Bills of Exchange

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Phan Tun Anh K154040415
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Huynh Nguyn Nht Trng K154040452
H ng Hoang K154040426
 1. Definition
A bill of exchange is a non-
In Viet Nam, Bill of interest-bearing written order
Exchange has only 1 that binds one party to pay a
type fixed sum of money to another
party a predetermined future
date.
 Definition
Bills of exchange: an order to require a
party to pay another party a stated
In international sum at a specified date.
trade
Promissory Note: a signed document
containing a written promise to pay a
stated sum to a specified person at a
specified date or on demand.
 The Parties in BE
2.
There are at least 3 parties!
 The Parties in BE
1. Drawer:
- This is the person who
writes and signs the bill.
- A seller/ creditor who is
entitled to receive
money from the debtor
can draw a bill of
exchange upon the
buyer/ debtor.
3. Payee:
2. Drawee:
-The person to whom the
- This is the person on
payment has to be made.
whom the bill is drawn.
He may be the drawer or
- Ex: if A sells goods to B on
drawers bank.
credit then A will be called
- In Vietnam, the payee
drawer of BE, B or Bs Bank
may be the seller or
would be called drawee
sellers bank.
since he can drawn the BE
- In international area,
from A.
the payee mostly the
sellers bank (the
correspondent bank).
3. Characteristics of
Bill of Exchange
- 1. A Bill of Exchange must be in writing (can be printed or written. However,
it is advisable not to write in pencil to avoid fraudulent alteration).
- 2. There are 3 parties to a bill: drawer, drawee, payee. But sometimes one
person may take on 2 roles. (Ex: where he draws a bill payable to himself or
payable to the drawee).
- The bill must be an unconditional order to pay. E.g. : please pay X or Pay
X
Note: A request /authority to pay is not a bill of exchange, e.g. we hereby
authorize you to pay on our account is not a bill of exchange.
- 3.The order must be unconditional. If conditional, it is not bill of exchange.
E.g : the order that gives drawee the discretion to pay X if satisfied with
the goods delivered or on or before Jan 1, 2007
- 4. The bill must be signed by the drawer or his authorized agent (signature by
means of rubberstamp is acceptable provided it is affixed with the intention of
being the drawers signature).
- 5. The bill must be addressed by one person or body of person to another
+) Body of person = company, partnership,..
+) Drawee must be identified with reasonable certainty. (Ex: Mr. X and Mr. Y, not
Mr. X or Mr. Y)
+) If the drawer and the drawee are the same person, the holder may treat the
document either as bill of exchange or a promissory note.
- 6. The bill must order payment of a sum certain in money, not in goods or
services.
+) If the order is to pay by bond or gold, it is not a bill of exchange.
+) The sum may be payable with interest or by stated installments, or according
to a specified rate of exchange.
+) Where there is a difference between the amount stated in words and figures,
the sum stated in words is the amount payable.
- 7. The bill must be payable on demand or at a fixed or determinable future time:
+) Payable on demand - the holder is entitled to payment immediately upon demand.
This includes bills payable on sight or on presentation or in which no time for payment is
stated.
+) Fixed or determinable future times - payment on the end of the period after date or
the happening of specified event which is certain to happen though the time
of happening may be uncertain. E.g.: 30 days after date/sight/Ts death are valid.
Note: A bill ordering payment on or before a certain date is invalid because of lack
of certainty in the time of payment
- 8. The bill must be payable to or to the order of a specified person.
+) That it is not necessary for the validity of a bill that the payee must be different from
either the drawer or drawee. A bill drawn by A on B in favor of himself is a valid bill;
similarly, a bill drawn by A only B in favor of B is also valid. In the last case however, the
bill is not effective till the drawee endorse it in favor of another, note further that the Act
specifically lays down that a bill may be made payable to joint payees or to payees in
the alternative.
 4.
Elements of a BE
 MUST
HAVE

1.Title: Bill of Exchange 5.Payment location

2.Amount of money 6.Beneficiary
3.Name and address of drawee 7.Date and Place of the draft
4.Payment period 8.Name and address of drawer
 1. Title: Bill of Exchange
Draft not titled as draft is not valid.

