Professional Documents
Culture Documents
Basis for
Comparison
Meaning
Defined in
Parties
Drawn by
Liability of Maker
Can maker and
payee be the same
person?
Copies
Bill of Exchange
Promissory Note
No
Dishonor
Comparison Chart
Definition
Key Differences
Conclusion
Comparison Chart
Sale
When in a contract of sale, the
exchange of goods for money
consideration takes place
immediately, it is known as Sale.
Absolute
Executed Contract
Yes
In sale, the title of goods transfers
to the buyer with the transfer of
goods.
Buyer
Agreement to sell
When in a contract of sale the parties to
contract agree to exchange the goods for a
price at a future specified date is known
as an Agreement to Sell.
Conditional
Executory Contract
No
In an agreement to sell, the title of goods
remains with the seller as there is no
transfer of goods.
Seller
Responsibility of buyer
Responsibility of seller
No tax is levied.
Here the buyer has the right to claim
damages only.
Right to sue for damages.
Definition of Sale
A sale is a type of contract in which the seller transfers the ownership of goods to the buyer for a
money consideration. Here the relationship amidst the seller and buyer is of creditor and debtor. It is
the result of an agreement to sell when the conditions are fulfilled and the specified time is over. The
following are the essential conditions regarding Sale:
1.
2.
3.
4.
5.
There must be at least two parties; one is the buyer, and other is the seller.
The subject matter of the sale is the goods.
Payment should be made in the countrys legal currency.
The goods should pass from seller to buyer.
All the necessary conditions of a valid contract should be present like free consent,
consideration, a lawful object, capacity of parties, etc.
If the goods are being sold and the property is transferred to the buyer, but the seller is not paid. Then,
the seller can go to the court and file a suit against the buyer for the damages and the price too. On the
other hand, if the goods are not delivered to the buyer then he can also sue the seller for damages.
the time of sale should exist in the case of an agreement to sell too.
If the seller rescinds the contract, then the buyer can claim damages for the breach of contract. On the
other hand, the unpaid seller can also sue the buyer for damages.
Conclusion
Under Indian Sale of Goods Act 1930, section 4 (3) deals with the Sale and Agreement to sell, where it
has been clarified that the agreement to sell also come under sale. However, there is a distinction
between these two terms which we discussed above.
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 contains an unconditional order, directing a person, to pay a certain amount to a specified
person. These two terms sound the same, which becomes the cause of confusion for many people.
Come, lets start understanding the difference between Cheque and Bill of Exchange.
Comparison Chart
Definition
Key Differences
Similarities
Conclusion
Comparison Chart
Basis for
Comparison
Meaning
Defined in
Cheque
A document used to make easy payments on
demand and can be transferred through hand
delivery is known as cheque.
Section 6 of The Negotiable Instrument Act,
1881
3 months
Validity Period
Payable to bearer
Always
on demand
Not Applicable, as it is always payable at the
Grace Days
time of presentment.
Acceptance
Stamping
Crossing
Drawee
Noting or
Protesting
Bill of Exchange
A written document that shows the
indebtedness of the debtor towards
the creditor.
Section 5 of The Negotiable
Instrument Act, 1881
Not Applicable
Cannot be made payable on
demand as per RBI Act, 1934
3 days of grace are allowed.
Definition of Cheque
A cheque is a type of bill of exchange, used for the purpose of making payment to any person. It is an
unconditional order, addressing the drawee to make payment on behalf the drawer, a certain sum of
money to the payee. A cheque is always payable on demand, i.e. the amount is paid to the bearer of the
instrument at the time of presentment of the cheque. It is always in writing and signed by the drawer of
the instrument.
It should be noted that the issuer must have an account with the bank. There is a specified time limit of
3 months, during which the cheque must be presented for payment. If a person presents the cheque
after the expiry of 3 months, then the cheque will be dishonored. The various types of cheques are:
Electronic Cheque: A cheque in electronic form is known as an electronic cheque.
Truncated Cheque: A cheque in paper form is known as truncated cheque.
There are three parties involved in the bill of exchange, they are:
Drawer: The maker of the bill of exchange.
Drawee: A person on whom the bill is drawn, i.e., the person who gives acceptance to make
payment to the payee.
Payee: The person who gets the payment.
There are three days of grace allowed to the drawee, to make payment to the payee, when it becomes
due. You might wonder about the days of grace, lets understand it with an example: A bill is drawn on
5-10-2014 in the name of X, to make payment to Y after 3 months. The bill will become due on 5-012015 while the date of maturity is 8-01-2015 because of 3 days of grace are added to it. The following
are the types of bill of exchange:
Inland Bill
Foreign Bill
Time Bill
Demand Bill
Trade Bill
Accommodation Bill
Similarities
Conclusion
Cheque and Bill of Exchange both are used to make payments easily. However, the cheque itself is a
type of bill of exchange, used to discharge the liabilities and so it consists of all the features of a bill of
exchange. Not only in business, but individuals, government agencies, and other institutions also use
the cheque to make payments but the bill of exchange is mostly used in business.