This chapter is divided into two main parts. First, it aims to provide an introduction to the concept of an important piece of property called an instrument, principally by focusing on one specific example: the bill of exchange. Second, the chapter considers a bank payment mechanism called the letter of credit, especially in conjunction with bills of exchange. Bills of exchange, of which cheques are a particular type, although declining in importance in domestic sales, remain important in international sales. While bills of exchange are not the only instruments, and letters of credit are not the only mechanism supporting the financing of international trade, focusing on these two important commercial documents makes it possible to obtain a good understanding of the types of legal issues involved in documentary payments.
Chapter
24. Documentary payments
Chapter
20. Cheques and miscellaneous payment instruments
D Fox, RJC Munday, B Soyer, AM Tettenborn, and PG Turner
This chapter focuses on the use of cheques and similar instruments as a mode of payment in commercial transactions, and discusses the relation between them and bills of exchange (of which they are a specialised type). Cheques are intended as instruments which will immediately be paid, whereas bills of exchange are typically drawn payable at a future date and used as a credit instrument. Unlike bills of exchange, cheques are not, and are not intended to be, accepted by the bank on which they are drawn. This chapter first explains what a cheque is, and discusses the likely future of the institution, before discussing promissory notes, banker’s drafts, and travellers’ cheques.
