Exercises · Q3
Q.Distinguish between a Bill of Exchange and a Promissory Note.
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Start your 14-day free trial to unlock the full solution →| Basis | Bill of Exchange | Promissory Note |
|---|---|---|
| Made by | The creditor (drawer), ordering the debtor to pay | The debtor (maker), promising to pay |
| Nature | An order to pay | A promise to pay |
| Parties | Three — drawer, drawee, payee (drawer and payee may be the same person) | Two — maker and payee |
| Acceptance | Must be accepted by the drawee before it binds them | No acceptance needed — binding from the moment it is signed |
| Primary liability | The drawee/acceptor; drawer remains liable if dishonoured | The maker alone |
| Governing section | Section 5, Negotiable Instruments Act, 1881 | Section 4, Negotiable Instruments Act, 1881 |
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