Parties to a Bill of Exchange

Every bill of exchange, at the moment it is drawn, involves at least three parties, though the same person may occupy more than one role as the bill moves through its life.

Drawer — the person who writes and signs the bill, ordering payment. The drawer is almost always the seller/creditor to whom money is owed.

Drawee — the person to whom the order to pay is addressed; ordinarily the buyer/debtor. The drawee becomes the 'acceptor' only after signing the bill to signify agreement to pay it — an unaccepted bill of exchange is not yet a binding obligation on the drawee.

Payee — the person to whom, or to whose order, the amount is to be paid. Very often the drawer names himself as payee (drawing the bill 'payable to myself or my order'), in which case drawer and payee are the same person.

As a bill travels between hands, two further roles appear:

Holder — whoever is in lawful possession of the bill at a given time and entitled to receive payment (the original payee, or anyone the bill has since been endorsed to).

Endorser / Endorsee — when the holder signs the back of the bill and transfers it to another person, the holder becomes the endorser and the new owner becomes the endorsee. …