Question

Which of following is/are essentials of a bill of exchange?
(I) It must contain clear undertaking to pay.
(II) It must be signed by the drawer.
(III) The maker must sign it in taking an undertaking to pay to payee or his order.
(IV) The parties must be certain.

Select the correct answer from the options given below-

• A. (I), (II) & (III)
• B. (II) & (III)
• C. (III), (I) & (IV)
• D. All of the above

Answer 1

The correct option is D All of the above

Following are the essentials of bill of exchange:

1. It is an order by the drawer to the drawee. It cannot be a promise or a request. The drawer gives an order to the drawee to sign the document to certain money to the drawer.

2. A bill of exchange contains an unconditional order. No condition can be attached with payment of the bill.

3. A bill of exchange is an unconditional order in writing. It cannot be verbal or in any other way.

4. The bill must be signed by the drawer of the document if it is not signed by the drawer, it will not be a valid bill.

5. There are three parties in a bill of exchange. They are the drawer, drawee and the payee. Sometime the drawer and payee is the same person.

6. The amount of bill of exchange is the fixed sum written clearly in words and figures on the bill.

7. The amount of the bills is payable only in the form of money It cannot be paid in goods or something else.

8. The bill of exchange like the promissory note is payable on demand or at some determinable future time.

9. A bill of exchange must be payable to a certain person whose name is written on the document, or to his order. If it is endorsed by him it becomes payable to the bearer.

10. A bill of exchange is drawn by the drawer and accepted by the drawee (debtor). Until it is not accepted, it cannot be a bill of exchange.