Bills of exchange

Bills of exchange is also one of the important Negotiable instrument in India. It has been defined in section 5 of Negotiable Instrument Act 1881 as follows :-

'A  bills of exchange is an instrument in writing containing an unconditional order signed by the maker of directing a certain person to pay a certain sum of money. Only two or the order of a certain person to the bearer of the instrument.'

Usually there are three parties in bills of exchange.

1) Drawer - who makes the bill (seller)

2) Drawee - who accepts the bill (buyer)

3) Payee - who receives the amount.

The specimen of bills of exchange is as follows :-

On the basis of definition mentioned in section 5 following are the features of bills of exchange.

1) It must be in writing .

2) Itmust contain order to pay 

3) It must be unconditional.

4) Bill must be signed by the drawer.

5) Bill must be accepted by the drawee.

6) The parties of bills of exchange must be certain.

7) The sum payable must be certain.

8) Bill must contain an order to pay money and money only.