What Are The Classifications Of Bills?

Bills of exchange are classified on several bases. The classification of bills by parties, if one bank orders the other bank to pay, it is called a bank draft or bank bill. If the order to pay is drawn on any other type of drawee it is named as trade draft or trade bill. A trade bill is drawn either by a seller on a buyer or by a creditor on debtor. When we talk of a bill of exchange, we mean by it a trade bill. Sometimes bill of exchange is classified on the basis of period of time required for payment. A bill ordering payment on demand or at sight is called sight bill. A bill ordering payment after a period of time specified on it is called time bill.

If the bill is fully supported by documents for payments, it is called documentary bill in case no security or document is provided with the bill it is called clean bill. A bill of exchange is either inland or foreign bill of exchange. Inland bills are those which are drawn and payable within one country foreign bills are those which arise out of trade transactions between different parties in different countries. They are therefore drawn on a person or firm in a foreign country.