Bill of Exchange Test - 5

when a discounted bill gets dishonoured, the drawer becomes the creditor of the bank. hence the bank will recover the amount of dishonoured bill from the drawer.

when a bill is discounted with the bank and is dishonoured, the liability of drawer will arise. hence, the bank will look to the drawer for payment.

The drawer is the person who is entitle for the cash of bill receivable because he's the person who has  granted the credit.

Days of grace are not allowed when the bill is payable "on demand" or "at sight".

As per section 4 of Negotiable Instrument Act, 1881, promissory note refers to “an instrument in writing (not being a bank note or a currency note) containing unconditional undertaking, signed by the maker to pay on demand or at a fixed or determinable future time a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument”.

a bill is produced to notary public when it gets dishonour. it is produced to the notary for getting an evidence of dishonour of the bill.

a bill of exchange has three parties namely the drawer, the drawee and the payee.

payment made by the drawee will be recorded in the books of the drawer only if drawer has retained the bill till the date of maturity. since in other cases drawer isn't the holder of bill hence he won't record any entry.

The promissory note requires the fixation of stamp duty. proper stamp duty must be paid on the promissory note.

sometimes, an acceptor expresses his inability to meet the bill on the due date and requests the drawer, to substitute the old bill with a new one. the purpose is to get an extension of time. if the drawer aggres, the old bill is cancelled and a new bill is drawn and of course accepted by the drawee. this process is called the renewal of bill.

Discounting of bill of exchange= it means encashing a bill of exchange before its due date.

when the holder of a bill encashes the bill from a bank before the due date, it is known as discounting of the bill.

Initially noting charge is paid by the drawer but subsequently it is recovered by the drawer from the drawee. hence the burden of noting charge is ultimately is borne by the drawee.

when the drawee of the pays amount of bill before the date of maturity, it is retiring the bill. generally holder of the bill, in such cases, allows some deductions to the drawee because of early payment made by him such discount is called the rebate.

This bill is drawn just for the mutual help of the parties to the bill of exchange.

Trade bill is a simple bill drawn for the purpose of trade transactions and it is drawn by the creditor(drawer) on debtor(drawee).

a foreign bill of exchange is a payment drawn up in one country that is payable in another country.

bill of exchange is drawn by the seller of goods i.e creditor. hence, Jitesh will draw the bill on jay.

a bill of exchange has three parties namely the drawer, the drawee and the payee.

when the holder of a bill transfers the bill to a third party, the bill is said to have been endorsed or negotiated.

a bill may be encashed before the maturity of the bill by presenting it to any bank. the bank shall disburse the amount of bill after deducting its charges(discounting charges).

Initially noting charges are paid by the drawer of the bill but subsequently, such charges are recovered by the drawer to the drawee. hence, the burden of noting charges are ultimately borne by the drawee.

B/R book is an asset for the company. hence it has the debit balance.

when a bill is paid on maturity it is technically known as honouring of the bill of exchange.

The 'discounting charges' of a bill depends on the rate of interest and the period of maturity.