Bill of Exchange
A bill of exchange is playing an important part in the commercial life of the country. The need for it arises where the buyer Purchase goods needs a period of credit before paying it. It is drawn by the creditor and is accepted by the debtor.
According to F.W. Muller, a bill of exchange is 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 sum certain in money to or to the order of a certain person or to bearer.
Features or Characteristics of the bill.
The main characteristics or features of a bill of exchange are as follow.
(1) A bill of exchange must be in writing.
(2) It must contain an order to pay.
(3) The order to pay must be unconditional. If it is subject to the happening of some events it will not be a bill of exchange.
(4) It must be signed by the drawer and properly stamped.
(5) The parties to the bill the drawer, the drawee and payee must be certain and definite individuals.
(6) The amount payable must be certain.
(7) The payment must be made in money and not in kind.
(8) The bill payable may be either on demand or after a specified period.
(9) The bill may be payable either to the bearer or to the order of payee.
Parties to the bill
According to the definition, there are three parties involved to a bill of exchange.
(i) Drawer. The drawer is the person who draws the bill. He is the person who orders to pay a certain sum of money. (In the specimen of bill of exchange given below Mr. Hamid Zafar is the drawer of the bill).
(ii) Drawee. He is the person on whom the bill is drawn. He is the person who is ordered to make the payment of the bill. (In the specimen of the bill. Mr. Rashid Ahmad is the drawee).
(iii) Payee. He is the person to whom the money is directed to be paid. He gets the payment of the bill. (In the specimen of a bill, Mr. Kamal Akmal is the payee of the bill).
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