Coupon Accepted Successfully!


Meaning and definition:

A Bill of exchange is defined as “instrument in writing containing an unconditional order signed by the maker directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument

In simple words, it is a written unconditional order by one party, the drawer, addressed to another party, the drawee, to pay a specified amount of money to a named party, the payee, or to the bearer, at a fixed or determinable future time on demand.

In Nutshell

  • A Bill of Exchange is an instrument in writing
  • It contains an unconditional order
  • The order must be to pay money and money only
  • The sum payable must be specific
  • The name of the drawee must be clearly mentioned
  • It must be dated and stamped
  • The draft must be accepted for payment by the party to whom the order is made.

Parties to a Bill of Exchange

  • Drawer: The person who draws the bill is called ‘Drawer’. He is the person who has sold the goods on credit. In other words, he is the person who gives the order to pay. He is also known as maker.
  • Drawee: The person on whom the bill is drawn for his acceptance is called ‘Drawee’. He is the person who has purchased goods on credit. In other words, the person who is directed to pay is called the drawee. He is also known as acceptor.
  • Payee: The person to whom the payment is to be made is called the payee.

Format of Bill of Exchange

Test Your Skills Now!
Take a Quiz now
Reviewer Name