Which type of negotiable instrument is a legally binding, written document that instructs a party to pay a predetermined sum of money to another party?a)Promissory noteb)Bill of exchangec)Chequed)Bank draftCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

A bill of exchange is a type of negotiable instrument that is a legally binding, written document that instructs a party to pay a predetermined sum of money to another party. It is a written order from the payer to the payee, directing the payment of a specified amount on a specified date.For example, in international trade, an exporter may issue a bill of exchange to an importer, instructing them to pay a certain amount of money on a specified date. The importer can then accept the bill of exchange and use it as a means of payment.

Answer

Bill of Exchange:
A bill of exchange is a legally binding, written document that instructs a party to pay a predetermined sum of money to another party. It is a type of negotiable instrument that is commonly used in international trade transactions.

Key Points:
- A bill of exchange contains the details of the parties involved, the amount to be paid, the payment date, and other terms and conditions.
- The party that issues the bill of exchange is known as the drawer, while the party that is directed to pay is called the drawee.
- The drawee must accept the bill of exchange by signing it, indicating their agreement to make the payment on the specified date.
- Once accepted, the bill of exchange becomes a legally binding document, and the drawee is obligated to make the payment as instructed.
- Bills of exchange are commonly used in business transactions to provide a secure method of payment and ensure that all parties fulfill their financial obligations.
In conclusion, a bill of exchange is a crucial financial instrument that facilitates secure and legally binding payments between parties involved in commercial transactions.

Answer

A bill of exchange is a type of negotiable instrument that is a legally binding, written document that instructs a party to pay a predetermined sum of money to another party. It is a written order from the payer to the payee, directing the payment of a specified amount on a specified date.For example, in international trade, an exporter may issue a bill of exchange to an importer, instructing them to pay a certain amount of money on a specified date. The importer can then accept the bill of exchange and use it as a means of payment.

Answer

A bill of exchange is a type of negotiable instrument that is a legally binding, written document that instructs a party to pay a predetermined sum of money to another party. It is a written order from the payer to the payee, directing the payment of a specified amount on a specified date.For example, in international trade, an exporter may issue a bill of exchange to an importer, instructing them to pay a certain amount of money on a specified date. The importer can then accept the bill of exchange and use it as a means of payment.

Similar B Com Doubts

Which type of negotiable instrument is an instrument in writing that contains an unconditional order, addressed to a banker, to pay a certain sum of money on demand or to a specified person?

Which type of negotiable instrument is a written promise to pay a certain sum of money by a pre-decided date?

For an instrument to become a promissory note it must have the following element

Under what circumstances can an instrument be treated as both a bill of exchange and a promissory note?

difference between promissory note and bill of exchange Related: Presumptions - Negotiable instruments Act(1881), Business Law?

Top Courses for B Com

Suggested Free Tests

Related Content

Schools

Competitive Examinations

Quick Access Links

Technical Exams