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1. Promissory note
This an instrument in writing (not being a bank note or a currency note) containing an
unconditional undertaking, signed by the maker, to pay a certain sum of money only to or
to the order of a certain person or to the bearer of the instrument. There are primarily two
parties involved in a promissory note. They are;
i) The maker or drawer – the person who makes the note and promises to pay the
amount stated therein.
ii) The payee – the person to whom the amount is payable.
In course of transfer of a promissory note by payee and others, the parties involved are;
iii) The endorser – the person who endorses the note in favour of another person
iv) The endorsee – the person in whose favour the note is negotiated by
endorsement.
2. Bill of exchange
It is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. There are three parties involved in a bill of exchange;
i) The drawer – The person who makes the order for making payment.
ii) The drawee – The person to whom the order to pay is made. Generally a debtor
of the drawer.
iii) The payee – The person to whom the payment is to be made.
3. Cheques
A cheque may be regarded as a bill of exchange; the only difference is that the bank is
always the drawee in case of a cheque.
A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Actually, a cheque is an order by the account holder of the bank directing his banker to pay on demand, the specified amount, to or to the order of the person named therein or to the bearer.
NatalieR answered the question on February 15, 2022 at 01:20
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