Quick Answer: When Can A Bill Of Exchange Be Treated As Promissory Note?

What is bills of exchange with example?

Meaning 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..

Who is primarily liable on promissory note?

The maker of a promissory note is primarily liable, since that person is the individual who has originally promised to pay. He or she must meet this obligation when payment becomes due unless he or she has a valid defense or has been discharged of the debt.

Why is a bill of exchange needed?

A bill of exchange helps to counter some of the risks involved with exporting. Long-term trading arrangements between firms in different countries can be badly effected by exchange rate fluctuations, so the fixed payment terms laid out in a bill of exchange provides exporters with the assurance of a fixed price.

WHO endorses a bill of exchange?

Endorser The person, either the drawer or holder, who endorses the bill to any one by signing on the back of it is called an endorser. 7. Endorsee He/She is the person in whose favor the bill is endorsed.

What comes under negotiable instrument act?

A Negotiable Instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. … (2) A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or -some of several payees.

When can you treat a bill of exchange as a promissory note?

When the Bill of Exchange may be treated as a Promissory Note: a. The drawer and the drawee are the same person; (Sec.

Is Bill of exchange promissory note?

The most important feature of Promissory Note is, once it is drawn by the debtor, it need not be accepted by the creditor. Two parties are involved in the promissory note….Meaning of Promissory Note.Bill of ExchangePromissory NoteYes, the same person can be drawer and payee.The same person cannot be drawer and payee.17 more rows

What is the difference between a promissory note and a bill of exchange?

A promissory note is a specific form of a bill of exchange with the essential difference being that a promissory note is a promise by the maker to pay whereas an ‘ordinary’ bill of exchange is an order to someone else to pay.

What are bills of exchange?

A bill of exchange is a written order binding one party to pay a fixed sum of money to another party on demand or at some point in the future.

How many parties are there in a promissory note?

threeParties of Promissory Note All promissory notes constitute three primary parties. These include the drawee, drawer and payee. Drawer: A drawer is a borrower or debtor who promises to pay the debt to the moneylender.

What is a promissory note example?

A simple promissory note might be for a lump sum repayment on a certain date. For example, you lend your friend $1,000 and he agrees to repay you by December 1. The full amount is due on that date, and there is no payment schedule involved.

What is promissory note bill of exchange?

A negotiable instrument is a commercial document in writing, that contains an order for payment of money either on demand or after a certain time. Bill of Exchange carries an order to pay the money while Promissory Note contains a promise to pay money. …

Is Cheque a bill of exchange?

A cheque is a type of bill of exchange, used for the purpose of making payment to any person. It is an unconditional order, addressing the drawee to make payment on behalf the drawer, a certain sum of money to the payee.

What are the characteristics of bills of exchange?

The parties to the bill (the drawer, the drawee, and the payee) should be certain and definite individuals. There should be a definite amount to be paid. The payment needs to be paid in cash than in kind. The bill can be either on demand or after a specific time period.

What is the meaning of promissory note?

A promissory note is a financial instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on demand or at a specified future date.