Question

The cancellation of the old bill maturity in return for a new bill (which includes interest) for an extended period is called ________________.

• A. Retiring of a bill
• B. Renewal of a bill
• C. Dishonor of a bill
• D. Rebate on bill

Answer 1

The correct option is B Renewal of a bill

Sometimes, acceptor of a bill finds himself unable to meet his acceptance on the due date. So he may approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill with extended date. The acceptor in this case will of course have to pay interest for the extended period. Thus the cancellation of the old bill maturity in return for a new bill (which includes interest) for an extended period is called "renewal of a bill of exchange".