The draft must have a title to distinguish it from other valuable

papers
 2. Amount of money
The amount in words must match the amount written in
numbers.

If the amount written in words and the amount of money is

insufficient, the amount of payment shall be based on the
amount written in words.

If the amount is equal to a number or number but does not

match, the smaller amount is the basis for payment.
 3. Name and address of
drawee
5. Payment location
Help the beneficiary know where to send a draft to be paid.

Nowadays, it is usually the bank where the drawee opens the

transaction account as payment.
 4. Payment Period
At sight
At X days after sight
At X days after date
At X days after Bill of Lading date
On
6.Benecifiary
The beneficiary is the drawer

Beneficiary under order

Other named beneficiaries

The beneficiary is the person who holds the vote

 7. Place and Date of
the Draft
This information is very important:

It defines the applicable law of the draft.

It is the basis for determining the time of payment, the time limit
for presenting the draft.
 8. Name and Address of
drawer
Only authorized persons can sign as draftsman.

The signature must be signed manually.

Do not stamp over the signature.

The drawer is finally responsible for the beneficiary of the draft.

a. Title: Bill of exchange e. Place payment
b. Drawer f. Pay period
c. Drawee g. Amount of money and currency
d. Topper h. Beneficiary
 5.
Types of
Bills of exchanges
 1. Demand Bill (Sight Bill)

- A bill of exchange (BOE) that is

payable on demand or at sight or
when presented is a demand bill.
- In a demand bill, the time of
payment and due date is not
specified and hence it can made
payable on presentment.
 2. Usance Bill
- A BOE that must be paid after a
particular period of time or
specifies the time period for the
payment is a usance bill.
- It is also known as a time bill.
3. Clean bill
- A clean bill does not accompany any
documents of proof.
- The interest rate charged on clean bill is
usually higher than documentary bill.
 4.
Documentary bills
D/A (Documents against
acceptance) Bills
A BOE accompanied by
=> If the documents are documents confirming
delivered to the drawee genuineness of trade
against acceptable of a transaction that took place
bill, it is a D/A bill. between the buyer and seller
The bill become a clean is a documentary bill.
(These documents include
bill after delivery of
invoices, railway receipts, lorry
documents. receipts, bills of lading etc.)
D/P (Documents against
payment) Bills
=> If the documents are
delivered to drawee
against payment of the
bill, it is a D/P bill.
After delivery the
documents are held by
drawee's banker till the
maturity of the bill.
 5.
Inland Bills

It is a bill of exchange that is drawn in India and payable in

India or a bill drawn on an Indian resident either payable in
India or any other country.
 6.
Foreign bills
All bills of exchange payable outside India are foreign bills.
Export bill: A bill drawn by an exporter on party outside
India.
Import bill: A bill drawn by exporter outside India on Indian
importers.
 7.
Trade Bill
A BOE drawn and accepted for the purpose
off a genuine trade transaction is trade bill.
A trade bill is drawn by the seller (creditor)
and accepted by the buyer (debtor).
8.
Accommodation Bill
An accommodation bill do not involve any sale
and purchase of goods. It is drawn, accepted or
endorsed without any consideration.
 9.
Order Bill Accommodation Bills
When a bill is payable
to a specific person
whose name is
appearing on the bill, it
is called an order bill.
This bill can be
transferred only by
endorsement and
delivery.
10.
A bearer bill is payable
to any person who is in
possession of the bill
legally on the date of
maturity and to whom
payment will be made
by the drawee
 PHN CNG NHIM V
ST
Ni dung H v tn Ch thch
T
1 Phan Tun Anh Lm ppt, tng hp Chung
Khi nim, Cc bn tham
gia hi phiu
2 H ng Hoang Thuyt trnh, ni dung

3 c im ca hi phiu Trn Trinh Minh Chu Thuyt trnh, ni dung

4 Nguyn Thi Huynh Trang Lm ppt, ni dung

Thnh phn bt buc ca
hi phiu Thuyt trnh, tng hp
5 Nguyn Thi Kim Anh
chung
6 Ph Thi Thanh Trc Lm ppt, ni dung
Phn loi hi phiu
Huynh Nguyn Nht
7 Thuyt trnh, ni dung
Trng
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