What is Bill of Exchange?

      Section 3(1) of the Bill of Exchange, Act 1882 defines - Bill of exchange is an unconditional order in writing, addressed by one person to another, signed by one person giving it, requiring the person to whom it is addressed to pay on demand, at a fixed or determinable future time, a sum certain in money to or to the order of a specified person or to bearer. According to Section 5 of the Negotiable Instrument Act, 1881, A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bear of the instrument.  

What is cheque?

    According to Section 6 of Negotiable Instruments Act, 1881 A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.


Difference Between Cheque and Bill of Exchange

         All Cheques are bills of exchange but all bills of exchange or not cheques. It differs in many ways.



            Bill of Exchange


Cheque may be drawn only on a Banker.

It can be drawn on any person including a Banker.


 The amount is always payable on demand

  The amount may be payable on demand or after a specified Time.


 The Cheque is not entitled to days of grace.

It is entitled to 3 days of Grace.


 Acceptance is not needed

A bill payable after sight must be accepted.


 A cheque can be crossed

Like a Cheque, Crossing of the bill of exchange is not possible.

Notice of dishonor is not required. The parties thereon remain liable, even if no notice of dishonor is given.

Notice of dishonor is necessary to hold the parties liable. A Party who does not receive a notice of dishonor can generally escape its liability thereon.


 A Cheque is not to be noted or protested in case of dishonor.

A bill is noted or protested in case of dishonor.

     The protection given to the paying banker in respect of crossed cheque is peculiar to this instrument, In case of Bill of Exchange, no such protection is available.


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