Definition,:A bill of exchange is an order in writing ,directing a person to pay a sum of money, to a specified person. Negotiable Instruments Act, 1881 Acts, conclusion, parties involved, specimen examples, essential elements, Difference between promissory note and bills of exchange. It must contain an express Order to pay money

1. BILL OF EXCHANGE
Presented by: Praladh Timsina
MMAMC BBA – 4th Semester

2. Definition
• One of the negotiable instruments,
• A bill of exchange is an order in writing ,directing
a person to pay a sum of money, to a specified
person.
• Both Nepalese(2034) and Indian(1881),
negotiable instruments act of defining bills of
exchange are some how similar..

3. Section 5 of the Negotiable
Instruments Act, 1881
• defines a bill of exchange as ‘an instrument in
writing, containing an unconditional order,
signed by the maker, directing a certain
person to pay a certain sum of money only to
or to the order of a certain person, or to the
bearer of the instrument’

4. Conclusion
• A bill of exchange, therefore, is a written
acknowledgement of the debt,
• written by the creditor and accepted by the
debtor.
• There are usually three parties to a bill of
exchange
• Drawer, Acceptor or Drawee and Payee.
(***Drawer himself may be the payee.)

5. Parties to a Bill of Exchange
• Specimen
Rs. 30,000/- Biratnagar
August 16, 2016
Five months after date pay Sanjeev or (to his) order the sum of Rupees Thirty Thousand
only for value received.
To Accepted Stamp
Govinda Govinda S/d
Address Rashid
The above bill is drawn by Rashid, who is ordering Govind to pay Rs. 30,000 to Sanjeev
(to whom he is indebted for the same amount) in lieu of goods delivered by Rashid to
Govinda.

6. Parties to a Bill of Exchange
i. The Drawer - The person who makes the order for making
payment. He is the maker of the bill. In the above
specimen, it is Rashid.
ii. The Drawee - The person to whom the order to pay is made. He
is generally a debtor of the drawer and when he
accepts the bill he becomes the ‘acceptor’ and is
liable on it. It is Govinda in the given specimen, to
whom the bill of exchange is addressed.
iii. The Payee - The person to whom the payment is to be made.
In the given specimen ,it is Sanjeev.
The drawer can also draw a bill in his own name thereby he himself becomes the
payee. Here the words in the bill would be Pay to us or order. In a bill where a time
period is mentioned, just like the above specimen, is called a Time Bill. But a bill
may be made payable on demand also. This is called a Demand Bill.

7. Features of a bill of exchange
• Although a bill of exchange and a promissory note are different in
form, the essential requirements are more or less the same.
1. It must be in writing.
2. It must be signed by the Drawer.
3. The Drawer, Drawee and Payee must be certain.
4. The sum payable must also be certain.
5. It should be properly stamped, formalities like date ,place etc.
6. It must contain an express Order to pay money and money
alone. E.g..
“I shall be highly obliged if you make it convenient to pay Rs.
1000 to Afresh”. (Wrong )
“Please pay Rs. 5000 to the order of ‘P’. (Right)
7. The order must be unconditional.

8. Difference between Promissory Note
and Bills of Exchange
Points of differ Promissory note Bills of Exchange
No. of parties Two parties; maker & payee Three parties ; Drawer, Drawee
& Payee
Promise or Order Promise to pay Order to pay
Prior acceptance Not necessary Acceptance by Drawee
Liability (maker) Absolute and primary Secondary and conditional
Relation The maker of the promissory note
stands in immediate relation with
the payee
The maker or drawer of an
accepted bill stands in
immediate relations with
the acceptor and not the
payee.
Notice of dishonor To the maker; not necessary To be given by the holder to all
the liable persona.
Payable to bearer Cannot be drawn Can be done; but in case of
‘payable of bearer on demand’
, it is not drawn.

9. Protest Not necessary in case of
dishonour of note
Foreign bill of exchange
must be protested for
dishonour when such
protest is required to be
made by the law of the
country where they are
drawn
Copies Not at all drawn Yes , it can be drawn
Provisions of
acceptance
Not applicable Provisions like presenting
for acceptance, acceptance
for honour are applicable
Difference between Promissory Note
and Bills of Exchange

10. End of persentaion !!!!
Thank you