument with no requirement of acceptance.
What is a 'Holder in Due Course' of a Bill of Exchange?
Person who obtains bill for value before maturity without notice of defect.
What does 'acceptance' mean in the context of a Bill of Exchange?
Acceptance is the act by which the drawee signifies his assent to the order of the drawer by signing his name across the face of the bill, thereby becoming the acceptor and making himself liable to pay on maturity.
What is the legal effect of a Bill of Exchange being 'Accepted for Honour'?
Third party accepts liability to pay if drawee defaults on maturity.
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