Legal Definitions - international bill of exchange

An international bill of exchange is a written order signed by one person, called the drawer, directing another person, called the drawee or payor, to pay a certain amount of money to a third person, called the payee or bearer. It is a type of foreign draft that is payable in another country or state.

For example, if a company in the United States sells goods to a company in Japan, the seller can use an international bill of exchange to receive payment from the buyer. The seller would write the order, and the buyer's bank would pay the amount to the seller's bank or the seller directly.

Other types of drafts include:

• Clean draft: A draft with no shipping documents attached.
• Demand draft: A draft that is payable on the bearer's demand or on proper presentment to the drawer.
• Documentary draft: A payment demand conditioned on the presentation of a document, such as a document of title, invoice, certificate, or notice of default.
• Export draft: A draft drawn by a domestic seller on a foreign buyer, directing the buyer to pay the trade amount to the seller or the seller's bank.
• Inland draft: A draft drawn and payable in the same state or country.
• Time draft: A draft that contains a specified payment date.
• Trade draft: A draft that instructs a commercial enterprise or its agent to pay the amount specified.

Overall, a bill of exchange is a useful tool for international trade and commerce, allowing for secure and efficient payment transactions between parties in different countries.