Which of the following requires acceptances before it can be valid?
Answer Details
A bill of exchange requires acceptances before it can be valid. A bill of exchange is a written order from one person (the drawer) to another (the drawee) to pay a specified sum of money to a third party (the payee) at a future date. The drawee must accept the bill of exchange before it becomes a binding legal document.
Acceptance is the drawee's written agreement to pay the amount specified on the bill of exchange. Once the drawee accepts the bill of exchange, they become legally obligated to pay the specified amount to the payee on the due date.
In contrast, a promissory note is a written promise to pay a specified amount of money to a named person or order at a specified date or on demand. It does not require acceptance by anyone else to become valid.
A letter of credit is a financial instrument that is issued by a bank on behalf of a buyer to guarantee payment to a seller. It does not require acceptances to become valid.
A cheque is a written order from an account holder to their bank to pay a specified sum of money to a named person or order. It does not require acceptances to become valid.