Bill of exchange as an Instrument: A bill of exchange is a device by which the purchaser or debtor in a credit transaction is not required to make immediate payment but satisfies the seller or creditor by accepting in writing the liability to pay the amount due from him.
Meaning of bill of exchange and promissory note: A bill of exchange is an acknowledgement of debt given by one person to another, incorporating all the terms and conditions of payments. A promissory note is an undertaking in writing given by the debtor to the creditor to pay the latter a certain sum of money in accordance with the conditions stated therein.
Difference between a bill and a note.
A bill is prepared by the creditor and accepted by the debtor; a note is prepared by the debtor.
There are three parties to a bill; there are only two parties to a note.
A bill requires acceptance to acquire financial status; a note in itself has financial status.
Features and advantages of a bill: A bill is a written unconditional order; it is signed by the creditor and accepted by the debtor; the amount of the bill is payable either on demand or at a fixed period.
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