A promissory note or bill of exchange or cheque payables either to the order or bearer are deemed as the instruments under negotiable instrument acts of 1881. The promissory note is actually an undertaking from the debtor to pay a certain sum of amount to the creditor or to his order. The bill of exchange is kind of negotiable instruments generally arising out of trade transactions. Let’s find out the key difference between a bill of exchange and a promissory note.
|Promissory Note||Bills of Exchange|
|In a Promissory note, there will be two parties namely maker (debtor) and a payee (creditor).||In a Bills of exchange, there will be three parties namely drawer, drawee, and payee.|
|A Promissory note contains an unconditional promise by the maker to pay to the payee or his order.||A bill contains an unconditional order to the drawee to pay according to the instruction of the drawer.|
|A Promissory note cannot be made payable to the maker himself.||In Bills of exchange, the drawer and payee can be the same person.|
|A Promissory note is presented for payment without any prior acceptance by the maker.||A Bill is payable after sight must be accepted by the drawee or someone else on his behalf prior to the presentation of the same for payment.|
|In the Promissory note, the liability of the maker is absolute and primary.||The liability of the drawer of the Bills is conditional and secondary.|
|In the Promissory note, sending notice of dishonor to the maker is not necessary.||
Holder shall serve the notice of dishonor to the drawer and intermediate endorsee/s.
|A Promissory note cannot be made payable to bearer.||A Bill can be drawn payable to bearer (provided it is not payable on demand)|
|There is no need of protest for dishonor in the case of Promissory note||In case of foreign bills if the bill is dishonoured, it must be noted and protested. This is in addition to the notice of dishonor already served on all the parties to the bill dishonored foreign bills must be protested.|
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