A bill of exchange is a negotiable instrument that carries an unconditional order to pay a specified amount of money. It is an unconditional order signed by maker to pay a certain amount to the bearer of the instrument.
There are some features of bill of exchange. This is given below:
- A bill of exchange must be in written form
- There must need a confirm order to make a payment
- The order should not have any condition
- The amount should be definite
- The date should be fixed
- The bill must be signed by both parties (drawer and drawee)
- The amount should be paid on demand or expiry of the date
- The amount must be paid to the beneficiary of the bill
There are different types of bill of exchange. This are –
- Banker acceptance bill: A bill that is accepted by a bank.
- Clean bill: This type of bill is not accompanied by documents.
- Documentary bill: It supports the bill of exchange by providing an essential document that confirms the truthiness of the transactions.
- Sight bill: It is also called a demand bill. A bill that is presented by the holder of the bill for payment or maturity of the date.
- Usance bill: It is a time bounce bill. It means the payment needs to meet within a specific time period.
- Document against acceptance: This a bill of exchange in which all documents are release on acceptance of the bill. When the importer accepts that all documents related to a shipment of the goods handed over to him and provides a bill are known as a document against acceptance.
- Document against payment: This is a bill of exchange in which all documents are released on payment of the bill. When the importer accepts that all documents related to the shipment of the goods handed over to him and provides a bill are known as a document against payment.
- Trade bill: This type of bill is specially related only to trade.
- Demand bill: The demand bill is payable when it is demanded.
- Inland bill: A bill that is payable inside the origin country is known as an inland bill.
- Foreign bill: A bill that is payable outside the origin country is known as a foreign bill.
- Accommodation bill: This type of bill withdrawn without any conditioned usually known as an accommodation bill.
- Supply bill: A bill that is withdrawn by a supplier or contractor from the government department is called a supply bill.
Finally, we learn definition , features and types of bill of exchange. Hope you all are properly use them.