Bill of Exchange | Definition, Essentials and Examples

Bill of Exchange

A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay on demand or at a fixed or determinable future time a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

Parties to the Bill of Exchange

• Drawer: who makes the bill
• Drawee: who is directed to pay
• Payee: Person to whom the payment is to be made

Essentials of Bill of Exchange

• It must be in writing
• It must contain an unconditional order to pay
• It must be signed by the drawer
• The drawee must be a certain person
• The payee must be a certain person
• The sum payable must be certain
• The sum payable must be in Pak rupee