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Long Answer Questions · Q1

Q.A bill of exchange must contain "an unconditional promise to pay." Do you agree with the statement?

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✓ Free question

No — a bill of exchange contains an unconditional ORDER to pay, not a promise; it is the promissory note that contains an unconditional promise.

The statement is incorrect. Under the Negotiable Instruments Act, 1881:

  • A bill of exchange contains an unconditional order by the drawer (creditor) directing the drawee (debtor) to pay a certain sum. It has three parties and requires acceptance by the drawee.
  • A promissory note contains an unconditional promise by the maker (debtor) to pay a certain sum. It has two parties and needs no acceptance.

So an unconditional promise to pay is the essential feature of a promissory note, whereas a bill of exchange embodies an unconditional order. The two must not be confused.

✓Final answer

Disagree — a bill of exchange contains an unconditional ORDER to pay; the unconditional PROMISE to pay is the feature of a promissory note.

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