State the Difference between promissory note and bill of exchange." (7 Marks)

Difference between promissory note and bill of exchange: S. No. Basis Promissory Note Bill of Exchange 1. Definition "A Promissory Note" is an instrument in writing (not being a banknote or a currency-note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. "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 bearer of the instrument. 2. Nature of Instrument In a promissory note, there is a promise to pay money. In a bill of exchange, there is an order for making payment. 3. Parties In a promissory note, there are only 2 parties namely: i. the maker and ii. the payee In a bill of exchange, there are 3 parties which are as under: i. the drawer ii. the drawee iii. the payee 4. Acceptance A promissory note does not require any acceptance, as it is signed by the person who is liable to pay. A bill of exchange needs acceptance from the drawee. 5. Payable to bearer A promissory note cannot be made payable to bearer. On the other hand, a bill of exchange can be drawn payable to bearer. However, it cannot be payable to bearer on demand.