Bill of Exchange

• There are 3 parties in the bill of Exchange.
  

BEO is a written negotiable Instrument which contains an unconditional order which is

1. Signed by the Maker
   
2. Directs a certain person to pay
   
3. Certain sum of Money only to
   
4. Certain person or the bearer.
   

The parties are Drawer, Drawee and Payee.

• Drawer: The person who orders to pay
  
• Drawee: The person who is directed to pay
  
• Payee: The person who is authorized to obtain a payment
  

Please note that A minor can be a Drawer but not a Drawee because he can not incur liability.

Once the Drawee accepts the BOE, he becomes acceptor.

Inland Bill & Foreign Bill

A bill that is drawn in India and paid in India or out of India to a person, who is in India, whether Indian or Foreigner, is Inland Bill. Simply, a bill drawn in India and paid in India is a Inland Bill.

A bill which is NOT drawn in India but is payable in India to a person, who is in India and is Indian or a foreigner is a Foreign Bill.

Hundi:

• Hundi is the Desi version of a bill of Exchange.
  

They are used conventionally, not stamped and a vernacular language is written on them. They are still in use and are governed by local practices only.

• Darshani Hundi is akin to a Demand Promissory Note
  
• Miadi Hundi is akin to a Usance Promissory Note
  
• Khoka is also a Hundi which refers to a bill of exchange that has been paid and canceled.
  

BOE , as per the NI act are charged at the rate of 18% per annum interest.