What is a Bill of Exchange? Also, explain its essential characteristics under the Negotiable Instruments Act, 1881.

Bill of Exchange: A “bill of exchange” is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. \nParties to the bill of exchange \n(a) Drawer: The maker of a bill of exchange. \n(b) Drawee: The person directed by the drawer to pay is called the 'drawee'. He is the person on whom the bill is drawn. On acceptance of the bill, he is called an acceptor and is liable for the payment of the bill. His liability is primary and unconditional. \n(c) Payee: The person named in the instrument, to whom or to whose order the money is, by the instrument, directed to be paid. \nEssential characteristics of bill of exchange \n(a) It must be in writing. \n(b) Must contain an express order to pay. \n(c) The order to pay must be definite and unconditional. \n(d) The drawer must sign the instrument. \n(e) Drawer, drawee, and payee must be certain. All these three parties may not necessarily be three different persons. One can play the role of two. But there must be two distinct persons in any case. As per Section 31 of the RBI Act, 1934, a bill of exchange cannot be made payable to bearer on demand. \n(f) The sum must be certain. \n(g) The order must be to pay money only. \n(h) It must be stamped.