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The developer I am buying from demands Bills of Exchange? How do they work?

Civil Law

Antonio Flores Vila

24th of January 2001

Q. Would you be able to explain what are "Bills of Exchange"? The developper demands us signing them. We tried to negotiate a bank transfer, but they are saying no. How do "Bills of Exchange" guarantee the future payments? Are they sent to our bank and the bank freezes this amount or not?


    A. A bill of exchange is an unconditional order in writing , addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer. (Bill of exchange Act 1882. Ley Cambiaria Española).

    Bills of exchange guarantee the future payments by giving the vendor the right to quickly execute the bill anywhere in Europe. In Spain, an unpaid bill of exchange will ensure the vendor a quick procedure to collect the debt. They are sent to your bank, but the bank does not freeze the amount. They will order a transfer to a given account once it arrives, but if there are no funds, it is sent back with a stamp on it saying ´defaulted´.

    I suggest you seek proper legal advice to ensure the vendor also complies with their obligations, in order to avoid abuse. The developers tend to not comply with most of the consumer protection regulations, and they would be obliged to compromise if certain irregularities are properly pointed out.

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