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CA Foundation · Business Laws · The Negotiable Instruments Act, 1881

Anil Sharma, a Pune trader, signs a promissory note promising to pay Rs 50,000 to Bhavna Textiles on demand. In the note, who is the 'maker', and who is the 'payee'?

Anil is the maker and Bhavna Textiles is the payee. The maker of a promissory note is the person who signs it and promises to pay, while the payee is the person to whom the money is promised. Drawer and drawee apply to bills and cheques.

  1. AAnil is the maker and Bhavna Textiles is the payeeCorrect
  2. BAnil is the payee and Bhavna Textiles is the maker
  3. CAnil is the drawer and Bhavna Textiles is the drawee
  4. DAnil is the drawee and Bhavna Textiles is the endorsee

Explanation

In a promissory note, the person who signs and promises to pay is the maker, and the person to whom payment is promised is the payee. Anil promises to pay, so he is the maker. Drawer and drawee are terms used for bills of exchange and cheques, not for a promissory note.

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