Bill of Exchange or International Bill of Exchange?

A Bill of Exchange and an International Bill of Exchange differ primarily in their scope, governing laws, and the jurisdictions involved. A Bill of Exchange is a negotiable instrument that orders one party to pay a specified sum to another party, typically within the same country or jurisdiction. In contrast, an International Bill of Exchange involves parties across different countries, making it subject to international laws and conventions, such as the law merchant or specific treaties. Definition and Scope of a Bill of Exchange A Bill of Exchange is a written order or request from one party to another for the payment of money to a third party or their order, on account of the drawer (Cox v. National Bank, 100 U.S. 704 (1879). It is governed by the law merchant, which is a part of the common law and applies to commercial transactions (Bank of U.S. v. U.S., 43 U.S. 711 (1844). Bills of Exchange can be classified as inland or foreign, depending on the location of the drawer and the payee. An inland bill is payable within the same state or country, while a foreign bill is drawn in one state or country and payable in another (Miller v. American Gold Mining Co., 3 Alaska 1 (1906). For example, a bill drawn in New York and payable in Louisiana is considered a foreign bill of exchange (Donegan v. Wood, 49 Ala. 242 (1873). Definition and Scope of an International Bill of Exchange An International Bill of Exchange is a type of foreign bill of exchange that specifically involves parties in different countries. It is subject to international commercial laws and practices, such as the law merchant, which governs the rights and liabilities of parties involved in foreign bills (Bank of U.S. v. U.S., 43 U.S. 711 (1844). The governing law for an International Bill of Exchange often depends on the place of performance or payment. For instance, a bill payable in Paris, France, is regulated by the laws of France concerning payment and performance (Caras v. Thalmann, 138 A.D. 297 (1910)). Additionally, the law merchant requires that the bill itself be exhibited when a demand for payment is made on the drawee of a foreign bill (Musson v. Lake, 45 U.S. 262 (1846). Governing Laws and Jurisdictional Differences The governing laws for a Bill of Exchange depend on the jurisdiction where it is drawn and payable. For example, a bill drawn and negotiated in New York is governed by New York law, even if the parties involved have connections to other jurisdictions (Amsinck v. Rogers, 27 Bedell 252 (1907). In contrast, an International Bill of Exchange may be governed by the laws of the country where it is payable or where the contract is performed. This principle is illustrated in cases where the law of the place of payment governs all matters connected with the performance of the contract (Caras v. Thalmann, 138 A.D. 297 (1910)). Practical and Legal Implications The practical implications of these differences are significant. A Bill of Exchange drawn within the same jurisdiction is simpler to enforce and less likely to encounter legal conflicts. On the other hand, an International Bill of Exchange may require compliance with multiple legal systems and international conventions, making it more complex. For example, the law merchant provides for re-exchange and other remedies for dishonored foreign bills, which are not typically applicable to inland bills (Bank of U.S. v. U.S., 43 U.S. 711 (1844). Bills of Exchange and International Bills of Exchange are governed by distinct legal frameworks in the United States. Regular Bills of Exchange are primarily regulated under state laws, including the Uniform Commercial Code (UCC), which provides a comprehensive set of rules for negotiable instruments. In contrast, International Bills of Exchange are subject to international conventions, such as the United Nations Convention on International Bills of Exchange and International Promissory Notes (UNCITRAL Convention). However, the UNCITRAL Convention lacks enforceability in the United States due to non-ratification, rendering it without legal effect in domestic courts. Governing Law for Regular Bills of Exchange Regular Bills of Exchange are governed by state laws, which have adopted the UCC provisions on negotiable instruments. For example, Ohio law under R.C. Chapter 1303 explicitly governs negotiable instruments, including Bills of Exchange, and provides enforceability standards for such instruments. In Williams v. Dayton Water, the court held that self-prepared International Bills of Exchange were not valid negotiable instruments under R.C. Chapter 1303, emphasizing the necessity for compliance with state law requirements for enforceability (Williams v. Dayton Water, 158 N.E.3d 654 (2020). Additionally, the jurisprudence surrounding Bills of Exchange incorporates the law merchant and local state laws. In Nathan v. State of Louisiana, the Supreme Court recognized that the regulation of Bills of Exchange, whether domestic or foreign, is dependent on the local law of the states, which have adopted the general principles of the commercial law of Europe with modifications (Nathan v. State of Louisiana, 49 U.S. 73 (1850). This underscores the state-centric approach to governing Bills of Exchange in the United States. Governing Law for International Bills of Exchange International Bills of Exchange are intended to be governed by the UNCITRAL Convention, which provides a standardized framework for such instruments. However, the United States has not ratified this convention, and courts have consistently held that International Bills of Exchange lack legal force and effect. In Williams v. Dayton Water, the court determined that International Bills of Exchange presented by the plaintiff were not valid legal tender or negotiable instruments, citing the absence of applicable law recognizing their enforceability (Williams v. Dayton Water, 158 N.E.3d 654 (2020). The lack of ratification of the UNCITRAL Convention means that International Bills of Exchange cannot be enforced under its provisions in U.S. courts. This legal gap leaves such instruments without a governing framework in the United States, as confirmed by the consistent rejection of claims based on International Bills of Exchange in various jurisdictions (Williams v. Dayton Water, 158 N.E.3d 654 (2020). Distinction Between Domestic and Foreign Bills of Exchange The distinction between domestic and foreign Bills of Exchange is significant in determining the applicable law. Foreign Bills of Exchange are governed by the law merchant and the local laws of the state where they are drawn or payable. For instance, in Donegan v. Wood, the court held that a Bill of Exchange drawn in Alabama and payable in Louisiana was a foreign Bill of Exchange governed by the commercial law of Louisiana (Donegan v. Wood, 49 Ala. 242 (1873). Similarly, in Amsinck v. Rogers, the court emphasized that the governing law for a foreign Bill of Exchange is determined by the place of execution and performance, reinforcing the principle that local laws govern such instruments (Amsinck v. Rogers, 27 Bedell 252 (1907). Enforceability of Bills of Exchange The enforceability of Bills of Exchange depends on compliance with the governing legal framework. Regular Bills of Exchange are enforceable under state UCC laws, provided they meet the requirements for negotiability, such as being unconditional and payable to order or bearer. In Nikimiha Securities Ltd. v. Trend Group Ltd., the court affirmed that Bills of Exchange accepted by the defendant created valid and enforceable obligations under Pennsylvania law (Nikimiha Securities Ltd. v. Trend Group Ltd., 646 F.Supp. 1211 (1986). In contrast, International Bills of Exchange lack enforceability due to the non-ratification of the UNCITRAL Convention. Courts have consistently rejected claims based on such instruments, as seen in Williams v. Dayton Water, where the plaintiff’s International Bills of Exchange were deemed invalid (Williams v. Dayton Water, 158 N.E.3d 654 (2020). Conclusion of Legal Frameworks Regular Bills of Exchange are governed by state UCC laws and are enforceable when they meet the statutory requirements for negotiability. International Bills of Exchange, intended to be governed by the UNCITRAL Convention, lack enforceability in the United States due to non-ratification, leaving them without legal effect in domestic courts. This distinction underscores the importance of compliance with state laws for the enforceability of Bills of Exchange in the United States.