Distinguish between Bill of Exchange and Promissory Note.

Basis of Distinction Promissory Note Bill of Exchange Number of Parties A promissory note is a two-party instrument, with a maker (debtor) and a payee (creditor). There are three parties—drawer, drawee and payee, though any two out of the three capacities may be filled by one and the same person. Maker as Payee A promissory note cannot be made payable to the maker himself. In a bill of exchange, the drawer and payee may be the same person. Nature of Instrument A promissory note contains an unconditional promise by the maker to pay to the payee or his order. In a bill of exchange there is an unconditional order to the drawee to pay according to the directions of the drawer. Acceptance A promissory note is presented for payment without any prior acceptance by the maker. A bill of exchange payable after sight must be accepted by the drawee or someone else on his behalf before it can be presented for payment. Liability of Maker/Drawer The liability of the maker of a Promissory note is primary and absolute. The liability of the drawer of a bill of exchange is secondary and conditional. Protest for Dishonour No such protest is necessary in the case of a promissory note. Foreign bill of exchange must be protested for dishonour. Notice of Dishonour No such notice need to be given in the case of a Promissory note. When a bill of exchange is dishonoured, due notice of dishonour is to be given by the holder to the drawer and the intermediate endorsee. Payable to Bearer A promissory note cannot be made payable to bearer, even if it is made payable otherwise than on demand. A bill of exchange can be drawn payable to bearer provided it is not payable on demand.