bill of exchange
A bill of exchange, a short-term negotiable instrument , is a signed, unconditional, written order binding one party to pay a fixed sum of money to another party on demand or at a predetermined date. A bill of exchange is sometimes called draft or draught , but draft usually applies to domestic transactions only. The term bill of exchange may also be applied broadly to other instruments of foreign exchange.
For example, a check is a type of bill of exchange.
[Last reviewed in February of 2022 by the Wex Definitions Team ]
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