The distinctive features of these two types of negotiable instruments are tabulated below:
Promissory Note
1. It contains a promise to pay.
2. The liability of the maker of a note is primary and absolute (S.3
3. It is presented for payment without any previous acceptance by the maker.
4. The maker of a promissory note stands in immediate relationship with the payee and is primarily liable to the payee or the holder.
5. It cannot be made payable to the maker himself. The maker and the payee cannot be the same person.
6. In the case of a promissory note there are only two parties, viz., the maker (debtor) and the payee (creditor).
7. A promissory note cannot be drawn in sets.
8. A promissory note can never be conditional.
9. In case of dishonour no notice of dishonour is required to be given by the Holder.
Bill of Exchange
1. It contains an order to pay.
2. The liability of the drawer of a bill is secondary and conditional.
3. If a bill is payable some time after sight, it is required to be accepted either by the drawee himself or by some one else on his behalf, before it can be presented for payment.
4. The maker or drawer of an accepted bill stands in immediate relationship with the acceptor and the payee.
5. The drawer and payee or the drawee and the payee may be the same person.
6. There are three parties, viz, drawer, drawee and payee, and any two of these 3 capacities can be filled by one and the same person.
7. The bills can be drawn in sets.
8. A bill of exchange cannot be drawn conditionally, but it can be accepted conditionally with the consent of the holder.
9. A notice of dishonour must be given in case of dishonour of Bills of Exchange.
