Ch. # 6 BILL OF EXCHANGE

Chapter # 6		BILL OF EXCHANGE
Q.1:	Define bill of exchange?
Ans:	Bill of exchange is an unconditional order in writing drawn by one person another, signed by he acceptor, requiring the acceptor to pay on demand or at fixed or determinable future time, a certain sum of money only to, or to the order of a specified person or to the bearer.
Q.2:	Name different parties of bill of exchange?
Ans:	i)       Drawer  ii)    Drawee iii)  Payee
Q.3:	Define “Drawer”?
Ans:	A person who draws the bill of exchange is called “Drawer”.
Q.4:	Define “Drawee”?
Ans:	The person to whom bill is drawn is called drawee.
Q.5:	Define “Payee”?
Ans:	A person who receive s the amount of bill on maturity date is called payee.
Q.6:	What do you men by “due date” of bill?
Ans:	A determinable future time for payment of bill is called “due date” of bill.
Q.7:	What is meant by “grace days”?
Ans:	An extra three days which are given in Bill of Exchange to acceptor after agreed time for payment are called “grace days”.
Q.8:	What is bill receivable?
Ans:	A bill of exchange from the view of its drawer is called bill receivable.
Q.9:	What is Bill payable?
Ans:	A bill of exchange from the view of its acceptor is called bill payable.
Q.10:	Give any three characteristics of bill of exchange?
Ans:	i)       It must be in writing.  ii)    It must be signed by the maker. iii)  It must be unconditional order to pay.
Q.11:	Define promissory note?
Ans:	Promissory note is promise in writing containing an unconditional undertaking, signed by the maker, to pay a certain person or to the bearer of the instrument, a certain sum of money, after certain period of time.
Q.12:	Name different parties of promissory note?
Ans:	i)       Maker  ii)    Payee
Q.13:	Define “Maker”
Ans:	A person who promises to play under promissory note is called maker.
Q.14:	Give any three characteristics / features of promissory note?
Ans:	i)       It must be in writing.  ii)    It must be signed by the maker. iii)  It must be an unconditional promise to pay.
Q.15:	Differentiate between bill of exchange and promissory note?
Ans:	Bill of Exchange Promissory Note i)       It is an order to pay. It is promise to pay. ii)    There are parties involved in it. There are to parties involved in it. iii)  Its acceptance is necessary There is no need to acceptance.
Q.16:	Define the “Discounting of bill”?
Ans:	When holder of the bill sells it to bank before due date to fulfill his money need against discount is called “discounting of bill”.
Q.17:	Define “endorsement of bill”?
Ans:	When a bill if transferred to third party or creditor to settle his debt is called endorsement of bill.
Q.18:	Define “Dishonouring of bill”?
Ans:	When the acceptor refuses to accept or make payment on the bill due to any reason is called “Dishonouring of bill”.
Q.19:	What is meant by “maturity of bill”?
Ans:	When payment is made by acceptor and received by payee on the due date is called maturity of bill.
Q.20:	What is meant by “renewal of bill”?
Ans:	When a drawee is not in position to meet the original bill at maturity he may request to the drawer to draw a new bill for further period against interest. This process of drawing a new bill is called “Renewal of bill”.
Q.21:	What is “retiring of bill”?
Ans:	When drawee is agreed to make payment of bill before the due of date for certain amount of rebate, is called retiring of bill.
Q.22:	Define “insolvent”?
Ans:	When liabilities of any person exceeds from this assets, he is insolvent.
Q.23:	What is insolvency?
Ans:	The situation in which liabilities of any person exceeds his assets is called insolvency?
Q.24:	Define “Nothing charges”?
Ans:	Charges which are paid to notary public on dishonour of bill of exchange for nothing of bill are called “nothing charges”.
Q.25:	Define “Notary public”?
Ans:	A person who notes the bill of exchange on its dishonour is called “Notary Public”.
Q.26:	Define “Noting”?
Ans:	A process of recording the dishonoured bill by the notary public is called “Noting”.
Q.27:	Define “Accommodation Bill”?
Ans:	When a bill of exchange is drawn, accepted without any consideration for accommodation of himself, or acceptor or for mutual accommodation is called “Accommodation bill”.
Q.28:	Write different types of accommodation?
Ans:	i)       Accommodation of drawer  ii)    Accommodation of drawee iii)  Mutual accommodation
Q.29:	What is acceptance of bill?
Ans:	A sign made by drawee on the face of bill along with the word “accepted” is called acceptance.
Q.30:	What is holder of bill?
Ans:	A person who I entitled in his own name to the possession of bill and to claim the amount due on it, is called holder.
Q.31:	Name any four kinds of bill of exchange?
Ans:	i)       Accommodation bill  ii)    Inland bill iii)  Clean bill iv)   Trade bill.
Q.32:	Define clean bill?
Ans:	When no documents of title relating to the goods and other documents are attached is called clean bill.
Q.33:	What is qualified acceptance?
Ans:	When a bill is accepted with some conditions by drawee is called qualified acceptance.
Q.34:	What is general acceptance?
Ans:	When a bill is accepted without any condition on the order of drawer, is called general acceptance.
Q.35:	Give any four advantages of bill of exchange?
Ans:	i)       Free transferability  ii)    Facility of discounting iii)  Proof of debt. iv)   Specific terms and conditions.
Q.36:	What do you know about rebate on bill of exchange?
Ans:	Amount allowed to drawee for early payment of the amount of the bill of exchange is called rebate.
Q.37:	Define mutual accommodation?
Ans:	A situation in which bill of exchange is drawn for accommodation of both drawer and drawee is called mutual accommodation.