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Bills Of Exchange. Introduction. Negotiable Instrument . According To Section 13(1) Of The Negotiable Instrument Act, 1881, “ A Negotiable Instrument Means A Promissory Note, Bill Of Exchange Or Cheque Payable Either To Order Or To Bearer”. Recognized By Statute

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negotiable instrument
Negotiable Instrument
  • According To Section 13(1) Of The Negotiable Instrument Act, 1881,

“ A Negotiable Instrument Means A Promissory Note, Bill Of Exchange Or Cheque Payable Either To Order Or To Bearer”

types of negotiable instrument
Recognized By Statute

Bills Of Exchange

Promissory Notes

Cheques

Recognized By Usage Or Custom

Hundis

Share Warrants

Dividend Warrants

Bearer Debentures

Types Of Negotiable Instrument
bills of exchange1
Bills Of Exchange
  • According to section 5 of Negotiable Instrument Act,
  • “A Bill Of Exchange is an instrument in writing containing an unconditional order, signed by the maker , directing a certain person to pay a sum of money only to or to the order of a certain person or to the bearer of the instrument”
specimen of a bill of exchange
Specimen Of A Bill Of Exchange

JAMMU

27th Nov. 2006

Three months after due date, pay XYZ or order, the

Sum of Rs 1000(one thousand only) for value received.

Stamp

To,

M/S ABC

Gandhi Nagar

Jammu

parts of a bill of exchange
Parts Of A Bill Of Exchange
  • Date
  • Term
  • Amount
  • Stamp
  • Parties
special features
Special features
  • A Bill Of Exchange is an instrument in writing
  • It must be signed by the maker
  • It contains an unconditional order
  • The order must be to pay money and money only
  • The sum payable must be specific
  • The amount must be paid within a stipulated time
  • The name of the drawee must be clearly mentioned
  • It must be dated and stamped
parties to a bill of exchange
Parties to a Bill Of Exchange

Drawer

The person who draws or writes the Bill Of Exchange is called the Drawer. The Drawer must be the seller or creditor to whom the money is owing

drawee
Drawee
  • The Drawee is the person on whom the bill is drawn. He is the purchaser or debtor who is ordered by the Drawer to pay the amount
payee
Payee
  • The person who has the right to receive the amount of the bill is called the Payee, the Payee may be a third person or the Drawer himself
advantages of bill of exchange
Advantages of Bill of Exchange
  • A Bill of Exchange is used in settlement of debts
  • It fixes the date of payment
  • It is a written and signed acknowledgement of debt
  • A debtor enjoys full period of credit
  • A drawer can convert the bill into cash by getting it discounted with the bank
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