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Question -

Distinguish between bill of exchange and promissory note.



Answer -

The points of comparison are as follows:

Basis of Comparison

Bills of Exchange

Promissory Note

What it contains

It contains an order to pay

It contains a promise to pay

Parties

It involves three parties which are : drawer, payee and acceptor

It involves two parties and they are: maker/drawer and payee

Drawn by

Creditor

Debtor

Acceptance

Acceptance required by the debtor

Being drawn by promissor, it requires no acceptance

Payee

The same person can be payee and drawer

Promissor and Payee cannot be same

Noting in case of dishonour

Dishonouring of the instrument, leads to noting of the bill

No requirement of noting

Liability

Liability does not rest with the drawer primarily

Promissor is primarily responsible

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