1、国际商务英语Chapter 5 Bill of ExchangeDefinitionA bill of exchange is formally defined as an unconditional order in writing, addressed by one party (drawer) to another (drawee), signed by the party giving it, requiring the party to whom it is addressed to pay on demand, or at a fixed or determinable futur
2、e time, a sum certain in money, to or to the order of a specified party (payee), or to bearer. A bill of exchange can also be called a draft or a bill.Essentials The word “Exchange”An unconditional order in writingAddressed by one person to anotherSigned by the person giving it TenorA sum certain in
3、 money Payable to a specified person only or his order or to bearerOther items The date of issueThe place of issueThe place of payment A banker designated as payerValue receivedA set of bill Referee in case of need Notice of dishonor excused and protest waived Without recourse Parties and ActsThere
4、are three immediate parties to a bill of exchange: the drawer, the drawer and the payee. They are the basic parties to a bill before it is transferred to another party.The drawer : The drawer is the party who draws and signs a draft on the drawee and delivers it to the payee. The drawee: The drawee
5、is the party on whom the bill is drawn and he is the party to honor the bill at the order of the drawer The payee: The payee is the party to receive payment. He is the first creditor to the bill and the first legal owner of the instrument Other Parties EndorserAn endorser is a payee or a holder who
6、signs his name on the back of a bill for the purpose of negotiation. EndorseeAn endorsee is the party to whom the instrument is transferred. He becomes the new holder to the instrument and is the creditor to the instrument. An endorsee can also become an endorser if he wishes to transfer the instrum
7、ent to another party by signing his name on its back. Acceptor for honorAn acceptor for honor is the person who himself is not a liable party to a bill of exchange but with the consent of the holder may intervene and accept the bill in the event that the bill is dishonored by non-acceptance. Guarant
8、orA guarantor is another third party who guarantees the acceptance and the payment of a bill of exchange. HolderA holder is a party who is in possession of the instrument. A holder can be the payee/bearer or the endorsee. Holder for value Holder in due courseActs of Bill of ExchangeThe acts of a bil
9、l of exchange refer to the legal acts carried out to bear the obligations to a draft. The main act of which is to issue. In broad sense, the acts also include presentment, payment, payment for honor, dishonor, protest and the exercise of right recourse. IssueTo issue a draft comprises two acts to be
10、 performed by the drawer. One is to draw a draft and sign it; the other is to deliver it to the payee. EndorsementEndorsement is made on the back of a bill of exchange. It is an act of negotiation. Four Kinds of Endorsement Special endorsement (Endorsement in full)Blank endorsement Restrictive endor
11、sementConditional endorsement PresentmentPresentment/Presentation is to be made by the holder to the person designated as drawee for payment if it is a sight bill and for acceptance and payment if it is a time bill.Bills must be presented for acceptance on the following occasions and failure to do s
12、o will make the holder lose the right of recourse against his prior parties.AcceptanceAcceptance of a bill is the signification by the drawee of a time bill of his assent to the order of the drawer. The drawee has no liability on the bill until he signs the bill in such a way as to signify acceptanc
13、e of liability to pay the money stated in the bill.PaymentThe ultimate purpose for a bill of exchange is to get paid. Payment is carried out when the bill is paid. Payment of a sight bill is made when the bill is presented to the drawee and payment of a time bill is made at maturity. DishonorDishono
14、r is a failure or refusal to make acceptance or payment of a bill of exchange when presented to the drawee. A bill of exchange may be dishonored either by non-acceptance or by non-payment. When a bill is only offered a qualified acceptance, the holder may take it as dishonored by non-acceptance. Oth
15、er instances of dishonor may arise when the drawees deliberate avoidance, his bankruptcy or even his death, which makes the acceptance or the payment impossible. Notice of dishonorWhen a bill is dishonored by non-acceptance or by non-payment, the holder must give notice of dishonor to the drawer and
16、 all the endorsers for whom the holder may wish to make liable. The purpose of giving such notice is to inform the drawer and prior endorsers the default of acceptance or payment so that they may get ready to honor the payment. ProtestProtest is a formal certificate given by a notary party or other
17、authorized person to evidence that a bill of exchange has been dishonored. The protest should be done on the very day or no later than the next business day from the day of dishonor.Right of recourse Right of recourse means that the holder of a bill of exchange has the right to claim compensation from the drawer and the endorsers in the event that the bill has been dishonored. The compensation should include the amount payable on the bill with interest, the fees for giving the notice of dishonor and protest and other incurred expenses.
