The bill as a promissory note
The bill is referred to a valuable paper, which expressed the obligation to pay to any person a sum of money at a particular time and in a certain place. Actually bill is a debt obligation of an abstract kind, because it from any conditions not depend.
Being a monetary instrument, the bill has a set of specific details, the totality of which is called the form of the bill. If the security is not set up correctly, the form of the bill will be considered defective. This document is deprived of its power, and the obligation expressed in the bill is lost.
The bill can be simple and transferable. There are also discount and interest-bearing securities of this type.
The bill has some advantages before other financial instruments, for example, before you Deposit. One of its advantages is a lower rate of tax on promissory notes. From a savings certificate, a bill of exchange has higher liquidity. It makes such security-effective tool for raising funds.
It should be remembered that the bill is a special type of securities. It can be used as means of payment. Today high popularity among industrial companies and financial institutions use operation with estimated bills.
Avalized promissory note
A special place among securities is the so-called avalized bill of exchange. Aval – Bank guarantee, having the form of signatures affixed on the front side of the document. Sometimes the signature is placed on a separate sheet attached to the bill.
What is the advantage of this type of bills? The fact that Aval increases the reliability of securities. This signature guarantees the unconditional and unconditional payment obligation. Most often the guarantor becomes a banking institution. Guarantor assumes full responsibility to the holder of the securities. He agrees to perform the bond obligations.
After payment of the obligations of the guarantor receives all of the rights which derive directly from the form of the security.
Bill avalization is often used by banks when making monetary debt for services rendered and goods, but also for the work performed. The Aval may be given not only for the full amount of the bill, but also part of it. Some banks provide surety on different stages of processing of bills, for example, when drafted, issued, or at the stage of circulation of this valuable paper.
