Bill Of Exchange

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DEFINITION of 'Bill Of Exchange'

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.

INVESTOPEDIA EXPLAINS '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?

    A bill of exchange is a written agreement between two parties – the buyer and the seller – used primarily in international ... Read Full Answer >>
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    A number of different websites offer free templates to help an individual or business generate a bill of exchange. A bill ... Read Full Answer >>
  3. What is the difference between a bill of exchange and a bill of lading?

    A bill of exchange is a documentation of payment, much like a promissory note. On the other hand, a bill of lading is a receipt ... Read Full Answer >>
  4. Who uses bills of exchange?

    Bills of exchange primarily act as promissory notes in international trade; the seller, or exporter, in the transaction addresses ... Read Full Answer >>
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