Bill Of Exchange

Formal

A paper instrument (document) used in overseas trade. An unconditional order guaranteeing that monies will be paid at some future time or paid upon completion of certain terms (eg receipt of goods). Usually struck for high financial amounts to govern international shipments.

Real-world Example

An exporter ships $1M of machinery to a buyer overseas and issues a Bill of Exchange stating payment is due 90 days after the buyer receives the goods - a legally binding promise to pay that both sides, and their banks, can rely on.