BILL OF EXCHANGE-Meaning and essential
BILL OF EXCHANGE (Section 5) Section 5 defines a bill of exchange as follows; "A Bill of Exchange is 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." The bill of exchange is used when : - when a creditor sells goods on credit to his debtor or there exists a debt between them; - the debtor agrees to make payment for goods on a future date after the expiry of the credit period ; - the creditor to ensure that the debtor shall pay for the goods; - draws a bill , which is called as a bill of exchange ; - the creditor draws the bill, so he is called as drawer; - the debtor is known as drawee ; - when the bill is drawn, the drawer (creditor) takes the bill to the drawee and gets his signature on it; - when the drawee signs the bill, the bill is said to have been accepted; - once the bill i...