Bill of Exchange
A bill of exchange is a commercial document that guarantees that one person will pay another an amount of money on a certain date . Specifically, the it is defined as a written instrument by which one person, called the drawer , orders another, the so-called drawee or debtor , to pay a sum of money on a certain due date. Payment of the bill can be made to the drawer himself or to a third party, called beneficiary or payee , to whom the drawer has transmitted (or endorsed) the bill of exchange.
Characteristics
The document must have at least the following characteristics:
- Specify the place of issue.
- Denomination of the currency in which it was issued.
- I ride in letters and numbers.
- Date on which the document was issued.
- Due date.
- Issuer data (Issuer).
- Address of the bank where the payment will be made (not mandatory).
- Data of the person who must make the payment (drawee).
- Explicit acceptance of the person who must make the payment.
- Signature of the issuer of the bill of exchange.
- Stamp duty rate .
- Identification of the document used to complete it.
Who intervenes in a bill of exchange?
The following people may also intervene in the operation of the bill of exchange:
- The endorser : the person who endorses or transmits the bill of exchange to a third party.
- The endorsee : the one in whose favor the bill is endorsed.
- The guarantor : the one who guarantees the payment of the bill.
How to fill out
To fill out, the following sections must be included:
- The name “bill of exchange”.
- The place and date of issue of the letter.
- The order to pay a specific sum, with the amount indicated in letters and figures.
- The expiration date.
- The place of payment.
- The name and address of the drawee.
- The name of the beneficiary or policyholder.
- The signature, name and address of the drawer.
- The acceptance, date of acceptance and signature of the acceptor.
Difference between bill of exchange and other financial instruments
Although the bill of exchange is a means of payment like other financial instruments, it has some special characteristics, among which are:
- It is issued by the creditor or beneficiary.
- It requires the explicit acceptance of the debtor, which does not occur with other financial instruments.
- It allows interest to be set at the time of payment, which does not happen with a check, for example.
- This is a credit and not a demand payment.
