Difference Between Promissory Note And Bill Of Exchange – Hello friends, today we are going to share Difference Between Bill Of Exchange and Promissory Note.
Promissory Note – According to Section 4 of the Indian Negotiable Instruments Act, 1881, “A promissory note is an instrument in writing (not being a bank note or currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money to, or to the order of a certain peson.”
Bills of Exchange – According to the Negotiable Instruments Act, 1881, “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 sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”
Difference Between Promissory Note And Bill Of Exchange
| Sr. No. | Basis | Promissory Note | Bill Of Exchange |
| 1 | Drawer | A promissory note is made by the debtor. | A bill of exchange is drawn by the creditor. |
| 2 | Nature | A promissory note is a promise to pay. | A bill of exchange is an order to pay. |
| 3 | Acceptance | A promissory note does not need to be accepted There are two parties to a promissory note:(1) the maker and (2) the payee. | In the case of a bill of exchange, acceptance by the drawer is necessary. |
| 4 | Parties | The maker and payee of a promissory note can never be one and the same person. | There are three parties to a bill of exchange: (1) the drawer, (2) the acceptor and (3) the payee. |
| 5 | Drawer and Payee | In the case of a foreign promissory note, only one copy is made. | The drawer and payee of a bill of exchange may be one and the same person. |
| 6 | Copies | The makers of a promissory note are jointly and severally liable. | In case of a foreign bill of exchange, three copies are made. |
| 7 | Joint Liabilites | A promissory note payable at sight needs to be stamped. | The acceptors of a bill of exchange have a joint liability. |
| 8 | Stamp | In the case of a promissory note, the same is not possible. | A bill payable at sight need not be stamped. |
| 9 | Payment for Honour | The maker of a promissory note is always liable for the same. | In case a bill of exchange is dishonoured, any other person may make its payment. |
| 10 | Liability on Dishonour | In case a promissory note is dishonoured noting is not necessary | In case of non-payment of a bill, the drawer is liable for the same. |
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