A Bill of Exchange is a written order used primarily in international trade that binds one party to pay a fixed sum of money to another party on demand or at a predetermined date. It is similar to checks and promissory notes and can be drawn by individuals or banks.

According to law is define under Negotiable Instruments Act 1881, a bill of exchange is defined as "an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument".

Historical Evolution:
During the thirteenth century the credit instrument was adapted to other uses than merely for purposes of exchange. Brunner furnishes a copy of an interesting instrument, written in Latin and made by a citizen of Marseilles in the year 1247(C.). The instrument was executed at Marseilles and acknowledged a public instrument, as such instruments were then required to be.

Early in the fourteenth century instruments corresponding in form to our modern bills of exchange appear. Brunner furnishes a specimen of one of these, written in Italian and drawn at Vignone in 1339, in which appears the name of the Acajutla, who were famous exchange bankers carrying on a vast business at Florence and else where throughout Europe generally at that time.

Towards the close of the fifteenth century, bills of exchange first came to be enforced in the Common Law Courts. First, as to the common law courts.: An action on the covenant would lie, if the instrument -were under seal (as often happened) and the action were between the immediate parties; whilst an action of debt was available, if it were shown that the claim was a liquidated one founded upon a simple contract (express or implied by law) between the parties.

The first reported case on a bill of exchange appears to be Martin v. Boure, decided in 1602, in the King's Bench, on assumpsit, and a writ of error being brought in the exchequer Chamber. The case is obscurely reported; but the action is apparently by the drawer against the acceptor on the dishonor of the bill by the latter. The declaration is not a model of draftsmanship, but is interesting, in that it contains an allegation that the principal bill of exchange in the case was delivered silundum suiting moratorium.

Legal framework of Bill of Exchange:
A bill of exchange is a mode of payment that can be utilised for the purpose of making credit payments. It is a written order that imposes liability on a party to pay a definite amount of money to another party on a pre-decided date. A bill of exchange is usually used in international trade. In simple language, a seller provides a credit period to the buyer on account of either selling goods or providing any service. This document derives its legal validity via Section 5 of the Negotiable Instruments Act 1881.

Section says "Bill of Exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or the bearer of the instrument".

Features of a bill of exchange:

1. A bill of exchange is an instrument in writing.
2. It is drawn and signed by the maker i.e. drawer of the bill.
3. It is drawn on a specific person i.e. drawee, to pay the specified amount.
4. Contains an unconditional order to a person i.e. drawee.
5. To make an instrument of value the drawee must accept it.
6. The specified amount is payable to the person whose name is mentioned in the bill or to his order or to the bearer.
7. It specifies the date by which the amount should be paid.
8. Payment of the bill must be in the legal currency of the country.
9. It must be properly stamped.
10. It must bear a revenue stamp.

Parties to a bill of exchange:

1. Drawer: The drawer refers to the party that writes the bill and orders for money to be paid. In another language, it is the person whose name is indicated on the bill.
2. Drawee: This is the party that is required to pay the amount as specified on the bill.
3. Payee: Payee refers to the beneficiary of the bill, meaning that according to the bill, the amount that is due is to be paid to the payee.
4. Holder: When the payee is in Bill's custody, he is referred to as the holder. The holder must provide the Bill to the drawee for the latter's acceptance.
5. Acceptor: When the drawee signs the Bills of Exchange as a mark of his acceptance, then he becomes the acceptor of the Bill.
6. Drawee in Case of Need: At times, another person's name is mentioned in the Bills of Exchange, who would accept the Bill in case the original drawee does not accept the Bill. This 3rd person is called drawee in case of need.
7. Endorser: If the bill holder endorses it to another person, then he will be called an endorser.
8. Endorsee: This is the person to whom the Bills of Exchange has been endorsed.

Format of bill of exchange:

A Bill of Exchange is a written order used in international trade to bind one party to pay a fixed sum of money to another party on demand or at a confirmed future date. Here's the essential format for a Bill of Exchange:

1. Drawer's Information:
   • Name and address of the person who writes the bill (the drawer).
   • The drawer authorizes the recipient (the drawee) to make the payment.
2. Payment Details:
   • The date on which the payment is due.
   • The amount of money to be paid.
3. Recipient Details:
   • Name and address of the person to whom the payment is made (the payee).
4. Identification:
   • An identification number for tracking purposes.
5. Signature:
   • Signature of the drawer (the person creating the bill).

Case law:

1. National Bank of Belgium v. Amco (USA) Corporation
   The case of National Bank of Belgium v. Amco (USA) Corporation involves intricate issues related to international trade, finance, and the enforcement of financial instruments such as bills of exchange.
   
   Background
   Nature of Dispute: The dispute arose over the enforcement of a bill of exchange issued in the context of an international trade transaction.
   
   Key Issues:
   • Enforcement of the Bill of Exchange: The primary issue was whether the bill of exchange could be enforced under the applicable laws.
   • Obligations of Endorsers and Acceptors: The case examined the roles and responsibilities of the endorsers and acceptors of the bill of exchange, particularly under different jurisdictions.
   • International Jurisdiction: The case also involved questions of which jurisdiction's laws were applicable to the enforcement of the financial instrument.
   Judgment: The court ruled in favor of the National Bank of Belgium, affirming the enforceability of the bill of exchange.
    
2. K. P. Poulose v. State of Kerala (AIR 1975 SC 1259)
   Indian case related to the bill of exchange is K. P. Poulose v. State of Kerala (AIR 1975 SC 1259). This case provides important insights into the legal treatment and enforcement of bills of exchange under Indian law.
   
   Background:
   Nature of Dispute: The case involved the dishonour of a bill of exchange and the legal consequences of such dishonour.
   
   Key Issues:
   • Dishonour of Bill of Exchange: The main issue was whether the petitioner could be held liable for the dishonour of the bill of exchange.
   • Notice of Dishonour: Another critical issue was whether proper notice of dishonour had been given to the parties concerned, as required by the Negotiable Instruments Act, 1881.
   • Criminal Liability: The case also examined the criminal liability of the drawer of a dishonoured bill of exchange under the relevant provisions of the Indian Penal Code.
   Judgment: The Supreme Court of India ruled on the liability of the petitioner and the requirements for notice of dishonour.

Conclusion:
A bill of exchange serves as an important instrument in order to carry out trade transactions. It is a security that gives a guarantee of payment as the rules and regulations associated with this instrument are specifically laid down in the Negotiable Instruments Act. It is no surprise that trade credit is an essential tool for the growth of any as it effectively puts less pressure in comparison to what immediate cash payment would have on any business.

Therefore, a bill of exchange plays a major role in the execution of a credit system of payment and performs as a substitute for money. What can be done to incorporate the bills of exchange and other negotiable instruments in today's age of technology is to digitize these instruments in order to increase their usage.