What is a Bill of Exchange? What are its Features and Types?
A bill of exchange is a valuable document that gives the right to claim and is used in commercial transactions. Bills of exchange are divided into three types in the Turkish Commercial Code as bills, policies and checks. The common features of these securities are:
- They include a debt to pay some money
- Bills of exchange are presentation bills
- It has circulation capabilities
- They are exempt from the disease (principle of abstraction)
- They are subject to strict form requirements
- They are promissory notes by law
- The applies principle of independence of signatures
- They enjoy public trust
The types of bills of exchange can be briefly defined as follows:
- Policy: It is a bill that one person gives to another person and includes the right to pay. It is a type of bill that regulates the tripartite relationship. One of the issuer of the bond is the debtor and the other is the creditor. The drawer is delivered to the debtor by addressing the creditor, and when the debtor accepts, the drawer disappears.
- Promissory Note: It is the document signed by the debtor and showing that the money given to the creditor will be paid after a certain period of time. A bond is also considered a promise of payment. In the bill, the sentence ends not as "pay" but "I will pay". Since these people do not have cash, they promise to repay their debts with bonds in the future.
- Check: Checks addressed to banks are issued in accordance with the provisions of the TCC. There are three parties in the checks, which are accepted as a negotiable document with a payment order feature. These are the drawer, the addressee and the beneficiary. The bank branch that will pay the check is the addressee. The person holding the check is also the beneficiary.
Bills of exchange are an important part of commercial activities and are useful in protecting the rights of creditors and meeting their cash needs.