The following are the points of distinction between a promissory note and a bill of exchange:
- There are three parties to a bill of exchange, namely, the drawer, the drawee and the payee, while in a promissory note there are only two parties – maker and payee.
- In a bill of exchange there is an unconditional order to pay, while in a promissory note there is an unconditional promise to pay.
- A bill of exchange requires an acceptance of the drawee before it is presented for payment, while a promissory note does not require any acceptance since it is signed by the person who is liable to pay.
- The liability of a maker of a bill of exchange is primary and while the liability of a drawer of a bill of exchange is secondary and conditional. It arises only when the drawee fails to pay that the drawer would be liable as a surety.
- A bill of exchange can be drawn in sets; but promissory note cannot be drawn in sets.