Elements of a Bill of Exchange

A bill of exchange is a negotiable instrument. It is made by the person who signs it. It is an unconditional order and a direction to specific person to pay a sum of money only to another specific person or to the order of or also to the bearer of the instrument. An instrument to be a bill of exchange that shall have some features to be a bill of exchange.


The following are the essential elements of a bill of exchange;

The bill of exchange must be in writing


The bill of exchange which was made shall be in writing. Mere words of order is not a valid instrument and that doesn't satisfy the rule to be a bill of exchange.


The bill exchange must contain an order regarding the payment


The bill of exchange is a unconditional order. Hence, the instrument shall have the instruction i.e. an order to pay to certain person or to the order of.

The bill of exchange must be unconditional


The bill of exchange shall always be free of any conditions. The payment to be made on order shall be unconditional and the same qualifies the instrument to be a bill of exchange.

Parties in the bill of exchange


Bill of exchange always have three parties to it. The drawer who makes the bill of exchange. The drawee who shall accepts the bill of exchange and eventually who becomes an acceptor. And finally, the payee who receives the sum of money as specifies in the instrument.

Parties to bill of exchange must be certain


The names mentioned in there in the bill of exchange shall be certain with their identities. The parties shall be identifiable and when that is not the case the bill of exchange nullifies.

The bill of exchange shall be signed


The drawer of the bill of exchange shall sign the instrument. He is the one who gives the order to pay. The drawer is the payee or the payee could be the holder of the bill also.

The sum of money payable though bill of exchange shall be certain


The sum of money shall be certain. Additions to the same of subtractions shall not be accepted unless there is an interest clause and the same shall be mentioned in percent. Other conditions to the sum of money shall be void.

Date, number, place, etc on bill of exchange


These are not required by the law and they are not essential. The important issue is order to pay certain sum of money unconditionally to the payee or to the order of or also to the bearer of the bill of exchange. The bill of exchange however shall be stamped to give legal validity to the same.

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