What is a bill of exchange:-

A bill of exchange is a binding agreement by one party to pay a fixed amount of cash to
another party as of a predetermined date (or on demand). The primary use of a bill of
exchange is in international trade. Its use has declined as other forms of payment have
become more popular.

There are three entities who may be involved with a bill of exchange. They are:
Drawee. This party pays the bill of exchange.
Drawer. This party requires the drawee to pay a third party (or the drawer can be paid by the
drawee).
Payee. This party is paid the amount specified on the bill of exchange by the drawee.
A bill of exchange normally includes the following information:
Title. The term "bill of exchange" is noted on the face of the document.
Amount. The amount to be paid, expressed both numerically and written in text.
As of. The date on which the amount is to be paid. Can be stated as a certain number of days
after an event, such as a shipment or receipt of a delivery.
Payee. States the name (and possibly the address) of the party to be paid.
Identification number. The bill should contain a unique identifying number.
Signature. The bill is signed by a person authorized to commit the drawee to pay the
designated amount of funds.
Issuers of bills of exchange use their own formats, so there is some variation from the
information just noted, as well as in the layout of the document.
A bill of exchange is transferable, so the drawee may find itself paying an entirely different
party than it initially agreed to pay. The payee can transfer the bill to another party by
endorsing the back of the document.
A payee may sell a bill of exchange to another party for a discounted price in order to obtain
funds prior to the payment date specified on the bill.


A bill of exchange does not usually include a requirement to pay interest. If interest is to be
paid, then the percentage interest is stated on the document. If a bill does not pay interest,
then it is effectively a post-dated check.
If an entity accepts a bill of exchange, its risk is that the drawee may not pay. This is a
particular concern if the drawee is a person or non-bank business. No matter who the drawee
is, the payee should investigate the creditworthiness of the issuer before accepting it. If the
drawee refuses to pay on the due date of the bill, then the bill is said to be dishonored.

What is an Air Waybill:-
A document that accompanies goods shipped by an international courier to provide detailed
information about the shipment and allow it to be tracked. The air waybill has multiple
copies so that each party involved in the shipment can document it.
The bill contains the shipper's name and address, consignee's name and address, three letter
origin airport code, three letter destination airport code, declared shipment value for
customs, number of pieces, gross weight, a description of the goods and any special
instructions (e.g. "Perishable"). It also contains the conditions of contract that describe the
carrier's terms and conditions, such as its liability limits and claims procedures.
The air waybill (AWB) is a straightforward legal document contracting a named airline
company to fly a specified package of goods from the airport of one named sender to the
airport of another named recipient. The package might be a small box of diamonds in the
front seat of a single-engine aircraft headed cross-country. It might be a 15-foot container
filled with live seafood in the hull of a jumbo cargo plane headed to a different country.
Regardless, all commercial merchandise entrusted to a transportation company for shipping
by air must have accompanying transport documents. The most important one is the air
waybill.
It takes three parties to complete the transfer and fulfill the contract. The sender of the
package is the consignor, the airline company is the carrier, and the recipient of the package
is the consignee. An air waybill is, therefore, also called an air consignment note, and it
identifies in writing the three parties.
The AWB form also identifies the contents of the package. For international shipments and
packages containing a great variety of merchandise, the AWB may reference an addendum
transport document called a packing list. It describes the package and its contents in detail
size, material composition of the goods, quantities and, most importantly, weight. The cost of


air freight is largely a calculation based on weight, and precautions must be taken to balance
the weight in the cargo hold of an aircraft.
The consignor delivers a package to an air transportation company, whether it be the airport
cargo docks of a passenger airline that will accept the package as if it is a piece of luggage for
a ticket-paying customer, or an authorized agent of the airline, such as a freight forwarder or
consolidator. Payment is negotiated, and an AWB is drafted and signed by the two parties.
Each AWB form has a tracking number that codifies the carrier and assigns a unique number
to the package.
The consignors copy of the AWB is a receipt for the sale of transport services. His signature
testifies that the package, as per description on the air waybill, was transferred to the carrier.
It is also an acceptance of the carriers shipping instructions, usually printed on the reverse
side of the document.
The carriers signed copy, in turn, acknowledges that the package is now in the carrier's
possession. It also accepts the terms of carriage as specified in the shipping instructions. The
carrier has the contractual obligation to deliver the package by plane to the destination
airport and to notify the consignee when it arrives.
Finally, the consignee retrieves the package, either at the airports cargo docks or from an
employed freight agent. He signs the AWB, acknowledging receipt of the package as
described, and retains a copy. The air transport company keeps another final copy of the
AWB with all three signatures as proof of delivery and fulfillment of the contract.
It might seem at first glance that an air transport company ought not to accept a package
whose contents are, in truth, unknown. An air waybill has several important characteristics
that address this. The first is that it is a contract of good faith. The consignor is liable for any
damage to aircraft or people resulting from faulty information in the document. If the
consignee is a buyer, no doubt he would also be upset if the package and its stated content
are not correct.
Secondly, most carriers offer insurance policies against the contents of a package shipment.
Seller and buyer can agree to include this additional cost in an air waybill. They can also
acquire a third-party insurance policy as an addendum transport document.
Finally, the AWB is a non-negotiable, non-transferable, legal instrument. It is not a document
of title. Unlike a functionally identical negotiable bill of lading for sea, rail, or road transport,
an air waybill does not confer ownership of the package to a carrier for the temporary
duration of possession. The carriers contractual obligation is for the service of carriage only,


and there is little need for considering the value or integrity of the contents of any given
package.