A written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum, either immediately (a sight bill) or on a fixed date (a term bill), for payment of goods and/or services received. The drawee 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. According to the 1930 Convention Providing A Uniform Law For Bills of Exchange and Promissory Notes held in Geneva (also called Geneva Convention) a bill of exchange contains: (1) The term bill of exchange inserted in the body of the instrument and expressed in the language employed in drawing up the instrument.
Use this term in a sentence
The bill of exchange was made juvt to make sure everything got paid and by a certain time to keep thing in order.
The salesman was relieved to finally get the bill of exchange signed, after working many long weeks to arrange the new deal.
You need to know what the bill of exchange says and make sure you are giving up everything that you must.