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What is a 'Bill Of Exchange'

A bill of exchange is a non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.

BREAKING DOWN 'Bill Of Exchange'

Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts.

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RELATED FAQS
  1. What is the difference between a bill of exchange and a promissory note?

    Learn what bills of exchange and promissory notes are, along with notation of the primary differences between these two documents. Read Answer >>
  2. Where on the Internet can I find free sample templates for a bill of exchange?

    Understand the concept behind a bill of exchange, and learn about websites on the Internet where you can find free sample ... Read Answer >>
  3. Who uses bills of exchange?

    Find out who uses bills of exchange, why they are important in international trade and what happens when a bill is traded ... Read Answer >>
  4. What is the difference between a bill of exchange and a bill of lading?

    Understand what a bill of exchange and a bill of lading are and the different purposes they each serve as documents used ... Read Answer >>
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