Bills of Exchange

• Both bills of exchange and promissory note are negotiable instruments, thereby meaning that they can be transferred to any person or institution. These are very good short term financing tools that lubricate daily running of business. A bills of Exchange is a written, unconditional order to pay certain sum of money, being properly dated and stamped and signed by the maker or drawer of the bill and accepted by the Drawee.
• There are three parties that are involved
  • Drawer
  • Drawee
  • Payee
• Drawer and Payee can be the same party but it is always not so
• A promissory note is also a negotiable instrument, biut it offers bills of exchange in the following manner. It has only two parties, with a proise to make payment, drawn by the purchaser and acceptance is not required as the same person who pays the amount prepares it.