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Bill Of Exchange
A bill of exchange is a written acknowledgement of the debt, written by the creditor and accepted by the debtor.) It is called a draft before its acceptance. Therefore, one of the underlying features of a bill of exchange is that it has to be accepted either by the person upon whom it is drawn or by someone else on his/her behalf.
What are the essentials of a Bill Of Exchange?
- Number of parties : A bill of exchange has three parties -the drawer, the drawee, and the payee. Sometimes the drawer and the payee can be one and the same person.
- Must be writing : The Bill of Exchange must be in writing.
- It must be signed by the drawer.
- Express order to pay : This is the essence of a bill of exchange. There must be an ‘order by the drawer to the drawee to pay. The order must be a command and not an excessive request.
- Order must be unconditional : The order to pay must be unconditional. The order of the payment of the bill must not dependent on a contingent event. A conditional bill of exchange is invalid.
- Order to pay money only : Just as a promissory note, the instrument must be for money only.
- Sum payable to be certain : The amount payable must be certain. There should be no ambiguity in the amount to be paid through the bill of exchange.
- Parties : The drawer, drawee and the payee are the parties in a bill of exchange. The drawer, drawee and payee must be certain.
- Must be signed : The instrument is complete only when it is signed by the drawer and the drawee.
- Acceptance : It must be accepted by the drawee by putting his signature on the face of the instrument with or without the word ‘accepted’.
- Must bear the stamp : A Bill of Exchange must be properly stamped in accordance with the Indian Stamp Act, 1899.
- Other formalities : Formalities such as date, place, consideration, etc. are usually found in a bill of exchange.
- Requisites of a contract to be complied with : All requisites of a valid contract like capacity to contract, consideration, free consent, lawful object must be present.
What is Bill Of Exchange? 👇https://freebird.data.blog/2022/07/18/bill-of-exchange-boe/
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