Difference Between Promissory Note And Bill Of Exchange – Hello friends, today we are going to share Difference Between Bill Of Exchange and Promissory Note.
Promissory Note – According to Section 4 of the Indian Negotiable Instruments Act, 1881, “A promissory note is an instrument in writing (not being a bank note or currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money to, or to the order of a certain peson.”
Bills of Exchange – According to the Negotiable Instruments Act, 1881, “A Bill of Exchange is an instrument in writing, containing an unconditional order signed by the maker directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”
Difference Between Promissory Note And Bill Of Exchange
|Sr. No.||Basis||Promissory Note||Bill Of Exchange|
|1||Drawer||A promissory note is made by the debtor.||A bill of exchange is drawn by the creditor.|
|2||Nature||A promissory note is a promise to pay.||A bill of exchange is an order to pay.|
|3||Acceptance||A promissory note does not need to be accepted There are two parties to a promissory note:(1) the maker and (2) the payee.||In the case of a bill of exchange, acceptance by the drawer is necessary.|
|4||Parties||The maker and payee of a promissory note can never be one and the same person.||There are three parties to a bill of exchange: (1) the drawer, (2) the acceptor and (3) the payee.|
|5||Drawer and Payee||In the case of a foreign promissory note, only one copy is made.||The drawer and payee of a bill of exchange may be one and the same person.|
|6||Copies||The makers of a promissory note are jointly and severally liable.||In case of a foreign bill of exchange, three copies are made.|
|7||Joint Liabilites||A promissory note payable at sight needs to be stamped.||The acceptors of a bill of exchange have a joint liability.|
|8||Stamp||In the case of a promissory note, the same is not possible.||A bill payable at sight need not be stamped.|
|9||Payment for Honour||The maker of a promissory note is always liable for the same.||In case a bill of exchange is dishonoured, any other person may make its payment.|
|10||Liability on Dishonour||In case a promissory note is dishonoured noting is not necessary||In case of non-payment of a bill, the drawer is liable for the same.|
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