What is a letter of change?

The bill of exchange is a legal, commercial document, in which a person called the drawer obliges a second person, called the drawer , to pay a certain amount before a specific date that we call expiration .

To understand it, we must define the figure of a third party or beneficiary also called the policyholder or holder . The drawer transmits or endorses that bill of exchange to the beneficiary for whom it is due to be paid by the drawee.

In this way, the beneficiary to whom the bill of exchange has been endorsed has additional security for the collection of the debt.

Who is the bill of exchange paid to?

This bill of exchange can be paid by the drawee to the drawer or directly to the beneficiary.

In summary. Who are the figures involved in a bill of exchange?

We have three basic figures seen previously:

A drawer . What is the creditor of the debt with the beneficiary and what makes up the bill of exchange to change its responsibility towards the obligated debtor. At this time, the person responsible for the payment of that debt will be the drawee.

The freed . It is the final debtor who agrees to pay the amount established in the bill of exchange prior to the expiration date or date established in the bill of exchange. We can designate the drawee as acceptor from the moment he accepts the payment order given by the drawer.

The beneficiary . Also called holder, bearer or policyholder since it is the person to whom the bill of exchange is endorsed and it is to whom in the end the amount indebted and fixed in the bill of exchange must be paid.

What is a letter of change?
What is a letter of change?

Can more people participate in a bill of exchange?

Yes. Three other figures may intervene in the process:

An endorser . It is the person who endorses the debt to the third party, this person does not have to be the drawer.

The endorsee . It is the person to whom the letter is endorsed, the one who receives it, does not have to be a beneficiary of the payment.

A guarantor . That is responsible for ensuring that the letter is paid and that is responsible if it is not.

How is a bill of exchange accepted?

It is a declaration of the debtor or drawee and that is contained together with the bill of exchange (understand that there are two documents) by which he assumes the obligation to pay to whoever has it in his possession, this can be the drawer or a third party called beneficiary when the payment date arrives.

By signing the declaration, the drawee becomes an acceptor, meaning that he is the main and direct person obliged to pay this debt.

Without this acceptance, the drawer is directly responsible for the payment against the beneficiary in the event that the drawer finally decides not to make the payment.

Therefore, the acceptance process is summarized as follows:

  1. The acceptance is made together with the signing of the bill of exchange by the drawee.
  2. This affectation can be the total or partial of the total amount fixed in the bill of exchange.
  3. This acceptance is without any condition or additional clause.

What is endorsing a bill of exchange?

It is another declaration also contained in the bill of exchange by which the creditor or drawer passes to another person or endorsee the obligation to collect the specified amount. This endorsee becomes the beneficiary and after the endorsement becomes the bearer of it.

An endorsee can become an endorser as many times as he wants unless the bill of exchange includes the clause of “ not endorsable ” with which it cannot be transmitted.

What is a guarantee on a bill of exchange?

A statement by which the payment of the bill of exchange by the guarantor is guaranteed if it is not fulfilled by the drawee who has accepted the debt.

What is the protest?

It is a notarial act that certifies that the payment of the bill of exchange has not been accepted. This act can be replaced by a signed declaration stating the denial by the drawee to pay.

At this time, the drawee only has two business days to pay the bill of exchange and it must be paid at the notary. Only then can you make claims. If after two days payment has not been made, the notary will return the protest record together with the letter to the drawer so that he can take the legal actions that he deems appropriate.

What is the shape of a bill of exchange?

An official form stamped and the amount will be proportional to the amount reflected in the bill of exchange. If it is insufficient, you may have problems when claiming or taking any legal action.

Information that a bill of exchange must contain

A bill of exchange must contain the following requirements

  • Denomination. The title must contain “Bill of exchange” in the title.
  • Order to pay. This must be a specified sum and cannot depend on any conditions.
  • Personal data of the drawee. Name, surname and address.
  • Expiration date. If it does not have a date, it is understood as “payable at sight” or when it is presented for collection. But it can be at a fixed date, a term from a date, in view that is when it is presented or a term from when we present this bill of exchange.
  • The place where the payment should be made.
  • Name and surname of the beneficiary.
  • The place and date of issue of the bill of exchange.
  • A signature of the issuer of the letter.

Clauses that a bill of exchange may contain.

A bill of exchange can contain the following clauses:

  • "Returned without expenses" or "without obligation to protest." The drawer will not have a deadline to take legal action.
  • "Not endorsable." If it is included, it cannot be transmitted.
  • "Interests". If this clause is included, interest will be generated from the date of issuance of the bill of exchange until it is paid.
  • "At own expense." The drawer and the drawee are the same person.
  • "To own order." The payee is the same as the drawee.
  • "To the carrier". When it is released at one's own command.

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