Multiple choice

Which of the following instruments has three parties, i.e. drawer, payee and drawee, to the instrument?

  1. Bill of exchange and cheque

  2. Bill of exchange and promissory note

  3. Promissory note and cheque

  4. Promissory note and demand draft
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A Correct answer
Explanation

‘Cheque’ is an instrument which contains an unconditional order, drawn on a banker, directing to pay a certain sum of money to the person whose name is specified in the instrument. ‘Bill of Exchange’ is a document containing an unconditional order, directing a person, to pay a certain amount to a specified person. A cheque is a type of bill of exchange, used for the purpose of making payment to any person.

There are three parties involved in the case: Drawer: The maker or issuer of the cheque. Drawee: The bank which makes payment of the cheque. Payee: The person who gets the payment of the cheque or whose name is mentioned on the cheque.

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