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9 Essential Elements of a
Bill of Exchange (With
Specimens)
ArticlesharedbySamMalhotra

ABillofExchangeisaninstrumentinwriting
containinganunconditionalorder,signedbythe
maker,directingacertainpersontopaya
certainsumofmoneyonlyto,ortotheorderofa
certainpersonortothebearerofthe
instrument.

ThemakerofabillofexchangeiscalledtheDrawer.Thepersonwho
isdirectedtopayiscalledtheDrawee.Thepersonwhowillreceivethe
moneyiscalledthePayee.Whenthepayeehascustodyofthebill,he
iscalledtheHolder.Itistheholdersdutytopresentthebilltothe
draweeforhisacceptance.Thedraweesignifieshisacceptanceby
signingonthebill.Aftersuchsignaturethedraweebecomesthe
Acceptor.

Inabillofexchangesometimesthenameofanotherpersonis
mentionedasthepersonwhowillacceptthebilliftheoriginaldrawee
doesnotacceptit.SuchapersoniscalledtheDraweeincaseof
Need.
 ImageSource:3.bp.blogspot.com

EssentialElementsofabillofexchange:
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Fast
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Apostille
Abillofexchangetobevalidmustfulfilthefollowingrequirements:

1.Theinstrumentmustbeinwriting.

2.Theinstrumentmustbesignedbythedrawer.

3.Theinstrumentmustcontainanordertopay,whichisexpressand
unconditional.

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 Fast
California
Apostille
4.Thedrawer,draweeandthepayeemustbecertainanddefinite
individuals.

5.Theamountofmoneytobepaidmustbecertain.

6.ThepaymentmustbeinthelegaltendercurrencyofIndia.

7.Themoneymustbepayabletoadefinitepersonoraccordingtohis
order.

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8.Abillofexchangemustbeproperlystamped.

9.Thebillmaybemadepayableondemandorafteradefiniteperiod
oftime.ButnooneexcepttheReserveBankandtheGovernmentof
Indiacandrawabillpayableondemandtothebearerofthebill.

Comments:

Therequirementsaremoreorlessthesameasinpromissorynotes
andaresubjecttosimilarconditionsasregardssignatureetc.
Ifanyoftherequirementsmentionedaboveisnotfulfilled,the
documentisnotabillofexchange.

Examples:

(i)Pleaseletthebearerhavesevenpoundsandoblige.Thisisnota
billofexchangebecauseitisarequestandnotanorder.Littlev.
Slackford.

(ii)WeherebyauthoriseyoutopayonouraccounttotheorderofX,
600.Thisisnotabillofexchangebecauseitisnotanordertopay.
HamiltonvSpottiswoode.

SpecimensofBillsofExchange:
Abillofexchangemaybedrawninanyform,providedthe
requirementsmentionedabovearefulfilled.

Example:

ToA.B.

(i)SixmonthsafterdatepayP.Q.ororderRs.1000

Sd/X.Y.

Date_________

Stamp

(ii)OnemonthaftersightpaytoP.Q.orbearer(ororder)Rs.500.

Sd/XY.

Date_________

Stamp
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