BILLS OF EXCHANGE VS PROMISSORY NOTE
| PARTICULARS | BILL OF EXCHANGE | PROMISSORY NOTE |
| MEANING | A bill of exchange contains an order from the creditor to the debtor to pay a specified amount to a person mentioned therein. | A promissory note is an instrument in writing containing an unconditional undertaking, signed by the maker to pay a certain sum of money. |
| NEGOTIABLE INSTRUMENT ACT | Bill of exchange defined under section 5 of Negotiable Instrument Act. | Promissory Note defined under section 4 of the Negotiable Instrument Act. |
| PARTIES | There may be three parties I.e., the drawer, the acceptor and the payee. | There are only two parties I.e., Maker and Payee. |
| DRAWN BY | It is drawn by the creditor | It is drawn by the debtor |
| LIABILITY | The liability of a drawer of bill of exchange is secondary and conditional. | The liability of the maker of a promissory note is primary and absolute. |
| ACCEPTANCE | Bill of Exchange requires an acceptance by the drawee. | A Promissory Note does not require any acceptance by the drawee. |
| COPIES | A single copy is prepared, except in case of foreign bills. | One copy is prepared in all cases. |
| NOTICE IN CASE OF DISHONOUR | In case of dishonor of bill of exchange either due to non-payment or non-payment or non-acceptance, notice must be given to all person liable to pay. | In case of dishonor of promissory note, notice of dishonor to maker is not necessary. |
| STAMPS | Stamping is necessary for a bill of exchange except for “bills payable on demand”. | Stamping is necessary for promissory notes without any exceptions. |
| PAYABLE TO BEARER | A bill of exchange can be so drawn provided it is not payable to bearer on demand. | A promissory note cannot be made payable to a bearer. |
| PAYABLE TO MAKER | In the case of bill of exchange, the drawer and the payee may be one person. | In a promissory note, the maker cannot pay to himself. |
Eduindex News 