Q.22. What is Renewal and Retirement of a
bill of exchange?
RENEWAL OF THE
BILL
Sometimes the drawee of the bill is
unable to pay the bill on its agreed date or time. In such a situation the
drawee can apply to issue a new bill subject to certain conditions after the
agreement of the drawer. This issuance of a new bill for some new time is known
as renewal of the bill. After the issuance of the bill the former is considered
to be cancelled. But if the drawee again unables to pay the newly issued bill,
the first bill with all its farmer conditions becomes payable and valid.
RETIREMENT OF
THE BILL
Sometimes the drawee pays the bill
before the agreed date enjoying the rebate which is provided to him for
prepayment of the bill. This is known as retirement of the bill. The amount of
the rebate depends upon the time left for payment and the amount for which the
bill is drawn.
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