BILL OF EXCHANGE

A three-party negotiable instrument in which the first party, the drawer, presents an order for the payment of a sum certain on a second party, the drawee, for payment to a third party, the payee, on demand or at a fixed future date.

A bill of exchange is distinguishable from a promissory note, since it does not contain a promise and the drawer does not expressly pledge to pay it. It is similar to a note, however, since it is payable either on demand or at a specific time.

The terms bill of exchange and draft are synonymous; however, the former is generally used in international law, whereas the latter is used in the uniform commercial code.

bill of ex·change • n. a written order to a person requiring the person to make a specified payment to the signatory or to a named payee; a promissory note.