What is Bill of Exchange definition/concept

A bill of exchange is a commercial document that allows you to carry out a payment order for a specified amount of money. In every bill of exchange there are three people involved: the issuer, the debtor and the beneficiary.

The sender is the one who creates the lyrics. The debtor is the one who owes, that is, the liability of the obligation , the one who has to pay a value in money indicated in the document.

The beneficiary is the creditor, the one who is entitled to receive a certain amount of money found in the document

In other words, the bill of exchange is an economic mechanism that involves three people:

the person A (the issuer) issuing a payment order; person B (the debtor) who pays a sum to person C (the payee).

Bills of exchange are used to transfer money between two people without the intervention of a bank or state .

It can be said that the bill of exchange is a commitment that exposes the issuer’s word. It is a method of payment considered as a credit instrument that can be used in commercial or private activities.

Bill of Exchange Elements

In bills of exchange there are fixed and permanent elements, in addition to other elements that do not always appear and are variable. The fixed elements are the names of the issuer, debtor and beneficiary, the date of issuance of the document and the place of payment. In commercial law terminology these elements are known as relative elements.

Variable elements are those that appear or not on the bill of exchange, such as a possible guarantor, endorsers, guarantors of endorsers or endorsers. These elements refer to possible participants in the bill of exchange and are therefore called personal elements.


For a bill of exchange to have legal validity , it is necessary to comply with a series of requirements: the explicit indication in the document dealing with the bill of exchange, the specification of the place and the exact day on which it is signed, the order to pay a certain amount to the debtor, the name of the debtor, the place and time of payment, the name of the person who will make the payment and finally the signature of the issuer.

On the other hand, there is a requirement to accept the bill of exchange, which appears with the word “accepted”, as well as the place where it is accepted, the date on which payment will be made and the issuer’s signature.

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