'bill of exchange' versus 'exchange'

Snjezana · Post by **Snjezana** » Fri May 16, 2014 1:00 am

Hi,
I would need help from somebody being the resident of India (Mumbai) and familiar with official law under which bills of exchange are handled in India
My question is in respect of bill of exchange that we have received under documentary collection and which should be accepted in order to deliver documents to the drawee (D/A).
According to our layers, for the bill of exchange to be correct the term ‘bill of exchange’ should be incorporated into the body of the instrument. That would certainly be the case if we are handling it under our country's Bill of Exchange act which is based on Geneva convention. Since this particular bill of exchange came from India (Mumbai) I do not know if the bill of exchange according to India's law has to quote term ‘bill of exchange’ on the body of the instrument or the words ‘pay against this Exchange....’ would be sufficient to make the document correct basis for delivering documentst under D/A documentary collection.
regards.
Snjezana

asamaha · Post by **asamaha** » Wed May 21, 2014 1:00 am

B/E, when drawn in one copy, usually show the following wording:
'Pay against this Sole of Exchange ..', and when they are issued in duplicate, the first copy indicates: 'Pay against this First of Exchange (second being unpaid)..', whilst the second states : 'Pay against this Second of Exchange (first being unpaid)..'.
So, it is a normal practice to describe the bill of exchange on the instrument by the word 'exchange' without the need to add the term 'bill'.

Regards
Antoine

NigelHolt · Post by **NigelHolt** » Wed May 21, 2014 1:00 am

Based on my own experience of the last 10 - 15 minutes I would have thought it would be a simple matter to determine the relevant legislation online and then see what it had to say.

The relevant legislation seems clearly to be the Negotiable Instruments Act, 1881. Section 5 "Bill of exchange" sets out the requirements of a bill of exchange and this does not stipulate that to qualify as a bill of exchange the words ‘bill of exchange’ or similar must be present. The Act was passed at the time India was a British colony and the British equivalent, the Bills of Exchange Act 1882 contains (in section 3 “Bill of exchange defined”) no such requirement either.

I have to admit to some surprise that legislation would require the words ‘bill of exchange’ to appear in order for something to qualify as a bill of exchange but accept Article 1.1 of the Convention Providing a Uniform Law For Bills of Exchange and Promissory Notes (Geneva, 1930) does require this.

polterd · Post by **polterd** » Thu May 22, 2014 1:00 am

See if this link helps. Anyhow, I do agree with Antoine. If words "pay against this sole of exchange" or "pay aginst this single of exchange" or similar wording are incorporated within the text, is enough to determine the type of document.

http://www.ddegjust.ac.in/studymaterial ... -207-f.pdf

Regards,
Bogdan

Snjezana · Post by **Snjezana** » Sat May 31, 2014 1:00 am

Many thanks to all. I do agree with all of you and I have seen many bills of exchange comming from India containing only 'pay against this Exchange...' and so far I have considered them to be correct, but then we had dispute with our lawyers. Honestly I cannot find anything in NIA what would make this requirement that the words 'bill of exchange' must be incorporated in the body of an instrument, but the possition was that NIA always refer to 'bill of exchange' and not to 'exchange' so after all we had required an Indian bank to send us new bill of exchange which indicated on the body of the instrument bill of exchagne and they did, without arguing (!?)
best regards
Snježana