BILLS OF EXCHANGE VS PROMISSORY NOTE

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. 

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