Question

Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example

Answer 1

The procedure to calculate the date of maturity of a bill of exchange is given below:

1. Ascertain the date on which the bill will be honoured.

2. Add three days of grace to the above date.

For example, a bill with maturity period of one month is drawn on 1^st July and due date is 1^st September.

Then add 3 days of grace and payment will be made on 4^th September.

Days of grace depend on the following situations:

1. Declared holidays: If the payment day happens to be a national holiday or Sunday, then the preceding day becomes the payment day.

For example,

i. If a bill is drawn on 12^th July and its due date is 12^th August, then after adding 3 days of grace the maturity day is 15^th August.

However, as 15^th August is a national holiday; so, 14^th August becomes the payment day.

ii. If a bill is drawn on 1^st May and the maturity period is of one month, then the due date is 1^st June.

After adding 3 days of grace, the payment date becomes 4^th June.

However, if 4^th June happens to be a Sunday, then the payment will be made on 3^rd June.

2. Undeclared holidays: If the payment day happens to be an emergency holiday, then the succeeding day becomes the payment day.

For example, if a bill is drawn on 1^st May and is payable after 15 days, then, after adding 3 days of grace period, the due date becomes 18^th May.

However, if a national strike is declared on 18^th May, then 19^th May becomes the due date of the bill.