A bill of exchange contains the term "Bill of Exchange", an order to pay a determinate sum of money, the name of the person who is to pay, the time that payment must be made, and a statement of the place where payment is to be made. The bill contains the name of the person to whom the payment is due, the date and place where the order is issued, and the signature of the drafter of the bill.
A bill of exchange is a written order that binds one party to pay a fixed sum of money to a second party at an agreed upon time and date. A bill of exchange is similar to a check or promissory note in that it can be created by an individual or a bank and then be transferred by an endorsement. The main benefit of a bill of exchange is that it is transferable; and, it can bind the original party to a third party, who was not included in the original creation of the document.
A bill of exchange is primarily used during international trade. A bill of exchange that is issued by a bank is refereed to as a bank draft. A bill of exchange issued by an individual is refereed to as a trade draft.