What effect does the use of a bill of exchange have in trade dealings?
A bill of exchange is a demand for payment issued by the seller to the buyer. It is a legal document governed within Australia by the Bills of Exchange Act 1909. International conventions also support the basic rights and obligations of the various parties to the bill. A valid bill of exchange facilitates payment of trade transactions and provides a more straightforward way of debt recovery in the event of default than relying on the underlying commercial contract. A bill of exchange is not a guarantee of payment. However, it does allow for legal recourse against the acceptor in the event that payment is not made.
