A bill of exchange is a commercial document by which a natural or legal person (drawer) orders another (drawee) to pay an amount of money in favor of a third party (holder or payee), within a specific time period (maturity).

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Thus, the bill of exchange consists of a commercial document generated by a subject that aims for another individual to pay a certain amount of money to a third party within a specific time period.

When the drawee signs the bill of exchange, they automatically commit to pay the corresponding amount and acquire a legal obligation.

Maturity date of the bill of exchange

Bills of exchange always have a maturity date corresponding to the day on which the amount specified in the bill of exchange must be paid. There are 4 types of maturities:

• Bills drawn on a fixed day: they mature on a specific day.
• Bills drawn at sight: they mature at the moment of their presentation for payment.
• Bills drawn at a term from the date: they have to be settled before the term indicated in the bill of exchange is fulfilled.
• Bills drawn at a term from sight: they mature within a certain time period from acceptance by the drawee.

Participants of the bill of exchange

The people who intervene in an operation with a bill of exchange are:

• The drawer: is the person who issues the bill, normally the seller. Elaborates the document.
• The drawee: is the person who pays the bill, normally the buyer. Accepts the payment order by signing the document. Thus committing to pay.
• The beneficiary or payee: is the entity to whom payment is to be made, that is, who collects on behalf of the drawer. It is a financial intermediary that receives the sum of money at the designated time.

It is necessary to differentiate between bills of exchange to collect or to pay.

Legal characteristics of the bill of exchange

For a bill of exchange to be considered legal it must meet a series of legal requirements:

• Amount: it must be expressed in numbers and words. The currency with which payment will be made must also be specified (if payment is made with a foreign currency, it is mandatory to indicate the exchange rate of the payment day.
• Acceptance and signature: both parties must sign the document to record that they carry out the operation with complete freedom.
• Identification of the drawee: complete identity of the natural person or the data of the company name of the company that must pay. If there is an error in this data, the bill of exchange is not valid.
• Maturity: when the term to settle the debt that the drawee has will end.
• Date and place of drawing: place, month and year in which the issuance of the bill of exchange is made.
• Account number: to which the amount of the bill must be credited.
• Designation of the payee: identifying data of the drawer of the bill. That is, company name, name and address.

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We hope this information is very useful to you.