Promisory Note, Bill of Exchange and Cheque & related Issues

                                               

A promissory note is drawn and signed by the debtor, who promises to pay the creditor a certain sum of money. The specimen of promissory note is given below:    

                        

                  

                                                                                                      Dhaka 11003

Tk 8,000                                                                                        5^th April, 2014

Three months after date i promise to pay Mr. John the sum of Taka.  eight thousand, for value received.

                                                         

                                                                                                    Stamp

To  Mr. John                                                                     Sd.    Mr. Rockfeller             

A promissory note may be drawn by more than one person also who may undertake to pay the amount both in their individual capacities as well as jointly. The specimen of a promissory note with joint and several liabilities is given below:

Tk ………….                                                                                              Dhaka……………..20………

                                                                             

On demand we jointly and severally promise to pay to………………………………………………………………. …………………………………………………………………....or order the sum of Takas  ……………………………………………………………………............... together with interest on such sum from this date at the rate of ……………………………………… percent per annum with ………………………….… rests, for value received.                                                        

                                                                                                  

                                                                                                      Stamp

                                                                                        (Signaturee across the stamp)

                                                                                   Addresses……………..            

  

A bill of exchange contains an order from the creditor to the debtor to pay a specified amount to a person mentioned therein. The maker of a bill is called the ‘drawer’, the person who is directed to pay is called the ‘drawee’; the person who is entitled to receive the payment is called the ‘payee’; sometimes the drawer himself is the payee. The specimen of a bill of exchange is given below:

cheque

According to the negotiable instruments act 1881, section 6, “ a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.” It is an important document for any transaction in the business world.

Thus, a cheque is a bill of exchange with two distinctive features namely-

1)      It is always drawn on a bank

2)      It is always payable on demand

  SOME RELATED ISSUES

Bearer: Bearer means a person who by negotiation comes into possession of a negotiable instrument, which is payable to bearer.

DEFECTIVE TITLE: A person who receives an instrument which has been lost or by means of fraud or any other unlawful means is not entitled to receive the amount due there on unless he claims as holder in due course.

LIABILITY OF THE DRAWER: The drawer of the negotiable instrument will remain responsible to the payee till it is paid off.

LIABILITY OF PRIOR PARTIES TO HOLDER IN DUE COURSE: Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied.

Inland bill: As per section 11 of N.I. Act, “A promissory note or bill of exchange or cheque drawn or made in Bangladesh and made payable in, or drawn upon any person resident in Bangladesh shall be deemed to be an inland instrument.

Foreign bill: As per section 12 of N.I. Act, “Any such instrument not so drawn, made or made payable shall be deemed to be a foreign instrument.” For example, a bill drawn in Bangladesh but accepted in England or vice versa is a foreign bill.

Time bill: A bill is said to be time bill which is payable at a determinable future time. It is also termed as Document against acceptance (D.A bill). Time bill also called Usance bill.

Demand bill: A bill is said to be demand bill which is payable on demand or at sight or on presentation and when no time for payment is specified in it. Demand bill also termed as Sight bill.

Trade bill: A bill drawn and accepted for a genuine trade transaction is termed as trade bill.

Accommodation bill: A bill drawn and accepted not for a genuine trade transaction but only to provide financial help to some party is termed as an accommodation bill.

Clean bill: A bill which has no documents attached is called clean bill.

Documentary bill: A bill which has documents attached is called Documentary bill.

Domicile Bill: A domicile bill is one which is payable at a place other than the acceptors usual residence or business place.

Maturity or Due date of bill: Maturity date is the date on which a Bill of Exchange is payable. In calculating the due date of a bill calendar months are reckoned.