Bills of Exchange and Promissory Notes are negotiable instruments under Negotiable Instruments Act, 1881. A Bill of Exchange is a written instrument containing an unconditional order to pay a specified sum of money on demand or at a fixed/determinable future date. Key parties: Drawer (creditor issuing the bill), Drawee (debtor on whom bill is drawn), Payee (person entitled to receive payment). A Promissory Note is a written promise to pay a specified sum of money on demand or at a fixed/determinable future date. Key parties: Maker (creditor issuing the note), Payee (debtor or person entitled to payment). Both instruments serve as credit instruments enabling deferred payment arrangements. Bills and notes are used extensively in trade to facilitate credit transactions. These instruments can be endorsed and transferred, providing liquidity to the holder. Acceptance of bill is the drawee's written agreement to pay at maturity. Maturity date is calculated by adding period to date of issue or acceptance. These instruments can be discounted with banks to get immediate funds at a discount. Dishonor occurs when payment is not made at maturity. Noting and protesting are formal procedures after dishonor for legal evidence. Exam tip: Understand the fundamental differences between bills and promissory notes; know the key parties and their responsibilities; grasp the mechanics of acceptance, endorsement, and discounting.