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Difference Between Bill of Exchange and Promissory Note:

Learning Objectives:

  1. What is the difference between bill of exchange and promissory note?

A bill of exchange differs from a promissory note on the following points:

Promissory Note Bill of Exchange
  • It is promise to pay
  • It is an order to pay
  • There are only two parties the drawer, and the payee.
  • There are three parties, the drawer, the drawee, and the payee.
  • There is no necessity of acceptance
  • It must be accepted
  • The maker is primarily liable
  • The drawer is not primarily liable.
  • It is never drawn in sets
  • Foreign bills are specially drawn in sets.
  • Protesting is not necessary after dishonour
  • A foreign bill must be protested upon dishonor.

You may also be interested in other articles from "accounting for bills of exchange page" chapter:

  1. Definition and Explanation of Bill of Exchange
  2. Advantages of a Bills of Exchange
  3. How a Bill of Exchange Functions
  4. Promissory Note
  5. Difference between Bill of Exchange and Promissory Note
  6. Difference Between Bill of Exchange and Cheque/Check
  7. Recording Transactions of Bill of Exchange
  8. Drawing, Acceptance, and Payment of Bill of Exchange
  9. Discounting of Bill of Exchange
  10. Bills of Exchange for Collection
  11. Endorsement of a Bill of Exchange
  12. Dishonour of a Bill of Exchange
  13. Renewal of a Bill of Exchange
  14. Retiring of a Bill of Exchange
  15. Accommodation Bill of Exchange
  16. Insolvency of the Acceptor in a Bill of Exchange
 

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