The main problems that arise in the process of making international settlements are ensuring the reliability of payments and maximum convenience in the course of their implementation, both for sellers and buyers. One of the solutions to these problems is the bill.
A bill is a security that is executed in strict accordance with the requirements of the law and contains an unconditional abstract monetary obligation (proposal) to pay a certain amount on a specified period.
The nature of the bill is manifested through its basic principles:
Strict formality means on the one hand that the bill, as a document, must be drawn up in writing, and on the other, contain a certain set of mandatory details: the absence of at least one of them deprives the document of the power of the bill; Unconditionality is a simple and unconditional order (obligation) to pay a certain amount of money, i.e. payment of the bill cannot be limited by any conditions: the wording: “Pay for the goods to be delivered …”, “Pay on condition …”, “Pay in accordance with contract No…”or others like this – deprive the document of the power of the bill; Abstract, i.e. no references are allowed in the text of the bill on the basis of its issuance, meaning that only money can be the subject of a bill of commitment.
Wexel implemented through its main functions:
Stock. The bill acts as a tool for applying on the securities market, with the ability to generate income for its owners; Settlement. Through the bill, information is exchanged on the transfer of bill obligations between participants in foreign trade, taking the bill into account. Moreover, the number of such participants can be as large as possible within the billing period; Payment. This function means the final settlement of mutual monetary claims and obligations of the parties on the bill upon the expiration of the bill amount. Credit. The bill is based on a commercial loan, the execution of which with the help of a bill has a number of advantages compared to a loan agreement: mobility, the ability to offset debts between foreign trade counterparties, as well as provide bank loans for the payment of inventory items.
The class of bills is quite diverse. They differ in the issuer, serviced transactions, the subject making the payment, the payment procedure and other signs.
Let’s give a description of each of the types of bills.
The Treasury bill is a short-term government security that does not exceed one year, usually it is 3 – 6 months. Treasury bills are sold at a discount to face value. A variety of treasury bills are municipal bills issued by the administration of regions and cities.
Private bills are issued by corporations, financial groups, commercial banks. Such bills do not have special support and the key to their reliability is the rating of the bill holder, the stability of its financial situation and authority in financial circles.
The financial bill reflects the relationship of borrowing money by the bill holder at a certain remuneration. The most common form of the financial bill is the bank bill, in which the bill is issued by the bank to a foreign correspondent bank.
The basis of the commodity (commercial) bill is the foreign trade transaction for the sale of goods. The exporter delivers the goods to the importer, receiving from the latter an obligation to pay after a certain time the cost of the goods and interest for deferring payment. The commodity bill acts as a form of commercial loan provided to each other by foreign trade counterparties. With the invention of the commodity bill, merchants ceased to depend on banks. France became the first to use the merchandise bill, then Holland, Germany, England followed suit.
A simple bill, also called the “vegetable” or “solo-vexel”, is issued by the importer to the exporter. It is a written document containing an unrelated abstract obligation of the bill holder (debtor) to pay a certain amount of money within the specified time period and in a fixed place to the bill holder or by his order to another person. Two persons initially participate in the promissory note: the bill holder, who undertakes to pay the bill issued by him, and the bill holder who owns the right to receive the bill amount (Fig. 3).
A bill of exchange (tratt) is a security issued in strict accordance with the requirements of the law and containing an unconditional abstract order of one person – a traveler biller, to another person – a payer-tresser to pay a certain amount within a certain period and in a certain place to a third party – a remitent. Those. the bill holder undertakes to pay the bill to another person, and he becomes the guarantor of payment. Thus, the payment is transferred (trasted) to a new person. The tracer must also have a traussate of its own material values for an amount not less than that indicated in the bill. The order of the tracer to make a payment is expressed by the words: “pay (pay)”, “pay (pay)” or other equivalent wording. Not two, as in a solo-vixel, but three persons are initially involved in the tratta: a bill holder is a tracer that transfers payment to a track; bill holder – a issuer entitled to receive payment from the track, and a boarding payer who is a person obligated for payment by bill.
The bearer bill is a bill that is payable immediately at the request of the bearer. Moreover, initially, when releasing such bills, the name of the bill holder is not indicated in the details. The use of such bills allows the transfer of the bill without hindrance without resorting to endorsement if the recipient of the bill amount is not known in advance. The bill paid at a certain time specified in the document is called urgent. Note that the law does not limit the circulation time of bills, which can range from one to two to a year and a half.
If a special place of payment is indicated in the bill, different from the location of the payer, it is called domiciled. Such bills are intended to strictly determine the place and conditions of protest in case of non-payment.