Talk:Negotiable instrument
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[edit] Bill of exchange
The following needs to be integrated into the article, as I now have the bill of exchange article redirected.
- Originally, the bill of exchange had four parties: the purchaser would go to his banker and ask him to draw up an order to pay a sum of money at a certain time at a certain place. The banker would adjust the purchaser's account accordingly, then draw up the bill. The purchaser would then take the bill to the payee and exchange it for whatever goods or services he wanted to buy. The payee then took the bill to his banker and redeemed it for the face value. The validity of the bill depended on the drawer (banker #1) having sufficient credit with the drawee (banker #2). As banking grew more sophisticated and institutionalized, the necessity for the drawer to be a banker disappeared and the number of parties on the bill was reduced to three: drawer, drawee and payee. A draft is a bill of exchange payable on demand of the payee.
"A draft is a bill of exchange payable on demand of the payee." That is actually not true under the Uniform Commercial Code's Article 3, which has been adopted in all 50 U.S. states. [Yes, I know there are alterations to the pure Code when legislatures get their greasy mitts on it. I do not think for my present purposes any U.S. legislature has mucked up my underlying point.] A draft is simply defined as follows: "An instrument...is a 'draft' if it is an order." An "order" here means "a written instruction to pay money signed by the person giving the instruction." A draft may be either payable on demand or at a definite time. In other words, a draft in the U.S. is identical to a bill of exchange in the U.K. [Or at least I cannot find a difference.] Indeed, having been through law school and studied negotiable instruments in the U.S., I can honestly say I never heard the term "bill of exchange" before today.
So I suppose what I'm getting at is this article needs to be amended to recognize the differences in terminology between the U.S. and the U.K. "Cheque" and "check" are similar enough terms so that I suspect no one is terribly confused. "Bill of exchange" and "draft," on the other hand, are different enough terms that I suspect some clarification would be welcome. --YLlama 23:11, 16 November 2006 (UTC)
[edit] Other countries
We need details of the rules in other countries. How similar/different are they to the US ?
-- Beardo 11:37, 26 May 2006 (UTC)
--kimMart 19 Oct 2006 I think that perhaps a specific article on Bill of Exchange is needed. The Bill of Exchange is an important commercial document in UK and by having an article, links to rules and other commercial codes in other countries might be made.. and then new articles created. Maybe the article on bill of exchange should not be redirected.
Re: Ellsworth's definition above: This definition below is from http://www.investopedia.com/terms/b/billofexchange.asp
A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.
Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts.
Another site that is useful for research purposes is http://www.aibtradefinance.com/tf/frontBOEPage2.asp because this has mention of the Geneva Convention and The United Kingdom Bills of Exchange Act 1882 which are important legislation. Reading this and other literature, you see the Bill of Exchange should be given a separate article.
