<P> A bill of exchange is essentially an order made by one person to another to pay money to a third person . A bill of exchange requires in its inception three parties -- the drawer , the drawee , and the payee . The person who draws the bill is called the drawer . He gives the order to pay money to the third party . The party upon whom the bill is drawn is called the drawee . He is the person to whom the bill is addressed and who is ordered to pay . He becomes an acceptor when he indicates his willingness to pay the bill . The party in whose favor the bill is drawn or is payable is called the payee . The parties need not all be distinct persons . Thus , the drawer may draw on himself payable to his own order . A bill of exchange may be endorsed by the payee in favour of a third party , who may in turn endorse it to a fourth , and so on indefinitely . The `` holder in due course '' may claim the amount of the bill against the drawee and all previous endorsers , regardless of any counterclaims that may have disabled the previous payee or endorser from doing so . This is what is meant by saying that a bill is negotiable . In some cases a bill is marked `` not negotiable '' -- see crossing of cheques . In that case it can still be transferred to a third party , but the third party can have no better right than the transferor . </P>
<P> A bill of exchange is essentially an order made by one person to another to pay money to a third person . A bill of exchange requires in its inception three parties -- the drawer , the drawee , and the payee . The person who draws the bill is called the drawer . He gives the order to pay money to the third party . The party upon whom the bill is drawn is called the drawee . He is the person to whom the bill is addressed and who is ordered to pay . He becomes an acceptor when he indicates his willingness to pay the bill . The party in whose favor the bill is drawn or is payable is called the payee . The parties need not all be distinct persons . Thus , the drawer may draw on himself payable to his own order . A bill of exchange may be endorsed by the payee in favour of a third party , who may in turn endorse it to a fourth , and so on indefinitely . The `` holder in due course '' may claim the amount of the bill against the drawee and all previous endorsers , regardless of any counterclaims that may have disabled the previous payee or endorser from doing so . This is what is meant by saying that a bill is negotiable . In some cases a bill is marked `` not negotiable '' -- see crossing of cheques . In that case it can still be transferred to a third party , but the third party can have no better right than the transferor . </P>
a person who is ordered to pay the amount of bill of exchange is known as
a person who is ordered to pay the amount of bill of exchange is known as
drawee
drawee