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Under which circumstances drawer and payee is same person:
- a)When drawer discounted the bill with banker
- b)When drawer endorse the bill to the third party
- c)When drawer held the bill till maturity
- d)When drawee rejects to accept the bill
Correct answer is option 'C'. Can you explain this answer?
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Under which circumstances drawer and payee is same person:a)When drawe...
Under which circumstances drawer and payee is same person:
When drawer held the bill till maturity.
Explanation:
- The drawer is the person who draws (creates) a bill of exchange, while the payee is the person who is entitled to receive payment under the bill.
- In some cases, the drawer and payee may be the same person. This can happen when the drawer holds the bill until its maturity, meaning until the date on which the payment is due.
- When the bill matures, the drawer becomes the payee and is entitled to receive payment from the drawee (the person who is supposed to make the payment).
- This can happen when the drawer has a debt to collect from the drawee and chooses to use a bill of exchange to secure the payment. In this case, the drawer can hold onto the bill until it matures and then present it for payment to the drawee.
- By doing so, the drawer becomes the payee and receives payment directly from the drawee, without the need for any intermediaries.
- This situation is different from when the drawer discounts the bill with a banker, meaning that they sell the bill to the banker at a discount in exchange for immediate cash. In this case, the banker becomes the payee and the drawer loses their right to receive payment from the drawee.
- Similarly, when the drawer endorses the bill to a third party, meaning that they transfer their right to receive payment to someone else, the payee becomes the third party, not the drawer. And when the drawee rejects to accept the bill, there is no payee involved in the transaction.
When drawer held the bill till maturity.
Explanation:
- The drawer is the person who draws (creates) a bill of exchange, while the payee is the person who is entitled to receive payment under the bill.
- In some cases, the drawer and payee may be the same person. This can happen when the drawer holds the bill until its maturity, meaning until the date on which the payment is due.
- When the bill matures, the drawer becomes the payee and is entitled to receive payment from the drawee (the person who is supposed to make the payment).
- This can happen when the drawer has a debt to collect from the drawee and chooses to use a bill of exchange to secure the payment. In this case, the drawer can hold onto the bill until it matures and then present it for payment to the drawee.
- By doing so, the drawer becomes the payee and receives payment directly from the drawee, without the need for any intermediaries.
- This situation is different from when the drawer discounts the bill with a banker, meaning that they sell the bill to the banker at a discount in exchange for immediate cash. In this case, the banker becomes the payee and the drawer loses their right to receive payment from the drawee.
- Similarly, when the drawer endorses the bill to a third party, meaning that they transfer their right to receive payment to someone else, the payee becomes the third party, not the drawer. And when the drawee rejects to accept the bill, there is no payee involved in the transaction.
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Under which circumstances drawer and payee is same person:a)When drawe...
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When drawer held the bill till maturity
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Under which circumstances drawer and payee is same person:a)When drawer discounted the bill with bankerb)When drawer endorse the bill to the third partyc)When drawer held the bill till maturityd)When drawee rejects to accept the billCorrect answer is option 'C'. Can you explain this answer?
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