Glossary Term: "bill of exchange"

A bill of exchange is a written, negotiable financial instrument used in trade transactions. It involves three parties: the drawer, the drawee, and the payee. The drawer, who owes money, directs the drawee to pay a specified amount to the payee. It contains details like payment amount, date, and the payee’s name. It serves as a promise to pay the stated sum at a determined future date or upon demand. Bills of exchange facilitate secure and deferred payments in commercial dealings, acting as a form of credit instrument aiding international and domestic trade.