Difference Between Promissory Note And Bill Of Exchange

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.BasisPromissory NoteBill Of Exchange
1DrawerA promissory note is made by the debtor.A bill of exchange is drawn by the creditor.
2NatureA promissory note is a promise to pay. A bill of exchange is an order to pay.
3AcceptanceA 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.
4PartiesThe 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.
5Drawer and PayeeIn 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.
6CopiesThe makers of a promissory note are jointly and severally liable.In case of a foreign bill of exchange, three copies are made.
7Joint LiabilitesA promissory note payable at sight needs to be stamped.The acceptors of a bill of exchange have a joint liability.
8StampIn the case of a promissory note, the same is not possible.A bill payable at sight need not be stamped.
9Payment for HonourThe 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.
10Liability on DishonourIn case a promissory note is dishonoured noting is not necessaryIn case of non-payment of a bill, the drawer is liable for the same.

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