What are Bills of exchange?
A bill of exchange is a binding agreement by one party to pay a fixed amount of cash to another party as of a predetermined date or on demand. Bills of exchange prefers in international trade.
A bill of exchange is an 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. https://learning.tradethiopia.com/
A bill of exchange is a mode of payment utilizing for the purpose of making credit payments. It is a written order that imposes liability on a party to pay a definite amount of money to another party on a pre-decided date.
Essential features of a bill of exchange are-
(1) It must be in writing.
(2) The drawer signs it.
(3) The drawer, drawee and payee must be certain.
(4) The sum payable must also be certain.
(5) It should be properly stamped.
(6) It must contain an express order to pay money and money alone.
Parties to Bills of Exchange
1. Drawer: The person who makes a bill of exchange is called the ‘drawer’.
2. Drawee: The person directed to pay the money by the drawer is called the ‘drawee’,
3. Acceptor: After a drawee of a bill has signed his assent upon the bill, or if there are more parts than one, upon one of such pares and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the ‘acceptor’.
Types of bills of exchange
(1) Inland and Foreign Bills Inland bill:
A bill is, named as an inland bill if:
(a) it is drawn in India on a person residing in India, whether payable in or outside India, or
(b) it is drawn in India on a person residing outside India but payable in India. The following are the Inland bills
(i) A bill is drawn by a merchant in Delhi on a merchant in Madras. It is payable in Bombay. The bill is an inland bill.
(ii) A bill is drawn by a Delhi merchant on a person in London, but is made payable in India. This is an inland bill.
A bill which is not an inland bill is a foreign bill. The following are the foreign bills:
i) A bill drawn outside India and made payable in India.
ii) A bill drawn outside India on any person residing outside India.
iii) A bill drawn in India on a person residing outside India and made payable outside India.
iv) A bill drawn outside India on a person residing in India.
v) A bill drawn outside India and made payable outside India.
(2) Time and Demand Bill Time bill:
A bill payable after a fixed time is termed as a time bill. In other words, bill payable “after date” is a time bill.
A bill payable at sight or on https://www.transmigrarts.com/ demand is termed as a demand bill.
(3) Trade and Accommodation Bill:
A bill drawn and accepted for a genuine trade transaction is termed as a “trade bill”.
A bill drawn and accepted not for a genuine trade transaction but only to provide financial help to some party is termed as an “accommodation bill”.https://learn.financestrategists.com/explanation/bill-of-exchange/bill-of-exchange/