bill of exchange


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Related to bill of exchange: bill of lading, letter of credit, promissory note

Bill of exchange

General term for a document demanding payment.

Bill of Exchange

A document requiring payment by one party to another for a good or service the party demanding payment provided. See also: Receipt.

bill of exchange

a FINANCIAL SECURITY which is used to extend business CREDIT for a limited time period. The lender draws up a bill of exchange for a specified sum of money payable at a given future date, usually three months hence, and the borrower signifies his agreement to pay the amount involved by signing (i.e. accepting) the bill. In addition, a borrower will often arrange for a bill to be guaranteed by an ACCEPTING HOUSE, which in return for a fee will agree to repay the debt should the borrower be unable to do so. Most bills are in fact ‘discounted’ (i.e. bought from the drawer) by a DISCOUNT HOUSE for an amount less than the face value of the bill (the difference between the two sums being the interest charged). The bill may then be held until maturity or sold at a lower price (‘rediscounted’) to another discount house, or, more commonly, on-sold to the COMMERCIAL BANKS. See DISCOUNT, DISCOUNT MARKET, REDISCOUNTING, INTEREST RATE.

bill of exchange

a FINANCIAL SECURITY representing an amount of CREDIT extended by one business to another for a short period of time (usually three months). The lender draws up a bill of exchange for a specified sum of money payable at a given future date, and the borrower signifies his agreement to pay the amount indicated by signing (accepting) the bill. Most bills are

‘discounted’ (i.e. bought from the drawer) by the DISCOUNT MARKET for an amount less than the face value of the bill (the difference between the two constitutes the interest charged). Bills are frequently purchased by the COMMERCIAL BANKS to be held as part of their RESERVE ASSET RATIO. See DISCOUNT, ACCEPTING HOUSE, DISCOUNT HOUSE.

References in periodicals archive ?
If the holder of the bill of exchange refuses to receive the payment by intervention, he shall forfeit his right of recourse against those who would have been discharged by such payment.
But the bill of exchange and the promissory note can not be regarded as two forms of the same instrument, for several reasons, namely: the obligation of the issuer in the case of the promissory note differs from the obligation of the issuer in the case of the bill of exchange, more specifically said, the issuer's obligation in the case of the promissory note lies in making itself the payment, and the drawer's obligation, the issuer in the case of bill of exchange, is to ensure the payment, the obligation of payment occurs only in the event of failure of payment or denied payment by the paying shirred.
As well as securing payment for the seller a bill of exchange can have an additional advant-age in that, in many cases, the seller's bank will agree to discount the documentary bill or make an advance against it.