Bill Of Exchange as a Negotiable Instrument

Bill Of Exchange as a Negotiable Instrument
Bill Of Exchange as a Negotiable Instrument –

“Bill Of Exchange as a Negotiable Instrument”- educareguide’s topic of attention is worth considering. In addition to that, many people, especially students (including those writing various kinds of examination across the globe, which includes WASSCE), researched this topic.

Definition Of Bill Of Exchange:

Simply defined, a bill of exchange is a signed, written order by which one party (drawer) instructs another party (drawee) to pay a specified. sum of money to a third party (payee). A bill of exchange is defined under the Ghana Bills of Exchange Act, 1961 (Act 55) as: “an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed, to pay, on demand, or at a fixed or determinable future time, a sum certain in money to or to the .order of a specified person or the bearer.” A Negotiable instrument is an unconditional order or promise to pay an amount of money, easily transferable from one person. to another


Parties To A Bill Of Exchange as a Negotiable Instrument

There are three parties to a bill of exchange. They are:

The Drawer:

The person who gives the order to pay

The Drawee:

The person to whom the order to pay is given

The Payee:

The person to whom payment is to be made

Features Of A Bill Of Exchange as a Negotiable Instrument

The following are the characteristics possessed by a bill of exchange:

  • It must be in writing.
  • The order must be unconditional.This mean that the debtor does not any option but to pay the amount stated on the bill of exchange.
  • It must be addressed by one person to another and it must be an order to pay.The drawer is the who writes the bill and sends it to the payee for the amount stated on the bill to be paid to the payee.
  • It must require payment to be made to a specified person or to the beare The person to whom the payment is made is the payee.
  • It must be signed by the drawer.
  • It must require the buyer to pay a sum of money on demand or in a fixed future
  • The buyer must accept the bill by writing the word accepted across its faceand followed by his signature.
  • It must order payment of a sum certain in money.



Furthermore, several examining bodies,  including WAEC has asked questions on this sub-topic many times in the Business Management examination. Therefore, educareguide is here to assist you in to fully understand this topic very well.


Examination Questions Which Are Asked On Bill Of Exchange as a Negotiable Instrument

  • What is a bill of exchange?
  • What are the characteristics of a bill of exchange?
  • State and explain the features of a Bill Of Exchange as a Negotiable Instrument
  • State the parties to a Bill Of Exchange as a Negotiable Instrument.


Even though bill of exchange is not a very popular document for settlement of debt in small-scale enterprises, some large firms use it very often in their financial operations. Also, though it may not be very popular in less developed countries Africa, such as Nigeria, Ghana, Sierra Leone, The Gambia, Malawi, South Africa, Namibia, Kenya, Rwanda, Liberia, etc., it is quite used in developed countries. Among those countries are the United Sates, United Kingdom, Germany, Canada, Australia, France, Spain, etc.



To conclude, I will say that bill of exchange as a negotiable instrument is a vital concept that every student, individual and business know and understand. This will enable you to take advantage of it as a means of payment received for goods and services.

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