Bill of Exchange
The Bill of Exchange Act defines a bill of exchange to be
“An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to, or to the order of a specified person or to bearer”.
Features of Bill of Exchange
- It must be in writing
- The order must be unconditional
- It must be addressed by one person to another and it must be an order to pay
- It must require payment to be made to a specified person or to the bearer
- It must be signed by the drawer
- It must require the buyer to pay a sum of money on-demand or on a fixed future date.
- The buyer must accept the bill by writing the word accepted across its face and followed by his signature
- It must order payment of a sum to certain parties to a bill.
There are various parties to a bill such as;
There are two kinds of bills: These are;
- Inland bill
- Foreign bill
Advantages of Bill
- A bill reduces the risk of carrying large amount of money
- It is transferable from one person to another
- It is a legal document which the creditors can sue the debtor on defaults
- It fixes the date of payment
- It enables the buyer to defer payment until the goods are received or even later.