BILL OF EXCHANGE

Under section 5 of Negotiable Instrument Act, 1981,”A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain sum of money only to, or to the order of a certain person or the bearer of the instrument .”

Parties of the Bill : There are three original parties of a bill of exchange – the drawer, the drawee and the payee .

Drawer : A person who draws the bill is called drawer.

Drawee : A person to whom the bill is Drawn or the acceptor of the bill called a Drawee.

Payee : A person to whom the money is ordered to be paid is called the payee. He may be drawer also

Endorser : A person who endorse the bill (or transfer the bill) to the other party is called the endorser.

Endorsee : A person to whom the bill is endorsed or transferred is called the endorsee.

·        Write the word / term / phrase which can substitute each of the following statement.

1.      A person to whom bill is endorsed.

Ans : Endorsee

2.      A person who draws a bill.

Ans : Drawer

3.      A person to whom the bill is payable.

Ans : Payee.

4.      Encashment of bill with the bank at some rebate.

Ans : Discounting of the bill.

5.      A bill drawn in one country and payable in other country.

Ans : Foreign bill

6.      The date on which bill is payable.

Ans : Due Date

7.      Payment of bill before due date.

Ans : Retirement of bill.

8.      Non payment of bill on the due date.

Ans : Dishonour of bill.

9.      A person who notes the dishonour of the bill.

Ans : Notary Public

10.   Payment of bill on due date.

Ans : Honour of bill.

11.   A person who accepts the bill.

Ans : Acceptor / Drawee.

12.   A person who endorses the bill.

Ans : Endorser.