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A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain amount of money only to, or to the order of, a certain person or to the bearer of the instrument.
A promise or order to pay is not "conditional", by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.
The sum payable can be "certain", although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an installment, the balance unpaid shall become due.
The person to whom the direction is given or that payment is to be made may be a “certain person”, within the meaning of this section and section 4, although he is misnamed or designated by description only.
There are three parties involved in a bill of exchange. Such as;
He in the person to whom the order to pay is made. He is generally a debtor of the drawer.
He is the person who makes the order for making payment
He is the person to whom the payment is to be made. The drawer can also draw a bill in his own name thereby he himself becomes the payee. Here the words in the bill would be Pay to us or order. In a bill where a time period is mentioned, a bill may be made payable on demand also, it is called a Demand Bill.
Following are the various features of a bill of exchange.