Bills of Exchange | Parties Involved in Bill of Exchange With Sample

Bill of Exchange

          When a seller sales goods or services to a buyer on credit basics, the seller becomes the creditor and buyer becomes the debtors. Often the creditor likes to have a written commitment from the debtor to pay the value goods on certain date. For this reason the creditor sends a written instrument to the debtor ordering him to pay the value of the goods or service either to him or to his order or to the bearer of the instrument. The debtor gives his consent to the order of the drawer by signing the instrument such is called Bills of Exchange.
          A Bill of Exchange is defined as “ An instrument in writing containing an unconditional order signed by the maker directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.”
Sample of bill of exchange is as shown below
An example of bill of exchange - how it looks like

Parties in Bill of Exchange

                  There are various parties involved in the Bills of Exchange

§  The Drawer: 

                The drawer is the person who draws or makes the bills of exchange. He is the seller of the goods on credit basis.

§  The Drawee: 

                   The drawee is a person on whom the bill of exchange is drawn. He is normally the debtor i.e. Buyer. He is usually the acceptor of the bill of exchange.

§  Acceptor: 

               This is the person who accepts the bills of exchange. He is usually the drawee himself but a third party can accept a bill on behalf of drawee.

§  Payee: 

                 He is the person to whom the amount is to be paid.

§  Holder:

                 He is the person who is holding the bill after it has been drawn.

§  Endorser:

             He is the person either drawer or holder who signs on the back of the bill and endorses it is called endorser.

§  Endorsee:

                 Endorsee refers to the person on whom the bill is drawn.

Generally three parties are involved in bill of exchange and they are drawer, drawee and payee.

Hope so you have completely now understood about Bill of Exchange and Parties involved in Bills of Exchange

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