Section 5 - Bill of exchange : Negotiable Instruments Act 1881

What is Bill of exchange? Bill of exchange is defined under Section 5 of Negotiable Instruments Act 1881

Section 5 of Negotiable Instruments Act 1881: "Bill of exchange"

A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

A promise or order to pay is not "conditional" within the meaning of this section and section 4, by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.

The sum payable may be "certain", within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an installment, the balance unpaid shall become due.

The person to whom it is clear that the direction is given or that payment is to be made may be "certain person", within the meaning of this section and section 4, although he is misnamed or designated by description only.