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Distinction Between Bill of Exchange and Promissory Note


Bills of

Promissory Note

1. It is an unconditional order to pay.

1. It is an unconditional promise to pay.

2. It is drawn by the creditor.

2. It is drawn by the debtor, i.e., the person who owes the money.

3.  There are three parties–the drawer, drawee, and the payee.

3.   There are two parties–promisor or the maker and the payee.

4. Acceptance is necessary.

4. No acceptance is required as it is drawn by the promisor, or the debtor.

5. Discounting and retiring of a bill of exchange under rebate is allowed.

5. Discounting and retiring of a promissory note under rebate is not allowed

6. A bill of exchange can be made payable to the bearer.

6.   A promissory note cannot be made payable to the bearer.

7.Presentment for payment is necessary, otherwise drawee will be discharged by delay.

7.  Presentment for payment is not required, unless the promissory note is payable after sight.

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