Bills of exchange are vital instruments in the realm of international trade, offering a means for businesses to engage in transactions with partners across borders. They serve a similar purpose to promissory notes but possess distinct characteristics and legal implications. Here's an expansion on the concept: Definition and Purpose: A bill of exchange is a written order issued by one party (the drawer) to another (the drawee), directing the drawee to pay a specific amount of money to a third party (the payee) at a predetermined future date or upon demand. The primary purpose of bills of exchange is to facilitate trade transactions by providing a secure method of payment, especially in cases where parties are located in different countries with different currencies and banking systems. Negotiability: One of the key features of bills of exchange is their negotiability, meaning they can be transferred from one party to another through endorsement. The holder of a bill of exchange can transfer its ownership to a third party by signing the back of the bill (endorsing it) and delivering it to the new holder. This process is known as negotiation.