ICom Notes Class 12 Banking Drafting, Circumstances of Bill of Exchange

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Drafting a Bill of Exchange

i. STAMP

To prepare a bill of exchange in the form of a legal document, the drawer of the bill has to pay a tax to the Government which is accepted by issuing a stamp. The value of the stamp depends upon the amount for which the bill has been drawn.

ii. AMOUNT PAYABLE

The amount payable should be written clearly. It is necessary that the amount should be written in words and figures.

iii. DATE

The date on which the bill is being drawn or prepare should be posted accurately. The date is usually written on the upper side of the bill.

iv. NAME OF THE DRAWEE

It is necessary that the name of the drawee should be mentioned in the bill. The words ‘’OR ORDER OR BEARER’’’ indicate the persons to whom the bill has to be paid.

v. FOR VALUE RECEIVED

A bill of exchange is always drawn against a certain amount or value. Therefore the words ‘’For Value Received’’’ should always be written on the bill.

vi. SIGNATURE OF THE DRAWEE

A bill lacking the signature of the drawer is unacceptable and unlawful. Such type of a bill can be dishonoured. That is why the structure of the drawer are essential.

vii. NAME & ADDRESS OF THE DRAWEE

The closing of the bill includes the name and address of the drawee. It is written on the left side corner of the bill.

Circumstances a Bill of Exchange is Dishonoured

When a bill of exchange is drawn in the favour of a specified person or firm, it is not necessary that the bill will be accepted. Due to some complexities the drawee does not accept the bill. The circumstances under which a bill of exchange is dishonoured are as follows.

Dishonour By Non-Acceptance

When a bill of exchange is drawn against the drawee and the drawee defuses to accept the same, this refused is called dishonour by non-acceptance.

Dishonour By Non-Payment

When the bill is presented to the drawee for its payment, sometimes the drawee fails to pays it. This failure of the drawee to the payment of the bill dishonours the bill by non-payment. In such a situation the drawer of the bill holds the complete right to take lawful action against the drawer.