Question

Explain the difference between Bill of Exchange and Promissory Note.

Answer 1

Difference	Bill of Exchange	Promissory Note
1. Meaning	A bill of exchange is an instrument in writing containing an unconditional order, signed by the drawer, directing a certain person to pay a certain sum of money only at a specified time to a certain person or according to his order or to the holder of the instrument.	A promissory note is an instrument in writing containing an unconditional undertaking, signed by the drawer to pay a certain sum of money only at a specified time to a certain person or according to his order or to the holder of the instrument.
2. Order or Promise	A bill of exchange is an unconditional order to pay money.	A promissory note is an unconditional promise to pay money.
3. Parties	There are three parties in a bill of exchange: 1. Drawer of a bill, 2. Acceptor of a bill 3. Receiver of money (Payee)	There are two parties in a promissory note: 1. Drawer of a promissory note 2. Receiver of money (Payee)
4. Drawer or Writer	Creditor draws the bill on debtor.	Debtor writes promissory note oh creditor.
5. Acceptance	The acceptance of a bill is necessary.	The acceptance of a promissory note is not necessary.
6. Responsibility	Responsibility for the payment of money is of the acceptor of a bill.	Responsibility for the payment of money is of the drawer of a promissory note.
7. Days of grace	Three days of grace are allowed after tire period of the bill to pay the amount.	No days of grace are allowed in case of promissory note.
8. Receivable or Liability	A bill is a ‘receivable’ (asset) for the drawer of a bill.	A promissory note is a liability for the writer of promissory note.
9. Accommodation	There can be accommodation bills.	There are no accommodation promissory note.
10. Notice	Notice is to be issued in case of dishonour of the bill.	There is no need of notice for the dishonour of a promissory note.