Bills of Exchange | Bills of Exchange Meaning | What are Bills of Exchange |

Bills of Exchange, can be understood as a written negotiable instrument, that carries an unconditional order to pay a specified sum of money to a designated person or the holder of the instrument, as directed in the instrument by the maker. The bill of exchange is either payable on demand, or after a specified term.

Bills of exchange here is a simple story that will help us understand this of exchange missiny d is an upcoming businessman one day mr. needy went to a shop that belonged to mr. privilege he wanted to buy some mobile covers mr. needy liked the quality and pricing of the goods i really liked the quality of mobile covers available video i would like to buy 5000 mobile

Covers what’s their cost the cost would be around 50 thousand sir i do not have rupees fifty thousand right now to pay for the mobile covers so will you give the mobile covers on credit i need a time period of three months to repeat today is first of me i will repeat the amount by 1st of august well i do not need money immediately i think that i should consider

The offer how can i trust that you will repay me on the stated date i will need some security why i will give you in writing that i will definitely repay you in three months use that as a legal document to take action against me if i do not repeat your loan mr. needy right now you are making a request later i will have to beg for my own money oh no you can order

Me to pay you after three months okay i agree to give you the mobile covers on credit mr. privilege now takes a blank paper and writes on it the amount of credit he is giving to mr. needy the city and the country they are in the date of drawing it the time period after which mr. needy will repay the loan the person whom mr. needy will repay the loan by order and

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Not by request the amount to be repaid in worth for the value of mobile cover spot mr. privilege writes down his own name and address and mr. neary’s name and address then mr. privilege put system and signs the paper well what mr. privilege has drawn here is known as a bill of exchange acceptance of bill of exchange every bill of exchange must be accepted by the

Droid or mr. neary because before the acceptance a bill has no legal sanctity a bill is accepted when the droid signed his name across the face of the bill together with place and date parties to a bill of exchange generally there are three parties to a bill of exchange first is the draw that is the person who draws the bill of exchange second is a droid that is

The person on whom the bill of exchange is drawn third is the piece that is the person who has the right to receive the amount of the bill in this case the drawer and the plane are the same when the draw has made the bill payable to himself the draw is the p in other cases the drawer and the paid may be different pay can also be a person to whom mr. privilege owes

Money and in this case the pay is mr. proud essentials of a bill of exchange a bill of exchange must contain the following details date the date of the bill must be stated correctly the date of maturity is calculated three months after the date of drawing amount the amount is written on the left hand top corner of the bill in figures it is again stated in words in

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The body of the bill the amounts must be the same both in figures and words joyce name and address the name and address of the draw are given in the left hand bottom corner of the bill term the tenure of the bill is mentioned in case of a time bill time bills are even after a fixed period of time in case of adam and will or a site with after sight words are written

This means that the drawee has to repay the amount as and when the drawer demands it stamps in a time bill a stamp has to be affixed no stamp is needed in a demand bill as the drawer and the draw are not certain regarding the payment date the value of the stamp depends upon the amount of the bill as fixed by the government the rate of the stamp varies according to

The value of the bill pay if the draw himself is the pay the fact is stated in the bill but if he is not the pig he mentions a third party’s name that is mr. cloud who he owes money to for value received as a matter of custom these words are stated in a bill of exchange they imply that the drawer has received the value in consideration of the transaction on which

The bill is drawn signature the drawer pulls down his signature on the right hand bottom corner of the bill discounting of bill of exchange let us understand what this means in case mr. privilege needs money before the maturity date he will have to discount the bill of exchange discounted or forbidden means selling the bill before the due date to a bank the bank

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Charges discount as it needs commission for its service rendered the bill is sold at less than its face value let us understand this better the face value of the bill is 50000 rupees the discount rate charged in this case is 6% of the face value thus the discount amount is 3000 rupees the selling price will then be the face value minus the dis out which is equal

To 47 thousand rupees after the bills maturity the bank will collect the amount of the bill from the draw on the due date in case the bill is dishonoured on maturity the bank can recover the payment from the draw the bank may read has come the bill with the reserve bank of india whenever it is in need of money rbi may see discount the bill at a certain rate see two

Percent of the face value this time the discount amount comes to one thousand rupees iv i will give the remaining amount which is 49 thousand rupees to the bank for meeting its financial need so students we learnt what a bill of exchange is the parties and the essentials of the bill and also the process of discounting and rediscounting bills of exchange facilitate

Trade without the involvement of money due to which they are used on a large scale in domestic as well as international trade

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Bills of Exchange | Bills of Exchange Meaning | What are Bills of Exchange | By Robomate