The distinctive features of these two types of negotiable instruments are tabulated below:

Promissory Note

Bill of Exchange

1. It contains a promise to pay It contains an order to pay. 2. The liability of the maker of a note is The liability of the drawer of a secondary primary and absolute (Section 32) and conditional. He would be liable if the drawee, after accepting the bill fails to pay the money due upon it provided notice of dishonour is given to the drawer within the prescribed time (Section 30). 3. It is presented for payment without any If a bill is payable some time after sight, it previous acceptance by maker. is the required to be accepted either by the drawee himself or by some one else on his behalf, before it can be presented for payment. 4. The maker of a promissory note stands The maker or drawer of an accepted bill in immediate relationship with the payee stands in immediate relationship with the (Explanation to Section 44)and is primarily acceptor and the payee (Explanation to liable to the payee or the holder. Section 44). 5. It cannot be made payable to the In the case of bill, the drawer and payee or maker himself, that is the maker and the the drawee and the payee may be the same payee cannot be the same person. person. 6. In the case of a promissory note In the case of a bill of exchange there are there are only two parties, viz., the maker three parties, viz., drawer, drawee and (debtor) and the payee(creditor). payee, and any two of these three capacities can be filled by one and the same person. 7. A promissory note cannot be drawn in The bills can be drawn in sets. sets. 8. A promissory note can never be A bill of exchange too cannot be drawn conditional. conditionally, but it can be accepted conditionally with the consent of the holder. It should be noted that neither a promissory note nor a bill of exchange can be made payable to bearer on demand.

Difference between Cheque and Bill of Exchange:

(1) In the case of a cheque the drawee- i.e. the person on whom the bill is drawn-must always be banker whereas in the case of a bill of exchange the drawee may be any person. (2) No days of grace are allowed in the case of a cheque, and a cheque is as a rule, payable on demand, whereas three days grace is allowed in the case of a bill. (3) In the case of a dishonour of a cheque, notice of dishonour is not necessary whereas notice of dishonour is usually required in the case of a bill. (4) A cheque can be drawn to bearer and made payable on demand, whereas a bill cannot be drawn to bearer if it is made payable on demand. (5) Cheques do not require to be stamped in India, whereas bills must be stamped according to the law. In England and several other countries, cheques also are required to be stamped. (6) A cheque may be crossed, whereas a bill cannot be crossed. Generally, it must be remembered that cheques are negotiable instruments and the most of the rules in relation to bills of exchange also apply to cheques.

k ) Drawer, Drawee, Acceptor, Maker, Payee, etc.,: ( i ) any other instrument is called drawer. ( ii ( iii Drawer, Drawee, Acceptor, Maker, Payee, etc.,:
(i) The party who draws a bill of exchange or a cheque or any other instrument is called drawer. (ii) The party on whom such bill of exchange of cheque is drawn is called the drawee. In other words the person who is thereby directed to pay is called the drawee. (iii) The drawee of a bill of exchange who has signified his assent to the order of the drawer is called the acceptor. The acceptor becomes liable to the holder after he has signified his assent but not before.