(1) To draw
To draw refers to the act of the drawee issuing a bill of exchange and handing it over to the payee. Once a bill of exchange is drawn, the drawee shall bear the debt liability and be responsible for the full bill debt, guaranteeing that the bill of exchange is accepted and paid; for the payee, he obtains the right to pay/accept and pay, and at the same time has the right to refuse payment and acceptance (without the obligation to pay/accept, he can decide whether to pay or accept based on his financial relationship with the drawee. For the payee, he obtains the creditor’s rights and becomes the holder of the bill. He has the right to request the payee to pay the bill of exchange. When the bill of exchange is refused, he has the right to claim against the drawee; he has the right to transfer the bill of exchange according to law.)
(2) Presentation
Presentation is the act of the holder presenting the bill of exchange to the payee for acceptance or payment. There are two types of presentations. One is acceptance presentation: a presentation of a time bill of exchange requiring the payee to promise to pay at maturity. The other is a payment reminder: a reminder for payment by holding a sight bill or a matured time bill.
(3) Acceptance
Acceptance is the act of the payee of a time bill clearly expressing his agreement to pay according to the instructions of the drawee when the holder makes an acceptance reminder.
(4) Payment
Payment is the act of the payee of a sight bill and the acceptor of a time bill fulfilling their payment obligations when they receive a payment reminder.
(5) Endorsement
Endorsement is a legal procedure for transferring bill rights, that is, the holder signs his own name or the name of the transferee on the back of the bill and hands the bill to the transferee.
There are three main ways of endorsement. One is a restrictive endorsement, which is a non-transferable endorsement. The second is a blank endorsement, also known as a bearer endorsement, where there is only the name of the endorser on the back of the bill without the signature of the transferee. This type of endorsement can be transferred only by delivery. The third type is a registered endorsement, which means that the back of the bill of exchange has both the endorser’s signature and the endorsee’s signature. This endorsement transferee can continue to endorse and transfer the bill of exchange.
(6) Dishonor & Recourse
Dishonour is the act of the holder presenting a bill of exchange for acceptance or payment but being refused acceptance or payment, also known as return of bill. Recourse refers to the act of the holder demanding the previous endorser, drawee or other bill debtor to repay the bill amount and fees when the bill of exchange is refused.