BILLS OF EXCHANGE AND PROMISSORY NOTES
Introduction :- Generally
when goods are sold on credit, seller would like that purchaser should give
promise in writing to pay amount of goods on creation date. Now it become an
commercial practice that creditor gives written promises to debtor in proper
form and which is properly stamped for paying at certain specified date. These
written promises are often accepted by banks and they advance money against
these. The written promises may be in form as Bill as exchange and promissory
Definition-According to section 5 of Negotiable instrument Act 1881, A bill of exchange is an
instrument in writing containing an unconditional order sighed by the maker
directing a certain person to pay a certain some of money only to, or to the order of certain
person to the bearer of instruments. In other words, a bill of exchange is
an unconditional order in writing given by the creditor to debtors in writing
which is payable on demand at a fixed future time, a certain sum of money.
Essential features of Bill of Exchange are
must be in writing and unconditional order.
must be dated.
must contain promise to pay certain sum of money.
will be payable to certain person or payable to bearer of Bill at exchange.
payable accepted by creditor in writing on its face.
months after date pay to M/s Tata Sons or order the sum of Rs.20,000/- for
MAYUR VIHAR , Delhi –96
· A foreign bill of exchange is generally
drawn-up in triplicate.
· Section 12 of negotiable instruments Act 1881
says that all instruments which are not inland instruments are foreign.
Following are examples of foreign Bill of
exchange and Promissory Note
A bill drawn in India on a person resident
outside India and made payable outside India.
A bill drawn outside India and made payable
A bill drawn outside India on a person resident
A bill drawn outside India and made payable in
Demo Classes of Accounts (CA/CMA/CS/B.Com/11-12th) by CA/CMA Santosh Kumar Sir
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