File Name: difference between cheque and bill of exchange .zip
The bill of exchange and promissory note are negotiable instruments used for carrying out various economic activities. However, they vary from each other in many ways. The significant difference between them is that a bill of exchange is a written order drafted by the drawer on the drawee to receive the mentioned sum within the specified period. Whereas, a promissory note is a written promise made by the borrower or drawer to repay the amount on a specific date or order of the payee. According to the traditional concept, cash is an inevitable part of every transaction. But in the present scenario, whether it is trading, banking, financing or any other economic activity, bill of exchange and promissory note make the transactions convenient even in the absence of immediate cash. Basis Bill of Exchange Promissory Note Meaning A bill of exchange is a written order drafted by the drawer on drawee to pay a specific sum within a mentioned time period without any condition.
The Negotiable Instruments Act, hereinafter referred to as the Act is an act which deals with promissory notes, bill of exchange and cheques. It provides the definition of these terms and also prescribes the general guidelines revolving around them. A cheque in the usual parlance is issued by a person who has a bank account with funds. The bank provides the cheques to a person and this cheque can be filled by the person holding the account and issue it as a token of payment. The person in whose name the cheque is issued can go to the bank and collect money on depositing the cheque. The cheque if is account payee, then will have to be deposited in the bank of the person in whose name the cheque has been made.
Bill of Exchange and Cheque are the most common documents which are used widely by all most every person to make payments easily. We have also written an article about the difference between Promissory Note and Bill of Exchange. A Cheque generally is an order by the customer of a bank directing the bank to pay on demand, the specified amount to the bearer of the cheque or for the person which the cheque is issued. A Cheque is a usual method of withdrawing money from a current account of the customer with the bank. Savings accounts are also permitted to use cheque by maintaining a certain amount of balance in the account.
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a contract , which promises the payment of money without condition, which may be paid either on demand or at a future date.
A negotiable instrument is a written document, which entitles a certain amount and is transferable from one person to another, by simple delivery or by endorsement and delivery. There are three types of a negotiable instrument as per statute, i. There are many instances when people juxtapose cheque for a bill of exchange, but they are different, in the sense that a bill of exchange requires acceptance, whereas there is no need for acceptance in cheque. Basis for Comparison Cheque Bill of Exchange Meaning A document used to make easy payments on demand and can be transferred through hand delivery is known as cheque. A written document that shows the indebtedness of the debtor towards the creditor.
Also, they are used generally in international exchange. This documentation indicates that a purchasing party has accepted the fact that they need to pay a selling party a certain amount at a fixed time for delivered materials. They are also known as debt notes that support financing for either an individual or a company source aside from a traditional lender. The difference between bill of exchange and promissory note is that the bill of exchange has to get accepted before any sort of payment happens, and the second one meaning promissory note does not require the acceptance of any kind. A bill of exchange is a form of negotiable instrument which carries the statement of the buyer to the seller regarding the amount of money to be paid. Three parties who play a pivotal role in the process are payee, drawee, and the drawer.
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Difference Between Cheque and Bill of Exchange · 1) Drawer: A maker of the bill of exchange. · 2) Drawee: An individual on whom the bill is drawn.Reply
A cheque is always drawn on a banker, while a bill of exchange may be drawn on any one, including a banker. 2. A cheque can only be drawn payable on demand; a bill of exchange may be drawn payable on demand, or on the expiry of a certain period after date or sight.Reply