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Question -

What is meant by renewal of a bill of exchange?



Answer -

A bill of exchange is said to be renewed when the debtor/acceptor have insufficient funds to pay the drawer and hence requests for time extension in order to make payment. A new bill of exchange is drawn on being agreed by the drawer of the bill. This process is called renewal of bill of exchange. The bill gets renewal only if the drawee agrees to pay a certain rate of interest as decided for the period of extension.

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