What is bill of exchange?

A bill of exchange is a commercial document that guarantees that a person will pay another person a certain amount of money on a certain date. Specifically, a bill of exchange is defined as a written order by which one person, called the drawer, orders another person, called the drawee or debtor, to pay a sum of money on a certain due date. The payment of the bill of exchange can be made to the drawer himself or to a third party, called the beneficiary or payee, to whom the drawer has transferred (or endorsed) the bill of exchange.

Thus, the following parties take part in a bill of exchange:

  • The drawer: who issues the bill of exchange and gives the payment order.
  • The drawee: who agrees to pay the bill of exchange. For this, they must sign it and are thus obliged to pay.
  • The beneficiary, payee, bearer or recipient: the person who receives the money.

Who is involved in a bill of exchange?

The following people may also be involved in the bill of exchange process:

  • The endorser: who endorses or transfers the bill of exchange to a third party.
  • The endorsee: the one in whose favour the bill is endorsed.
  • The guarantor: who guarantees payment of the bill of exchange.

How to complete a bill of exchange

When you fill in a bill of exchange, the following sections must be included:

  • The term "bill of exchange".
  • The place and date of issue of the bill of exchange.
  • The order to pay a certain sum, with the amount stated in letters and numbers.
  • The due date.
  • The place of payment.
  • The name and address of the drawee.
  • The name of the beneficiary or payee.
  • The signature, name and address of the drawer.
  • The acceptance, date of acceptance and signature of the acceptor.

In Spain, bills of exchange are subject to special taxes (stamp duties) and therefore must be issued on an official form or State-issued stationery. The amount will be in proportion to the amount shown in the bill of exchange.


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