The calculation of legal due date of a bills of exchange is dependent on the type of bills of exchange viz. Demand bill or term bill.
As the name suggests, a demand bill or sight bill is payable on demand (on presentation)/at sight. Whereas, a term bill (also known as ‘Usance Bill’) is payable after date or after sight of a stated number of months or certain event. In India, in case of Term bills/Usance bills of exchange, three days of grace is available to drawee for payment, after the date which it is expressed to be payable in the bill. Hence, legal due date of a term/usance bill will be the last day of grace (maturity date plus three days of grace is the legal due date).
Calculation of bill payable after date:
Let us take an example of a bill dated Aug 1, 2018 payable after 3 months. The legal due date of this bill will be 3 months after Aug 1 i.e. November 1st plus three days of grace, that is November 4, 2018.
Calculation of bill payable after sight:
In case of bills payable certain period after sight, the legal due date is calculated from the date of acceptance of the bill.
Example: A bill dated August 1, 2018 payable 3 months after sight is accepted on August 7, 2018. Three months after date of acceptance is November 7, 2018. Adding three days of grace after November 7, 2018, is November 10, 2018. Hence the legal due date of above bill is November 10, 2018.
In case the period of bill is stated in days, the calculation of the due date will be in days which include the date of payment but exclude the date of transaction.
Example: A bill dated February 1, 2018 payable 30 days after sight is accepted on February 7, 2018. In this case, 30 days after February 1 is March 9. Therefore, due date will be March 9, 2018 plus 3 days that is March 12, 2018,
Where due date has no corresponding date:
If the month in which the period would terminate has no corresponding day, the period shall be held to terminate on the last day of such month. If a negotiable instrument, dated 30th January, 2018, is made payable at one month after date, then the due date of the instrument will be on the third day after the 28th February, 2018. Hence due date of the bill is February 28 + 3 days of grace that is March 3, 2018.
One more example: A bill of exchange, dated 31st August, 2018, is made payable three months after date. The instrument is payable on December 3, 2018.
Where the due date is a public holiday:
If due date falls on a public holiday, the due date is preceding business day and if proceeding day also a public holiday, the due date will be preceding the previous day. For example, the due date of a bill is August 15, which is a public holiday; the preceding day is August 14. If August 14 is also a public holiday, and then the due date of the bill will be August 13.
However, if the due date falls on a sudden holiday, (emergency holiday like holiday declared on death of National Leader etc.), the due date for payment of a bill will be the following business day.