Question 3: Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
Answer:
The term maturity refers to the date on which a bill of exchange of a promissory note becomes due for payment. In arriving at the maturity date three days, known as days of grace, must be added to the date on which the period of credit expires i.e., instrument is payable e.g., if a bill dated March 15 is payable 30 days after date it, falls due on April 17, i.e. 33 days after March 15 if it were payable one month after date, the due date would be April 18, i.e., one month and 3 days after March 5.
Here, we should remember, that there is difference between one month of 30 days, when 30 days are given, we have to count 3 days above 30 days and where one month is given, we count 3 days of grace over a month as it is illustrated in the above example, where one month end on 15 April and date of maturity is 18 April in spite of 17 April. However, where the date of maturity is a public holiday, the instrument will become due on the preceding business day. In this case, if April 18 falls on a public holiday, then April 17 will be the maturity date.
But when an emergent holiday is declared under the Negotiable Instruments Act 1881, by the Government of India which may happen to be the date of maturity of a bill of exchange, then the date of maturity will be the next working day immediately after the holiday. e.g., the Government declared a holiday on April 18 which happened to be the day on which a bill of exchange drawn by Gupta upon Verma for Rs. 20,000 became due for payment. Since, April 18 has been declared a holiday under the Negotiable Instruments Act. Therefore, April 19 will be the date of maturity for this bill.
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