Parties to a Bill of Exchange

There are three parties to a bill of exchange:

1. Drawer — the maker of the bill. A seller or creditor entitled to receive money from the debtor draws the bill on the buyer or debtor, and signs it as its maker.
2. Drawee — the person on whom the bill is drawn. The drawee is the purchaser or debtor of the goods.
3. Payee — the person to whom payment is to be made. The drawer is the payee if he keeps the bill till the date of payment. The payee changes when:
   • the drawer gets the bill discounted — the person who discounts it becomes the payee;
   • the drawer endorses the bill to a creditor — the creditor becomes the payee.

Normally the drawer and the payee are the same person, and the drawee and the acceptor are

the same person. For example, Mamta sells goods worth ₹10,000 to Jyoti and draws a bill on

her for the same amount payable after three months. Here Mamta is the drawer and Jyoti is

the drawee. If Mamta keeps the bill and receives ₹10,000 on the due date, Mamta is the

payee. If she gives the bill to her creditor Ruchi, Ruchi becomes the payee; if she gets

it discounted from the bank, the bank becomes the payee. Since Jyoti accepted the bill, she …