Definition for bill of exchange: A bill of exchange is a short dated security used to finance foreign trade. It can be cashed at any time by the supplier
Examples – bills of exchange
In the Commonwealth almost all jurisdictions have codified the law relating to negotiable instruments in a Bills of Exchange Act, e.g. Bills of Exchange Act 1882 in the UK, Bills of Exchange Act 1908 in New Zealand. The Bills of Exchange Act:
- Defines a bill of exchange as: ‘an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer.
- Defines a cheque as: ‘a bill of exchange drawn on a banker payable on demand’
- Defines a promissory note as: ‘an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person or to bearer.’
Additionally most commonwealth jurisdictions have separate Cheques Acts providing for additional protections for bankers collecting unendorsed or irregularly endorsed cheques, providing that cheques that are crossed and marked ‘not negotiable’ or similar are not transferable, and providing for electronic presentation of cheques in inter-bank cheque clearing systems.
(from Wikipedia: Negotiable Instrument)