Bill of exchange can be defined as an instrument in writing containing unconditional order signed by the maker directing a certain person to pay predetermined sum of money only to or to the order of a certain person or to the bearer of the instrument. From the above definition one can infer that the features of bills of exchange are –
1. Under bill of exchange there are three parties; one is drawer who is the person who draws the bill. Second is the drawee who is the person who is ordered to pay, third is the payee in whose favor the bill is drawn or is payable. He is the one who receives the money from drawee.
2. The amount which is to be paid through bill should be a fixed amount which is known to both the parties.
3. Bill of exchange which is an instrument in writing can be made only for transferring of money not for other things.
4. It has to be compulsorily signed by the person making the bill of exchange in order to be called a valid bill of exchange.
5. The money must be payable to a specific person only or to his order or to the bearer.