The time of payment of a promissory note must be certain, the amount to be paid must be specified, and the instrument must be payable in money. If the instrument is to be paid in anything other than money, it is not a negotiable instrument. An instrument must be delivered, before it has a legal existence as a promissory note. The essentials of a promissory note are also essentials of any negotiable instrument. A promissory note need not be dated, nor need it state that it is given for a consideration. By its nature it imports a consideration. The party signing the note is called the maker, the party to whom it is made payable is called the payee. If the payee transfers it by indorsement, he is called the indorser, and the person to whom he transfers it is called the indorsee.
Fig. 2. Sight Draft.
125. Drafts and Bills of Exchange. The term, draft, is commonly used to designate an order from one bank or banks on another, as well as orders on third persons. Orders drawn by one person on another, payable to a third person, are known technically as bills of exchange. At present, the terms, draft, and bills of exchange are generally used interchangeably. A draft or a bill of exchange is a written order drawn by one person on another, payable to a third person, to the order of a third person, to the drawer himself or his order, or to bearer.
Fig. 3. Sixty-Day Draft, Accepted.
A common form of draft is shown in Fig. 2.
Bills of exchange or drafts are frequently made payable at a time considerably in the future. Fig. 3 is a form of sixty-day draft. This draft is presented to the drawee, J. H. Gotrochs, and if he accepts, he writes, accepted, followed by his name, across the draft. His name written on a draft is sufficient acceptance.
The party drawing a bill of exchange is called the drawer, the party to whom it is made payable is called, the drawee before acceptance, and the acceptor after acceptance. The drawee may accept by signing the instrument, by stating his acceptance on a separate piece of paper, by oral acceptance, or even by conduct making apparent his intention to accept. After acceptance of a draft or bill of exchange, the acceptor is liable to pay the bill according to its terms. He is in the position of a maker of a promissory note.
