What is a Bill of Exchange?
A Bill of Exchange is one of the key financial instruments in International Trade. The laws regulating Bills of Exchange in different countries come under two different legal spheres of influence:
Bills of Exchange Act (1882) - United Kingdom
Geneva Conventions of 1930
The Bill of Exchange is defined under these systems as follows:
Bill of Exchange Act (1882) - United Kingdom
"A Bill of Exchange is 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".
For a list of countries following the 'Bills of Exchange Act' see below
Common Law System
Convention providing a uniform law for Bills of Exchange and promissory notes (Geneva, 1930) The League of Nations.
Under Article 1 of the above convention a Bill of Exchange must contain:
The term "Bill of Exchange" inserted in the body of the instrument and expressed in the language employed in drawing up the instrument.
An unconditional order to pay a determinate sum of money.
The name of the person who is to pay.
A statement of the time of payment.
A statement of the place where payment is to be made;
The name of the person to whom or to whose order payment is to be made;
A statement of the date and of the place where the bill is issued;
The signature of the person who issues the bill
For a list of countries following the 'Geneva Conventions' see below
3 Bill of exchange defined
(1)A bill of exchange is 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.
(2)An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange.
(3)An order to pay out a particular fund is not unconditional within the meaning of this section; but an unqualified order to pay, coupled with (a) an indication of a particular fund out of which the drawee is to re-imburse himself or a particular account to be debited with the amount, or (b) a statement of the transaction which gives rise to the bill, is unconditional.
(4)A bill is not invalid by reason—
(a)That it is not dated;
(b)That it does not specify the value given
, or that any value has been given therefor;
(c)That it does not specify the place where it is drawn or the place where it is payable.
Modifications etc. (not altering text)
C1S. 3 amended by Decimal Currency Act 1969 (c. 19), s. 2