Bills of Exchange vs Promissory Note 🆚
Both are Negotiable Instruments. But they are opposites in nature.
Bill of Exchange: "You MUST pay me." (Order) Promissory Note: "I PROMISE to pay you." (Promise)
Key Differences Table 📊
| Feature | Bill of Exchange | Promissory Note |
|---|---|---|
| Nature | It is an Order to pay. | It is a Promise to pay. |
| Parties | 3 (Drawer, Drawee, Payee). | 2 (Maker, Payee). |
| Who makes it? | The Creditor (Seller). | The Debtor (Buyer). |
| Acceptance | Needs acceptance by Drawee. | No acceptance needed (Maker signs it). |
| Liability | Drawer is secondarily liable. | Maker is primarily liable. |
| Copies | Can be drawn in sets (Foreign bills). | Only one copy. |
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The Currency Note
Look at a ₹500 note. It says: "I Promise to pay the bearer the sum of five hundred rupees." It is a Promissory Note signed by the RBI Governor!
Quiz Time! 🎯
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💡 Final Wisdom: "In a Bill, the Seller takes charge. In a Note, the Buyer takes responsibility." 🤝
Next up: Accounting Treatment (Drawer's Books) - Let's do the Journal Entries! 📔