Definition and Explanation of Bill of Exchange

A bill of exchange has been defined as an unconditional order in writing addressed by one person to another; signed by the person giving it, requiring, the person to whom it is addressed to pay on demand or at a fixed or determinable future time, a certain sum in money to or to the order of a specified person or to bearer.

Difference Between Inland and Foreign Bills:

The bill of exchange may be inland or foreign. An inland bill is a bill which is both drawn and payable within the a country. A foreign bill is one which is drawn in one country but accepted and payable in another country.

Parties to a Bill of Exchange:

There are three parties in a bill:

1. Drawer
2. Drawee
3. Payee

Specimen/Sample of a Bill of Exchange:

Stamp Amount City 1st January, 2010 Three month after date pay to Z or order the sum of [amount] only for value received To, B (Drawer) City Sd.X. (Drawer)