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Parties to a Bill of Exchange Video Lecture | Accountancy Class 11 - Commerce

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FAQs on Parties to a Bill of Exchange Video Lecture - Accountancy Class 11 - Commerce

1. What is a bill of exchange?
A bill of exchange is a negotiable instrument that functions as a written order from the drawer (the party that initiates the bill) to the drawee (the party obligated to pay) to pay a specific amount of money to a third party, known as the payee. It serves as a legal document that ensures payment for goods or services provided.
2. Who are the parties involved in a bill of exchange?
There are three main parties involved in a bill of exchange: - Drawer: The individual or entity that issues the bill and expects payment from the drawee. - Drawee: The person or entity obligated to make the payment as instructed by the drawer. - Payee: The recipient of the payment, who can be an individual or entity.
3. What are the responsibilities of the drawer in a bill of exchange?
The drawer has several responsibilities in a bill of exchange: - Initiating the bill by drafting and signing it. - Ensuring that the bill is properly addressed to the drawee. - Specifying the amount of money to be paid and the currency. - Providing all necessary details about the payee. - Presenting the bill for acceptance and payment within the specified time frame.
4. What are the responsibilities of the drawee in a bill of exchange?
The drawee has the following responsibilities in a bill of exchange: - Reviewing the bill to confirm its authenticity and validity. - Accepting the bill by signing it, indicating their commitment to make the payment. - Ensuring that the payment is made to the payee within the agreed-upon time frame. - Notifying the drawer in case of any issues or disputes related to the bill.
5. Can a bill of exchange be transferred to another party?
Yes, a bill of exchange can be transferred to another party through a process known as endorsement. The payee can endorse the bill by signing the back of it, thereby transferring their right to receive payment to another person or entity. This new party becomes the new payee and can further endorse the bill if needed. The transfer of a bill of exchange can be done multiple times until the payment is eventually made.
82 videos|105 docs|42 tests

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