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Distinction Between Trade Bill and Accommodation Bill

(i) A trade bill arises from an indebtedness arising from purchase of goods or taking of a loan whereas an accommodation bill is drawn and accepted only for providing fund to one of the parties or both the parties of the bill.


(ii) On discount of a trade bill, full amount is retained by the drawer. In an accommodation bill however the amount may be shared by the drawer and the drawee in an agreed ratio.

(iii) Consideration is present in the trade bill while in accommodation bill there is no consideration.

(iv) Trade bill acts as an evidence of indebtedness while accommodation bill acts as a source of finance.

(v) In order to recover the debt, the drawee can initiate legal action on a trade bill. In accommodation bill, legal remedy for the recovery of amount is not available for immediate parties.

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