Dr.

Katalin Csekő
INTERNATIONA 7th Lecture
L TRADE Promissory Notes and Bill of
exchange
 THE COMMERCIAL
TRANSACTION=UNDERLYING
The DEAL
parties to the contract of international sale:
Seller: KBC Fashion AG., Medellin, Colombia
Buyer: Kraft Foods Deutschland, Lörrach, Germany
The total price of the goods: EUR100,000
The goods: uniforms
The day of delivery: May 12, 2023.
The day of payment: 90 days after the delivery=August 12, 2023
The interest payable for the trade credit: EUR 740 which is 3% p.a.
Payment method: promissory note or bill of exchange
Place: Lörrach, Germany Date: May 12, 2023.

I, Kraft Foods Deutschland, Lörrach promise to pay against this Promissory Note the
amount of 100,740 EUR, one hundred thousand seven hundred and forty euros.
Payable on August 12 (twelve), 2023.

To the order of KBC Fashion AG., Medellin, Colombia

Place of payment: IBAN 1250446034557722 of the Kraft Foods Deutschland
Signed by (Drawer)
Kraft Foods Deutschland
Place: Medellin, Colombia Date: May 12, 2023.

Pay, Kraft Foods Deutschland, Lörrach against this Bill of Exchange the amount of
100,740 EUR, one hundred thousand seven hundred and forty euros.
Payable on August 12 (twelve), 2023.
To the order of KBC Fashion AG, Medellin, Colombia
Drawee: Kraft Foods Deutschland
Place of payment: IBAN 1250446034557722 of the Kraft Foods Deutschland
Signed by (Drawer)
KBC Fashion AG. Medellin
Colombia
Accepted: Kraft Foods Deutschland, signed by Kraft Foods.
 PARTIES IN PROMISSORY NOTE & BILL OF EXCHANGE

The Drawer: the seller, the person who draws the bill; The buyer who issues the
Promissory Note.
The Drawee: to whom the bill of exchange is addressed (e.g., the buyer, or a bank which
will pay on the buyer’s behalf);
The Acceptor: the drawee, as soon as he has signed his name across the Bill of Exchange
and willing to pay the Bill of Exchange at its maturity (tenor).
The Payee: the beneficiary, who has a claim for the certain sum.
The Payee endorses the Bill of Exchange or Promissory Note in favour of (to the order of)
the next beneficiary (endorsee) full or in blank. (e.g., The seller is virtually the payee.)
The Endorser: any Payee who signs his name on the back side of the Bill of Exchange or
promissory note and thereby transfer his title to the new owner.
The Endorsee: the beneficiary as the result of endorsement.
 PROMISSORY NOTE & BILL OF EXCHANGE
Geneva Convention 1933; Bill of Exchange Act 1882 and Uniform Commercial Code of US.
It is ipso iure negotiable documents which might be
Unconditional promise or order to pay containing
A sum which is certain in money,
To the order of a specified person (=beneficiary or payee),
Demanding the debtor to accept and to pay (Drawee),
at the defined place (e.g. bank account) and
at sight or at a defined fixed date or determinable future time.
It is issued at a certain place and time.
Its validity is dependent on strict formal requirements.
See first, second or sole bill of exchange:
https://www.ubs.com/ch/en/corporates/international/trade-exportfinance/forms.html
 TRANSFER OF RIGHT=ENDORSEMENT
UNDER B/E & P/N
The right for the payment can be by the virtue of law „transferred” (=endorsed, negotiated)
in two forms in on the reverse side of the paper:
Full endorsement and by (physical) delivery where the new owner will be
Holder in due course → a specified person who takes the instrument free from all claims
and defenses to it, if he has paid adequate value for it and acted with no knowledge on
defects thereof;
Blank endorsement that means by pure delivery where the new „owner” will be
Holder → pure „bearer” (his name is not inserted) takes the instrument but his right remains
subject to all valid claims and defences thereto;
B/E & P/N must be honoured irrespective of the underlying transaction;
They might be deemed quasi money;