Types of Bill of Exchange

              Types of Bill of Exchange 

The bills of exchange are classified on two different basics: 

(1)On The Basis Of Period

(2) On The Basis Of Exchange

(1) Period

On the basis of period bills are of two types:

(a)  Demand Bill Of Exchange:

There is no fixed date for the payment of such bill. They become payable any time, when they are presented by the holder.

(b) Terms Bills Of Exchange:

These bills are payable after specified period of time. The period after which these bills become due for payment is called Tenor.

(2) Object

On the basis of purpose of writing the bill, the bills can be classified as:

(a) Trade Bill

These bills are drawn and accepted against the sale and purchase of goods on credit. These are by the seller and accepted by the buyer.

(b) Accommodation Bills

Such bills do not involve any sale and purchase of goods, rather they are drawn without any consideration. The purpose is to help any party or both the parties financially.

Classification Of Bill of Exchange:

(a) Inland Bills

These bills are drawn in a country upon persons living in the same country or made payable in the same country. Both drawer and acceptor reside in the same country.

(b) Foreign Bills

These bills are drawn in one country and accepted and payable in another country, e.g. a bill drawn in Pakistan and accepted and payable in London.