Bill of Exchange
Bill of exchange, defined.
A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer.
TYPES OF BILLS OF EXCHANGE
1. Draft
2. Trade acceptance
3. Banker’s acceptance
4. Treasury warrants
5. Money orders
6. Clean bills of exchange
7. Documentary bill of exchange
8. D/A bills of exchange
9. D/P bills of exchange
10. Time or usance bills
11. Bills in set
12. Inland bills
13. Foreign bills
DRAFT
> Common term for all bills of exchange and they are used synonymously
IN BANK DRAFTS, DRAWER AND DRAWEE BANK ARE LIABLE TO PURCHASER OF DRAFT FOR NOT COMPLYING WITH HIS INSTRUCTIONS
> The drawee bank acting as “payor” bank is solely liable for acts not done in accordance with the instructions of the drawer bank or of the purchaser of the draft
> The drawee bank has the burden of proving that it didn’t violate
TRADE ACCEPTANCE
> A bill of exchange payable to order and at a certain maturity, drawn by a seller against the purchaser of goods as drawee, for a fixed sum of money, showing on its face the acceptance of the purchaser of goods and that it has arisen out of a purchase of goods by the acceptor
> A draft drawn by the seller on the purchaser of goods sold and accepted by such purchaser
> States upon its face that the obligation of the acceptor arises out of purchase of goods from the drawer
> Arises from credit obligations arising from the sale of goods and must have a definite maturity
BANKER’S ACCEPTANCE
> Draft of which the acceptor is a bank or banker engaged generally in the business of granting banker’s acceptance credit
> Similar to a trade acceptance
> Drawn against the bank instead of the buyer
TRUST RECEIPT
> The written or printed document signed by the entrustee in favor of the entruster containing terms and conditions substantially complying with the provisions of this decree
> The legal title to the matter entrusted remains in the entruster but the entruster gives to the trustee a form of title which is good and legal against everybody except the entruster
> Entrustee—the person having or taking possession of goods, documents or instruments under a trust receipt transaction, and any successor in interest of such person for the purpose or purposes specified in the trust receipt agreement
> Entruster—person holding title over the goods, documents, or instruments subject of a TRA and any successor-in-interest of such person
