Difference Between Bill of Exchange and Promissory Note

 Difference Between Bill of Exchange and Promissory Note

Friends, in our last posts we gave you a brief introduction about  Bill of Exchange and Promissory Notes. In this post we shall discuss the differences between them. 

Differences between Bill of Exchange and Promissory Note :

Following are the points of difference between a bill of exchange and a promissory note.

1. Number of Parties :  
1. Bill of Exchange : There are three parties in a Bill of Exchange they are, Drawer, Drawee and Payee.
2. Promissory Note : There are only two parties in case of promissory note, they are Maker and Payee.
2. Promise and Order : 
1. Bill of Exchange : Bill of Exchange contains an unconditional order to pay.
2. Promissory Note : Promissory note contains a conditional promise to pay.
3. Acceptance :

• Bill of Exchange : Bill of Exchange requires acceptance by the Drawee
• Promissory Note : Promissory note does not require any acceptance as debtor himself prepares it.
4. Nature of Liability :
• Bill of Exchange : In case of Bill of Exchange the drawer's liability is secondary.
• Promissory Note : In case of Promissory note the liability of the maker is primary.
5. Maker's Position :
• Bill of Exchange : In case of Bill of Exchange maker is a creditor.
• Promissory Note : In case of promissory note, maker is a debtor.
6.  Formalities in case of Dishonor :
• Bill of Exchange : Notice of dishonor is essential in case of Bill of Exchange.
• Promissory Note : No Notice of dishonor is essential in case of promissory note.