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Foreign Bill

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FOREIGN BILL. The Bills of Exchange Act, 1882 (Section 4) defines an inland bill as a bill which is or on the face of it purports to be (a) both drawn and payable within the British Islands, or (b) drawn within the British Islands upon some person resident therein. Any other bill is a foreign bill. The British Islands mean any part of the United Kingdom of Great Britain and Ire land, the islands of Man, Guernsey, Jersey, Alderney and Sark, and the islands adjacent to any of them being part of the dominions of His Majesty, and a bill drawn in any of those places is an inland bill, but for the purposes of stamp duty a bill or note pur porting to be drawn out of the United Kingdom is deemed, by the Stamp Act, 1891, Section 36, to be a foreign bill.

The regulations regarding bills arc not the same in all countries and the Bills of Ex change Act in Section 72 sets forth the rules to be observed where laws conflict : " Where a bill drawn in one country is negotiated, accepted, or payable in another, the rights, duties, and liabilities of the parties thereto are determined as follows : " (1) The validity of a bill as regards requisites in form is determined by the law of the place of issue, and the validity as regards requisites in form of the supervening contracts, such as acceptance, or indorsement, or acceptance supra protest, is determined by the law of the place where such contract was made : " Provided that " (a) Where a bill is issued out of the United Kingdom it is not invalid by reason only that it is not stamped in accord ance with the law of the place of issue : 4 Where a bill. issued out of the United Kingdom, con forms, as regards requisites in form, to the law of the United Kingdom, it may, for the purpose of enforcing payment thereof, be treated as valid as between all per sons who negotiate, hold, or become parties to it in the United Kingdom.

" (2) Subject to the provisions of this Act, the interpretation of the drawing, indorsement, acceptance, or accept ance supra protest of a bill is deter mined by the law of the place where such contract is made.

Provided that where an inland bill is indorsed in a foreign country the indorsement shall as regards the payer be interpreted according to the law of the United Kingdom.

" (3) The duties of the holder with respect to presentment for acceptance or payment and the necessity for or sufficiency of a protest or notice of dishonour, or otherwise, are determined by the law of the place where the act is done or the bill is dishonoured.

" (4) Where a bill is drawn out of but payable in the United Kingdom and the sum payable is not ex pressed in the currency of the United Kingdom, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts at the place of payment on the day the bill is payable.

" (5) Where a bill is drawn in one country and is payable in another, the due date thereof is determined accord ing to the law of the place where it is payable." A foreign bill may be drawn in this coun try and be payable abroad, e.g. where goods are exported from England to America the exporter may draw a bill upon his correspon dent in America for the value of the goods. A foreign bill is also one which is drawn abroad and payable in this country, as, for example, for the value of goods imported into England from America. A credit may be

opened for the captain of a ship at a foreign port who may draw bills upon a London I banker up to a certain fixed sum.

The following extract from the " Bankers' Magazine," December, 1909, illustrates, in the case of cotton, the various forms of bank paper which may be created between the seeding in Texas and the delivery of the cotton in Liverpool :—" The planter is carried on through the season by advances from a local bank or a commission agent acting for a firm of Liverpool importers. When the cotton is ready to ship it may he paid for by a cheque on a bank in New Orleans or Galveston. The local bank sees it on board ship and draws on a New York bank against it, at the same time forwarding the bills of lading. The New York bank draws on London and sends on the bills of lading with the draft. The London acceptors, who may be a bank or a commercial firm, discount the bill, and the discounters may re-discount it or borrow on it. If it be what is technically called a fine bill,' that is. with the best kind of names on it, it may pass through many hands before it matures." Bills payable abroad are usually sent by country bankers to their London office or London agents to be sold through a foreign bill broker. As the bills are indorsed by the bank before negotiation, an account such as " foreign bills negotiated " should be credited (cash being debited) with the proceeds of the sale, in order to show the bank's liability upon the bills until maturity. When sufficient time has elapsed, after maturity, to allow of the bills being returned, if dishonoured, " foreign bills negotiated " account should be debited, and foreign bills account credited. This latter account is credited because when the customer received credit for the bills, foreign bills account would be debited.

A foreign bill is usually drawn in a set, that is, instead of there being only one docu ment, as is generally the case with inland bills, there are two, or three, documents. The several parts, however, constitute one bill. Only one of the parts must be ac cepted, for if more than one part is accepted the acceptor may find himself liable on every part so accepted, as if it were a separate bill. In the same way, if a holder of a set indorses two or more parts to different persons he is liable on every such part. When an acceptor pays a bill drawn in a set he should see that the part bearing his acceptance is delivered up to him, otherwise a holder of it in due course may require payment of it. In the ordinary course of things, where any one part is discharged, the whole bill is dis charged. The rules of the Bills of Exchange Act, Section 71, with regard to a bill drawn in several parts are given under BILL IN A SET.

The following are specimens of foreign bills :— No. Copenhagen , 1910.

At ten days from date pay this first of exchange to the order of John Jones five pounds sterling value received, which place to account as per advice.

To R. BRowx.

J. Jackson, London.

Payable in London. Due No.

Las Palmas, 1200. , 1910.

At thirty days after sight of this first of exchange (second unpaid) pay to the order of John Jones the sum of two hundred pounds sterling, value received, which amount place with or without further advice to the account of the steamer Britannia.