Bill of Exchange

Bill of Exchange definition

/bɪl/ /ɒv/ /ɪksˈtʃeɪndʒ/

What does Bill of Exchange mean?

A negotiable instrument that represents an unconditional promise by one party to pay another party, in accordance with the terms of that instrument. Bills of exchange are governed by the Bills of Exchange Act 1882. Their key characteristics are as follows:

•'unconditional'—payment cannot be subject to any conditions or requirements whether set out in the instrument or referenced externally

•'in money'—they are for payment in money and cannot include an agreement to perform any other acts

•'sum certain'—the amount due cannot be qualified or contingent and must be able to be determined from the instrument itself. However, if interest must be paid in addition to the principal amount, that can still be a 'sum certain' provided that the interest rate is fixed in the instrument (and is not floating).

Variances

Bills of Exchange Act 1882

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