|A bill of exchange is a written order used primarily in trade that binds one party to pay a fixed sum of money to another party on demand or at a predetermined date. Bills of exchange are similar to checks and promissory notes as they can be drawn by individuals or banks and are generally transferable.
What we need to know
Bills of exchange may be used as payment for sales order invoices or in international trade to help importers and exporters fulfill transactions.
The law governing Bills of Exchange in Tanzania is the Bill of Exchange Act, Section 3 of the Act states;
“A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time, a sum certain to or to the order of a specified person, or to bearer”.
An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange.
For a bill of exchange to be accepted, it must fulfill the following conditions, namely –
a) It must be written on the bill and be signed by the drawee. The mere signature of the drawee without additional words is sufficient
b) It must not express that the drawee will perform his promise by any other means than the payment of money”
Therefore, in order for the bill of exchange to be valid, it must be in writing, , must be signed or have any other instructions on it.
The type of acceptance depends on the bill of exchange whereas acceptance is either general or qualified.
a) Partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn;
b) Qualified, that is to say, an acceptance to pay only at a particular specified place: An acceptance to pay at a particular place is a general acceptance, unless it expressly states that the bill is to be paid there only and not elsewhere”.