The Bill of Exchange

The bill of exchange is the binding document that exists between the two companies and usually done when two parties are conducting international trade. In this bill there are two parties and one of them agrees to pay a given amount of cash to the other party in some specific date or predetermined time period. There are three entities that are involved directly in the bill of exchange. One of them is the Drawee that is the major party that will pay the bill of exchange the other party is called the Drawer that is the party who urges Drawee to pay the cash on their behalf to some third party. The third entity in this system is that of the Payee that receives the amount of cash from Drawee on the request of the drawer.

Bill of exchange is a financial document that contains different pieces of information in it. The information recorded on bill of exchange includes the title, the name of the respective parties that are going to pay the roles of Drawee, Drawer and Payee. Other information includes the amount of cash that is to be paid to the payee and the signature of the person that is authorized by Drawee to pay the cash to the payee.

Bill of Exchange has different formats and slight variations occur in each format that depends upon the entities involved in bill of exchange. Moreover it is a kind of transferable bill that can be transferred from one party to the other by endorsing it on its back. The use of Bill of Exchange is continuously declined due to the emergence of other modes of payment.


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