Financial Documents

In international trade, there are two financial documents which provide for payment by the buyer. These are the bill of exchange and the promissory note.

Bills of exchange are a commonly used method of settlement in international trade. A bill of exchange is defined by the Bills of Exchange Act 1882 as:

1) an unconditional order in writing;

2) addressed by one person (the drawer);

3) to another (the drawee);

4) signed by the person giving it (the drawer);

5) requiring the person to whom it is addressed (the drawee);

6) to pay;

7) on demand, or at a fixed or determinable future time;

8) a sum certain in money;

9) to, or to the order of, a specified person, or to bearer.

An example of a bill of exchange is given below, with the items shown above indicated by their reference letter:

№ 178/3 31^st March __________________ 19X4 ___ For (h) £ 2,400 At (g) 60 days’ sight _____ (a) (f) __ Pay this First of Exchange ____________________________________________ to the Order   of ________(i) ourselves __ __________ ___________________________ two thousand four hundred pounds Value in merchandise shipped to which place to Account Spain Invoice no. 12345 To (c) Muchos Gracias SA (b) For and on behalf of (e) Pueblo Lucia, Malaga Sellem Abroad plc (d) BPPrior

When a term bill is addressed to the drawee, the drawee should sign the bill on receipt to indicate his acceptance of the order. After acceptance, the drawee becomes known as the “acceptor”.

A bill might be drawn in sterling or a foreign currency, depending on the terms of sale between the exporter and the foreign buyer.

Дата добавления: 2015-09-07