Definition and Explanation of Bill of Exchange
bill of exchange (BOE) is a written, unconditional order by one party to another to pay a certain amount of money or sum either immediately or on a fixed date, for payment of goods or services received. One party that accepts the bill by signing it, thus converting it into a post-dated check and a binding contract. A bill of exchange is also called a draft but, while all drafts are negotiable instruments, only “to order” bills of exchange can be negotiated.The term bill of exchange inserted in the body of the instrument and expressed in the language employed in drawing up the instrument. A bill of exchange is unconditional order to pay a determinate sum of money. A bill of exchange is the name of the person who is to pay.