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Bills of exchange (or as they are often referred to, ‘drafts’) are negotiable instruments that represent an unconditional promise by one party (the drawer) to pay money to another party (the drawee), in accordance with the terms of that instrument. They are often used in the context of trade finance where, for one reason or another, a party does not want to make immediate Settlement of its account. The Bills of Exchange Act 1882 (BEA 1882) sets out in detail the Requirements for the form of a Bill of exchange and accordingly should be consulted prior to any detailed consideration of a bill of exchange.

BEA 1882 provides that a bill of exchange is:

‘…an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer.’

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