A written order from one person (the payor) to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at some fixed future date, a certain sum of money, to either the person identified as payee, or to any person presenting the bill of exchange.
Notably, a document which purports to be a bill of exchange but which omits direction to the third-party money holder (often referred to as the drawee) to disburse to the payee, is not a bill of exchange.
In McLean v Shields, Justice Wallbridge of the Manitoba Court of Queen's Bench opined that a specified due date was not a requirement of a bill of exchange:
"A bill of exchange may be accepted payable on a condition if the holder will take it, and it is then not absolutely due until the condition is satisfied....
"It is of little consequence whether the bill on its face expresses its due date, as the acceptors with the consent of the holder, have fixed the date when it becomes due....
"In my opinion it is a proper bill of exchange, and, if no time had been fixed for payment, the acceptors could have fixed one, which they have done."
A check (or cheque) is the most common form of bill of exchange where the order is given to a bank in regards to monies on deposit by the payor.
Judicially, Clayton Town Site Co. v. Clayton Drug Co., where the Supreme Court of New Mexico wrote:
"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 a fixed or determinable future time, a sum certain in money, to order or to bearer."
Many jurisdictions have sought to anchor this essential commercial instrument away from the vagaries of judicial definition by issuing statutes which provide a stable definition.
Canada has a federal Bill of Exchange Act which defines a bill of exchange at ¶16 as:
"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 in money to or to the order of a specified person or to bearer."
"An instrument that does not comply with (these) requirements, or that orders any act to be done in addition to the payment of money, is not, except as hereinafter provided, a bill."
"An order to pay out of a particular fund is not unconditional within the meaning of this section, except that an unqualified order to pay, coupled with an indication of a particular fund out of which the drawee is to reimburse himself or a particular account to be debited with the amount, or a statement of the transaction that gives rise to the bill, is unconditional."
- Bill of Exchange Act 1985 RSC Chapter B-4
- Clayton Town Site Co. v. Clayton Drug Co. Supreme Court of New Mexico, USA, 1915, 147 P. 460
- McLean v Shields 1 Man. L. R. 278 (1884)
- McPherson v. Johnston 3 BCR 465 (1894)