Comparison of a Bill and a Hundi and the Various Kinds of Hundies A bill of exchange and a hundi are both important instruments used in commercial transactions, particularly for making payments and facilitating credit. A bill of exchange is a negotiable instrument recognized and regulated under the Negotiable Instruments Act, 1881, whereas a hundi is a traditional indigenous instrument that developed in India through customary commercial practices. Although both serve the broad purpose of transferring money and creating an obligation to pay, they differ in their legal basis, form, terminology, and methods of operation. A bill of exchange is defined under the Negotiable Instruments Act, 1881, as 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. It therefore normally involves three parties: the drawer, who makes the order; the drawee, who is directed to make payment; and the payee, to whom the payment is to be made. A bill may be payable on demand or at a specified future date. A hundi, on the other hand, is a traditional negotiable instrument used by merchants and traders in India. It generally contains an unconditional order for payment of money and may resemble a bill of exchange in its commercial operation. However, hundies are primarily governed by trade customs and usages, unless the parties have