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What is Bill of Exchange and Cheque? Find the difference between cheque and bill of exchange?

 Bill of exchange- It is a writing instrument containing unconditional order to pay certain sum of money. It signed by drawer or creditor and accepted by debtor. In bill of exchange three parties are involved- 

  • Drawer - A person or organization who give the order to drawer to pay the bill amount which drawn by drawer Or creditor. 
  • Drawee Or acceptor - A person who accept the bill drawn by drawer and make payment on order. 
  • Payee - A payee is a person who gets the payment at the time of maturity. 

Some important features are: 

  • The drawer, drawer must be certain. 
  • Bill of exchange must be stamped.
  • It also contain order to pay money alone. 
Bill of exchange classified into three parts:

  • Inland and foreign bills- Inland bills includes- bill is drawn in India on a person residing in India whether payable in or outside India. 
Or
  • Bill drawn in India on a person residing outside India but payable in India. 
Foreign bill- Bill which is not inland bill is a foreign bill. It includes
  • Bill drawn in India on a person residing outside India and made payable outside India. 
  • Bill drawn outside India and made payable put India. 
  • Bill drawn outside India on a person residing in India. 
  • Bill drawn outside India on a person residing outside India. 
  • Bill drawn outside India and made payable in India. 
Foreign bill are known as sets of three and each set is known as "via". Each part is despatched in separate conveyance so, that there is no delay in miscarriage in the transit. All the parts combine to form one bill. Only one part is stamped and accepted for payment. After that the other part become operative. 
  • Time and demand bill- A bill payable after a fixed time is known as time bill. 
Demand bill-A bill payment at sight and demand is known as demand bill. 
Trade and accommodation bill - Bill drawn and accepted by trade purpose is known as trade bill. Accomodation bill drawn and accepted only to provide financial help to some party is known as accomodation bill. 
Cheque- It is also a bill of exchange but it always drawn on a specified banker. It always payable on demand. It includes the electronic image of truncated cheque (removal of physical movement of cheque ) and also a cheque in the electronic form. 

Difference between Bill of exchange and cheque-
  1. Bill of exchange use for inland payment and foreign payment. While cheque use for inland payment. 
  2. Bill of exchange drawn on some person or firm while cheque is always drawn on a bank. 
  3. Bill of exchange payable on demand or expiry of a fixed period while cheque is always payable on demand. 
  4. Bill of exchange need fixed stamp. While cheque doesn't need any stamp. 
  5. Bill of exchange is not crossed while cheque is crossed. 

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