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

Types Of Negotiable
Instrument
Recognized By
Recognized

Usage Or
Custom

By Statute
1.

2.

3.

Bills Of
Exchange
Promissory
Notes
Cheques

1.
2.
3.
4.

Hundis
Share Warrants
Dividend Warrants
Bearer
Debentures

Bills Of
Exchange
A Bill Of Exchange is an

According to section 5 of Negotiable

Instrument Act,

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
JAMMU
27th Nov. 2006

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

Sum of Rs 1000(one thousand only) for value received.
To,
M/S ABC
Gandhi Nagar
Jammu

Stamp

Parts Of A Bill Of
Date Exchange
Term
Amount
Stamp
Parties

1.
2.
3.
4.
5.
6.
7.
8.

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
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

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

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

1.

2.
3.

4.
5.

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

Kinds of Bills Of
Exchange
Inland
Bill

Foreign
Bill

Kinds of Bills Of
Exchange

Trade Bills Accommoda

tion Bills

Kinds of Bills Of
Exchange
Demand
Bill

Time Bill

Thank You