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October 25, 2016

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

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