MANTUANO, Donita Marie B.

BSBA-FM2A

BILL OF
EXCHAN
GE
A bill of exchange is a contract that binds one party to pay
a specific sum of money to another party at a predetermined
future date. It is commonly used in international trade. It is the
most often utilized method of payment in both domestic and
international trade. It is frequently extended with credit durations of
90 days or more. A bill of exchange must also be approved by the
drawee in order to be valid. Due to the risks associated in foreign
transactions, the buyer or seller usually uses a bank to issue the
bill of exchange. As a result, bank drafts are occasionally used to
refer to bills of exchange.
A bill of exchange is a legal document that specifies a
debtor's obligations to a borrower. It is commonly used in
international trade to pay for goods and services. Although a bill of
exchange is not a contract in and of itself, it is used to carry out
the conditions of a contract by the parties involved. It will
determine whether payment is due right now or later. The amount
of money, the date, and the people involved, including the drawer
and drawee, must all be specified. After shipping the products, the
exporter, as agreed between the exporter and the importer, draws
the bills to the importer or, more typically, the bank acting on
behalf of the importer. It should be noted that the drawer and the
drawee may be the same person in some situations. When a
Principal draws a bill on his agent, for example, the drawer and the
drawee are the same person. Similarly, the drawer and the payee
could be the same person.
Bills of exchange are similar to checks and promissory
notes in that they can be written by people or banks and are
usually transferred through endorsements. Both financial
instruments are written agreements between buyers and sellers,
as well as any other parties involved in a financial transaction.