A
payee is the person to whom the payment is to be made. The drawer of the bill
himself will be the payee if he keeps the bill with him till the date of its
payment.
Features of bills of exchange:
i.
A bill of
exchange must be in writing.
ii. It is an order to make payment.
iii. The order to make payment is unconditional.
iv. The maker of the bill of exchange must sign
it.
v. The payment to be made must be certain.
vi. The date on which payment is made must also be
certain.
vii. The bill of exchange must be payable to a
certain person.
viii. The amount mentioned in the bill of exchange
is payable either on demand or on the expiry of a fixed period of time.
ix. It must be stamped as per the requirement of
law.
Q.2. Describe the
Advantages of Bill of Exchange.
Ans: - Advantages of Bill of exchange:
i.
Framework for relationship: A bill of exchange represents a device, which
provides a framework for enabling the credit transaction between the
seller/creditor and buyer/debtor on an agreed basis.
ii.
Certainty of terms and conditions: The creditor knows the time when he would receive the
money so also debtor is fully aware of the date by which he has to pay the
money.
iii.
Convenient means of credit: A bill of exchange enables the buyer to buy the
goods on credit and pay after the period of credit.
iv.
Conclusive proof: The bill of exchange is a legal evidence of a
credit transaction implying thereby that during the course of trade buyer has
obtained credit from the seller of the goods; therefore, he is liable to pay to
the seller.
v.
Easy transferability: A debt can be settled by transferring a bill of
exchange through endorsement and delivery.
Q.3. What is
Promissory note? What are the features of Promissory note?
Ans: - A
Promissory note is defined as an
instrument in writing, containing an unconditional undertaking signed by the
maker, to pay a certain sum of money only to or to the order of a certain
person, or to the bearer of the instrument.
Features of Promissory note are:
Q.4. Create a specimen
of bill of exchange and promissory note.
Ans: -
a) Bill of Exchange
Mr.
X
Rs.50,000
|
Assam
April
01,2010
|
Three
months after date pay to me or my order, the sum of rupees Fifty Thousand
only, for value received.
|
STAMP
Accepted
(signed)
Mr.
Y
Dibrugarh,
Assam
|
(Signed)
Mr.
X
Tinsukia,
Assam
|
|
Mr.
Y
Dibrugarh,
Assam
|
b) Promissory Note
Mr.
X
Rs.50,000
|
Assam
April
01,2010
|
Three
months after date I promise to pay Mr. Y or order a sum of Rupees Fifty Thousand
only for value received.
|
STAMP
|
|
To,
Mr.
Y
Dibrugarh,
Assam
|
Mr.
X
Tinsukia,
Assam
|
Q.5. Differentiate
Between Bill of Exchange and Promisory Note.
Ans: -
Basis
|
Bill of Exchange
|
Promissory Note
|
i.
Drawer
|
It
is drawn by the creditor
|
It
is drawn by the debtor
|
ii. Order or Promise
|
It
contains an order to make payment. There can be three parties to it, viz. the
drawer, the Drawee and the payee.
|
It
contains a promise to make payment. There are only two parties to it, viz.
the drawer and the payee.
|
iii. Acceptance
|
It
requires acceptance by the Drawee or someone else on his behalf.
|
It
does not require any acceptance.
|
iv. Payee
|
Drawer
and payee can be the same party
|
Drawer
cannot be the payee of it
|
v. Set
|
A bill of exchange can be drawn in sets.
|
Promissory note cannot be drawn in sets.
|
vi. Notice
|
In
case of its dishonour due notice of dishonour is to be given by the holder to
the drawer.
|
No
notice needs to be given in case of its dishonour.
|
Q.6 What are the difference between Trade Bill and
Accommodation Bill?
Ans: -
Basis
|
Trade Bill
|
Accommodation Bill
|
i.
Purpose
|
There are
drawn for trade purposes.
|
These are drawn and accepted for financial
assistance.
|
ii. Consideration
|
These are
drawn against proper consideration.
|
These are drawn in the absence of any consideration.
|
iii. Proof
|
These bills
are proof of debt.
|
These bills are not a proof of debt.
|
iv. Legal action
|
For
obtaining the debt from Drawee, Drawee can resort to legal action.
|
Legal action cannot be resorted the recovery of
amount against these bills by the immediate parties. |