Bill of Exchange

A bill of exchange is a printed order by the drawer to the drawee to pay money to the payee. The most general type of bill of exchange is the cheque, which is defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used mainly in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date sometime in the future.

Prior to the advent of paper currency, bills of exchange were a more important part of trade. They are a quite ancient form of instrument: they were used by medieval trade fairs, such as the Frankfurt Trade Fair.