FAQ’S On BILL OF EXCHANGE

1. COULD YOU BRIEFLY EXPLAIN BILL OF EXCHANGE?
It is an instrument unconditional order signed by the maker directing certain party to make the payment of certain amount to certain party or the bearer of the instrument.

Essential Elements of Bill
1. Date
2. Time 3
3. Amount
4. Parties
5. Stamp
6. Far value received ( Consideration )
7. Acceptance

* It is of two types: 1 order 2. Bearer
* it is of two types : 1 real 2. Accommodation
* it is of two types : 1 date of payment fixed 2. Sight bill

2. WHAT ARE THE MAIN FEATURES OF A BILL OF EXCHANGE?
A) ”Bill of Exchange” included in the current text (applicable also under H)
B) Drawer´s name = Name and address of the issuer of the Bill of Exchange i.e. the Seller.
C) Drawee’s name = Name and address of the paying part.
D) The amount expressed in letters.
E) The amount expressed in figures.
F) Date of issue = the date of the issuance of the Bill of Exchange.
G) Maturity = The maturity date of the Bill of Exchange. Upon immediate payment , write ”At sight”. Upon payment at a pre-determined date, write maturity yyyy-mm-dd ” ” at a pre-determined date after shipment, e.g. 60 days after B/L date, write”60 days date” in G) and under F) date of shipment When a Bill of Exchange matures at a pre-determined period after acceptance, e.g. 60 days sight the acceptance shall include maturity date.
H) Payee = the party receiving payment at maturity. In this field usually is written ”ourselves” and the issuer of the Bill of Exchange makes an endorsement on the reverse of the Bill of Exchange. The endorsement is consisting of the firm’s stamp alt. the company’s written name plus a signature of the person authorised to sign the Bill of Exchange.
If required in a Letter of Credit or otherwise that a First and Second of Exchange should be presented, write on the first “First (Second unpaid)” and on the second “Second (First unpaid)”
I) Field for additional information if applicable, e.g. Letter of Credit No.
J) Drawer´s signature = The Seller’s firm stamp+ signature alt. the company’s written name plus the signature of the person authorised to sign the Bill of Exchange.
K) When the drawee has accepted the Bill of Exchange he is called acceptor.
L) It could be payable at a the domicile of a third party, e.g. a bank, whose address should be stated.
M) Place of payment is the domicile of the drawee provided that M) is not evidencing otherwise

3. WHICH INTERNATIONAL CONVENTIONS ARE USUALLY GOVERNING BILLS OF EXCHANGE?
Usually the Geneva or UK Convention.

4. WHAT HAPPENS IF THE ACCEPTOR DOESN’T PAY TIMELY?
Default of payment must be evidenced by an authentic act (protest for non-acceptance or non-payment), usually carried out by a Notary Public at the place where payment of the Bill of Exchange should have been done. The bona-fide holder (a holder in good faith) of the Bill of Exchange should approach the Notary Public. A summary protocol is established upon protesting. This may be utilized by the Bill of Exchange holder facilitating summary proceedings. A protest is made official at the place where payment should have been made.

5. CAN YOU EXPLAIN “ENDORSEMENT”?
Endorsement is a legal term for the physical handing over of the instrument. The person handing over it (the endorser) to a succeding party can either endorse to a named party or make it payble to the bearer – that is the person duly holding the Bill of exchange.

6. CAN INTEREST BE SPECIFIED IN A BILL OF EXCHANGE
When a bill of exchange is payable at sight, or at a fixed period after sight, the drawer may stipulate that the sum payable shall bear interest. The rate of interest must be specified in the Bill of Exchange, in default of such specification the stipulation shall be deemed not to be written.

7. FROM WHICH DATE RUNS THE INTEREST IN A BILL OF EXCHANGE?
From the date of the Bill of Exchange issuance, unless some other date is specified.