Page 2 - LESSON NOTE

 Endorsement Possible- This bill of exchange can be exchanged
from one individual to another for the adjustment of the debt.

Parties of Bill of Exchange

A bill of exchange has three parties:

(1) Drawer:

 The drawer is the maker of a bill of exchange.
 The bill is signed by Drawer.

 A creditor who is entitled to receive payment from the debtor can
draw a bill of exchange.
(2) Drawee:

 Drawee is the person upon whom the bill of exchange is drawn.

 Drawee is the debtor who has to pay the money to the drawer.
 He is also known as ‘Acceptor’.

(3) Payee:

 The payee is the person to whom payment has to be made.

 The payee may be the drawer himself or a third party.

What is Promissory Note

The promissory note is defined as an instrument in writing (not being a
banknote or a currency note), containing an unconditional undertaking
signed by the maker, to pay a certain sum of money only to or to the order
of a certain person, or to the bearer of the instrument.

Importance of Promissory note in Bill of Exchange

According to the Negotiable Instruments Act 1881, the meaning of
promissory note is ‘an instrument in writing (not being a banknote or a
currency note), containing an unconditional undertaking signed by the
maker, to pay a certain sum of money only to or to the order of a certain
person, or to the bearer of the instrument. However, according to the