DEFINITIONS OF BILL 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 a certain sum of money only to the order of certain person or to the bearer of the instrument. Drawer: The person who orders the payment Drawee : The person to whom the order is given. Payee: The person to whom the payment has to be made. Drawer & payee may be the same person. Essential Elements of a Bill Of Exchange Date, Time, Amount, Parties, Stamp, Value Received, Acceptance are essential elements of a bill of Exchange. Features of a Valid Bill of Exchange: [1] It should be in writing and should be unconditional. [2] It should be signed by the drawer of the instrument. [3] It must contain a certain amount of money which has to be paid. [4] Drawer, Drawee and payee must be certain & exact person. [5] It must contain a date & must be stamped. [6] Bill must be accepted by the party on whom it is drawn & addressed. [7] It is a negotiable instrument and can be transferred hand to hand in settlement of order. [8] It is a riskless instrument as we do not require carrying money from one place to other. [9] The debtor enjoys the full credit as he is not imposed to pay the amount of bill before the due date [10] Payment can be enforced on a bill of exchange in a court of law.
Posted on: Tue, 10 Jun 2014 15:05:39 +0000