What are the parties to negotiable instruments?


The parties to a bill of exchanges, a promissory note and a cheque are as follows:

Parties to a Bill of Exchanges: (1) Drawer, (2) Drawee, (3) Acceptor, (4) Payee, (5) Holder, (6) Indorser, (7) Indorsee, (8) Drawee in case of need, and (9) Acceptor for honour.

Parties to a Promissory Note: (1) Maker, (2) Payee (3) Holder, (4) Indorser and (5) Indorsee

Meker, Drawer: The person who makes a promissory note is called the “maker”. The person who makes or draws a bill of exchange or cheque is called the “drawer”.

Drawee, Acceptor: The person on whom the bill of exchange or cheque is drawn and who is directed to pay is called the “drawee”. In case of a cheque, the drawee is always a banker. In case of a bill of exchange, the drawee becomes the “acceptor” when he accepts the bill, i.e. signs his accent upon the bill and delivers the same or gives notice of such signing to the holder or to some person on his behalf A cheque does not require acceptance as it is intended for immediate payment.

Payee: The person named in the bill, note or cheque, to whom or to whose order the money is to be paid, is called the “payee”. In a bill or cheque, the drawer may himself be the payee. Where the payee named in a bill is a fictious or non-existing person, the bill is treated as payable to bearer.

Indorser: The person who endorses the bill, note or cheque to another is called the “indorser”.

Indorsee: The person to whom the bill, note or cheque is endorsed is called the “Indorsee”.

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