Which of the following is / are true about Bill of Exchange? (a) A Bill of Exchange, requires in its…
A bill of exchange requires three parties (drawer, drawee and payee), not two, and is defined in section 5 of the Negotiable Instruments Act, 1881, whereas section 6 defines…
Choose your answer
Which of the following is / are true about Bill of Exchange?
(a) A Bill of Exchange, requires in its inception two parties
(b) A Bill of Exchange or draft, is a written order by the drawer directing the drawee to pay a certain sum of money to the payee
(c) Bills of Exchange are commonly used in international trade and are written orders by one person directing another to pay a specified sum to a named person or bearer on a specific date
(d) Definition of Bill of Exchange is mentioned in the section 6 of the Negotiable Instrument Act
Answer and explanation
Correct answer C
A bill of exchange requires three parties (drawer, drawee and payee), not two, and is defined in section 5 of the Negotiable Instruments Act, 1881, whereas section 6 defines a cheque. Statement (b) accurately describes a bill of exchange as a written order by the drawer directing the drawee to pay the payee, and statement (c) correctly notes its common use in international trade, so the answer is "(b) and (c)".
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