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CA Foundation · Accounting · Bills of Exchange and Promissory Notes

Which of the following statements about a bill of exchange is correct?

A bill of exchange must contain an unconditional order to pay a certain sum of money. It must be in writing and signed by the drawer. Conditional orders, payment in goods, or an unsigned instrument do not qualify as a bill.

  1. AIt must contain an unconditional order to pay a certain sum of moneyCorrect
  2. BIt may be made payable to a person only conditionally on delivery of goods
  3. CIt can be drawn for payment in goods of equal value
  4. DIt need not be signed by the drawer if it is accepted by the drawee

Explanation

A bill of exchange is a written instrument containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only. A condition, payment in goods, or absence of the drawer's signature each defeat the essential features, so those options are wrong.

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