The relevant steps for acceptance of bills of exchange are as follows:
1. First, the bill of exchange must be presented to the drawee. The drawee must decide to accept or reject the bill. The drawee must sign on the acceptance or refusal on the face of the bill and return it to the holder.
2. If the drawee accepts the bill, she will write the date of acceptance and sign in the acceptance column. The drawee thus becomes the acceptor of the bill and is called an acceptor for value. Upon acceptance, the drawee becomes primarily liable for the bill on the due date.
3. When a bill is accepted, the drawer and the holder can sue the acceptor in case of needed. The holder will have to present the bill to the drawee in a prescribed time, and the time is prescribed on the face of the bill.
4. The third (remaining) party to a bill of exchange transactions is the endorsee. The endorsee is the party who transfers the bill of exchange to a third party.
5. The holder may have the right to sue the acceptor and may have a legal lien against the drawee’s liquid assets.
6. The drawee can choose to accept or reject the bill until the “due date” is reached. If the drawee accepts the bill on or before the date of maturity, the bill can be said to be accepted by implication.
7. If the drawee does not accept the bill until after the date of maturity, the acceptance will be considered a “late acceptance” and the drawee is liable for any loss or damages sustained by the holder.
8. The payee has a duty to accept or reject the bill within a reasonable time. If there is an unreasonable delay, the drawee is liable to the holder in damages.
9. If the drawee pays the bill on the due date, the holder may collect on the bill by presenting it to a bank that will pay the drawer in exchange for the bill.
10. Finally, a promissory note is also a type of bill of exchange that is used in a transaction. The primary difference between a promissory note and a bill of exchange is that a promissory note contains a promise to pay, while a bill of exchange is an order to pay. A promissory note does not require acceptance and does not have an endorser.