CHEQUE BILL OF EXCHANGE PROMISSORY NOTE

Definition It is a document used to It is a negotiable instrument It is a legal

make easy payments on issued to order the debtor to document issued by the
demand and can be pay the creditor a certain debtor with a written
transferred through hand sum of money within a promise to pay the
delivery is known as a specific date or on-demand. creditor a
cheque. particular amount
within a selected date or
on-demand.
Parties Involved There are 2 parties
There are 3 parties There are 3 parties involved
involved i.e., a
involved i.e., a drawer, i.e., a drawer, the drawee,
drawer/maker and the
the drawee, and a payee. and a payee.
payee
Dishonouring of If the cheque is Notice served to all the No notice served to the
instrument dishonoured, it cannot concerned parties involved in drawer just in case of
be noted or protested  the transaction on dishonouring the
dishonouring the instrument.
instrument. 
Section Section 6 of The Mentioned in Section 5 of Mentioned in Section 4
Negotiable Instrument the Negotiable Instruments of the Negotiable
Act, 1881 Act, 1881 Instruments Act, 1881
Issued By Debtor Creditor Debtor
Acceptance A cheque does not Drawee must accept the bill No acceptance required
require acceptance. of exchange before payment. from the drawee.
Liability Parties remain liable to The liability of the
Liability of drawer is
pay also in case notice of drawer is primary and
secondary and conditional.
dishonour is not given. absolute.
Copies A cheque can have Bill of exchange can have The promissory note
copies. copies. allows no copies.
Is it Payable to
the drawer/maker The same person cannot Yes, the same person can be The same person cannot
be a drawer and payee. a drawer and payee. be a drawer and payee.
Validity It is valid for 3 years
It is valid for 3 months It is valid up to a specified
from the date of
from date of issue. date.
execution.

SIMILARITIES BETWEEN BILL OF EXHANGE AND CHEQUE

Both are negotiable instruments
It always addresses the drawee to make payment
Both are always in writing
Both are signed by the drawer of the instruments
Both are like express order to pay a certain amount
SIMILARITIES BETWEEN BILL OF EXHANGE AND PROMISSORY NOTE
Both act as evidence of the acknowledgement of a debt
Both may be discounted or endorsed before maturity
Both are negotiable i.e can be transferred from one person to another
Both are legally binding
Both allow for adequate time within which to organise for the payment of the value
of the bill or note