BILL OF EXCHANGE, a document purporting to be an instrument of pecuniary obli gation for value received, and which is employed for thepurpose of settling a debt in a manner convenient to the parties concerned. The original and simple idea of a bill is this: TWO parties residing at a distance from each other eon settle their -transactions without the trouble or risk of sending money direct from the debtor to the creditor. Thus, A and B are two parties in business in London; and C and D are merchants in Cadiz. A owes C £1000; and .D owes B a like sum. Instead of A sending. cash to 0, and D to 11, A pays B and receives B's bill on D, 'which he sends to C, who receives the amount from D; so that the transaction throughout is settled, without a farthing in money being sent from Cadiz or from London to Cadiz. Another simple idea of a bill is this: One person owes another £100 for goods, • for which he is to have credit for three months. The creditor, however, not being able conveniently to be without the money for that length of time, gets from the debtor an obligation or bill bearing that the R100 is to be paid in three months. This bill, being n negotiable instrument, will be dis counted by a banker, or other capitalist, who now stands in the position of the creditor, and receives payment when the bill is due. Thus, a bill of exchange performs two kinds of offices in commerce—it saves the transmission of coined money, and it enables credit ors not only to fix down debtors to a day of payment, but to get the use of a sum equiv alent to the debt (less a small discount) before it is properly due.
The origin of this important mercantile instrument is attributed by Montesquieu and others to the Jews and Lombards, when banished from Franey and England in the 13th c., for their usury and other alleged vices, in order the more easily to recover the effects they had left behind in these countries; but Blackstone shows its earlier use in the Mogul empire in China; and Depanw, in his Philosophical Researches respecting the Greeks,las attempted to prove that bills of exchange were in use among that people, and particu larly among the Athenians. However this may be, it is certain that hitherto no trace of them has been discovered either in the Roman code, or in any other system of ancient jurisprudence: The first notice of them in modern times occurs about the middle of the 12th c„ and by the end of the 14th they had got into general use in all the commercial states of Europe. In England, from about the middle of the 14t11 c. down to the time of James I., and for many years after, bills of exchange were restricted to the purposes of foreign commerce. What are called inland bills—that is, bills drawn by and upon per sons resident in this country—were not employed much earlier than the reign of Charles II., and even then'they were regarded with distrust and jealonsy by the English judges. Another restriction upon bills of exchange was, that the privilege of their use was con fined to parties that were merchants: and there is au old case tried by the court of king's beach, in the days. of William and Nary, where it was decided that an action on a foreign bill of exchange could not be maintained, 'because the defendant was a gentle min, and not a merchant! But all restraints on such Instruments gradually yielded to the wants and conveniences of society, and now any one capable of making a contract can be a party to a bill transaction, without regard to position, calling, or occupation.
In Scotland, inland bills were put on the same footing with foreign bills, by an act of the Scottish parliament passed in 1696.
A bill of exchange, as distinguished from a promissory-note (q.v.), is defined in law books to be a written and open letter of request, addressed by a person who is called the drawer, to another person called the drawee, desiring him to pay a certain sum of money, either to the drawer himself or to a third party called the payee. within a certain time after its date, or after it is presented for payment, or on demand. If the drawee signs the bill in token of his agreeing to this request, he is called the acceptor. For the consti tution of the bill itself, no particular:form of words is necessary, provided its character istic qualities clearly appear on the face of it, as an essentially pecuniary instrument; h bill of exchange is only good for a certain sum in money: such an instrument for the delivery of goods or property other than money, would be invalid. But although no par ticular words are required in a bill or note, it is always advisable to adhere, as much as possitle, to their customary form. To this general rule, however, there are exceptions: thus, by the 4S Geo. III. c. 89, negotiable bills or notes for less than 208. are void; and by the 17 Geo. III. c. 80, s. 1—made perpetual by the 27 Geo. III. c. 16, and 7 Geo. IV. c. 6—such bills and notes under 20s. arc illegal, and above this amount and less than £5, are also void unless they specify- the name and place of abode of the person to whom or to whose order they are made payable, and arc attested by one subscribed witness at the least, and bear date at or before the time when they are issued, and are made payable within 21 days after the date, and are in the form prescribed by the act. There are also certain forms prescribed with respect to checks, and with respect to bills and notes issued and reissuable by bankers at certain distances.
In regard to foreign bills, the risk of miscarriage to which they are liable in their transmission to distant countries has given rise to the custom of drawing them in stt8;, that is, writing out two or three of the same form and tenor, and transmitting them to the payee by different channels, so that if ono or two of the individuals of any set are lost, the other might reach its destination. The first of the set that is presented and accepted is alone entitled to payment, and payment of it discharges tho acceptor; but foreign bills of course, may also be drawn singly.
Besides the other requisites mentioned, bills of exchange must be duly stamped. The regulations on this subject are contained in the 17 and 13 Viet. c. 83, and are to be found in almanacs and other publications in common use. By sections 3 and 5 of the act, it is provided that the duties on bills drawn out of the United Kingdom shall be denoted by adhesive stamps, to be affixed by the holder of the bill before negotiating it, under pen alty of 250.
The following are the usual forms of the bills of exchange: