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bill of exchange vs. promissary note

Russian translation: promissory note is better in the context; it is not a translation question

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10:45 Feb 18, 2008
English to Russian translations [PRO]
Bus/Financial - Accounting
English term or phrase: bill of exchange vs. promissary note
Please, explain the difference between the terms "promissory note" and "bill of exchange". Unfortunately, I don't know which term should be used in the following text:
Apart from bank credits at the initial level the company may resort to private borrowings and use such instruments as a XXXXX. For a company a XXXX is the same borrowing instrument as a bank credit, except that a XXXX can be sold to anyone. By issuing a XXXX, the company may receive money from a private investor at a less interest rate as compared to a bank credit. This rate may range from 14 to 24%.
3golos
Russian translation:promissory note is better in the context; it is not a translation question
Explanation:
Both promissory notes and bills of exchange (subtype of drafts/bank checks) are so-called negotiable intsrument, instruments which can be negotiated (transferred) to 3rd persons who pay value for them without knowledge of any defenses the maker/issuer might have, it's called a "holder in due course" rule.

Therefore, translating it as простой v. переводной вексель, although correct, may create a confusion that a promissory note cannot be transferred to 3rd person for payment, but a draft can. Both instruments are negotiable (transferrable), so it can and often does happen for both instruments, through an endorsement.

I would prefer the term "promissory note" in this context not because this term is more general, as my colleague here says, but because a promissory note fits the purpose of what the company is aiming for better.

The company uses an unspecified negotiable instrument for the purpose of private borrowing, that's what a promissory note is for - it is a promise to pay a fixed amount of money at a definite time, but it is not an order to a bank, it is a private promise.

A check/draft/ bill of exchange is not a promise, but an order to a 3rd person to pay to a specified person or to a bearer (no name, to anybody) a certain amount, it is more of a payment instrument than a borrowing instrument.

==
Yet, since a promissory note is a 2-party paper and a draft/bill of exchange is a 3-party paper, and the set of parties and obligations is different, so if I were the asker, I would rather bring this to the attention of the employer and ask specifically which document is meant rather than insert your own understanding, this is not really a translation question, but a question of what kind of contract has been formed.

A bill of exchange can also be used for this purpose though, simply to defer payment, and therefore, again, it is not a translation question, but a question of fact and law, what kind of contract was formed.

==
As a side note, the 3rd party in a bank draft/ bill of exchange is not normally called an Acceptor, but simply a Drawee, the party who is to pay, or on whom funds should be drawn under the instrument. A Drawee does not have an obligation to the bearer of the draft to pay, that obligation arises only when the Drawee becomes an Acceptor by consenting to accept the draft (certified checks, for example). As far as I know, a bill of exchange is a simple draft, and the 3rd party's name on it is not an Acceptor, but a Drawee (трассат, лицо на которое выставлена тратта - коммерческий переводной вексель)
Selected response from:

xxxTatiana N.
Local time: 07:15
Grading comment
Thank you very much! Your answer was the most complete, and you made things clear to me
4 KudoZ points were awarded for this answer

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Summary of answers provided
5 +3вексель переводной vs. простой вексель
Anna Mirakyan
4promissory note is better in the context; it is not a translation questionxxxTatiana N.
4Wechsel vs. Solawechsel / Eigenwechsel (Schuldschein)Ellen Kraus


  

Answers


13 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5
bill of exchange vs. promissory note
Wechsel vs. Solawechsel / Eigenwechsel (Schuldschein)


Explanation:
bill of exchange is a three-name paper.
A promissary note (widely used as such in the U.S banking system but rarely in GB. (In finance it is termed <Schuldschein>



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Note added at 17 Min. (2008-02-18 11:02:19 GMT)
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I am sorry, translated into German rather than into Russian.
Meanwhile you have received a Russian translations and I agree with Anna Mirakayans explanations

Ellen Kraus
Austria
Local time: 13:15
Native speaker of: Native in GermanGerman
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6 mins   confidence: Answerer confidence 5/5 peer agreement (net): +3
вексель переводной vs. простой вексель


Explanation:
-

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Note added at 11 mins (2008-02-18 10:56:43 GMT)
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http://www.utrade.ru/articles/bill.html

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Note added at 14 mins (2008-02-18 10:59:12 GMT)
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In this context I think it is better to use just "promissary note" cause its meaning is more general.

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Note added at 21 mins (2008-02-18 11:06:24 GMT)
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Here is what I found searching: "Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts."
So maybe just bank drafts are a better term?


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Note added at 22 mins (2008-02-18 11:07:15 GMT)
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I found it here:
http://www.investopedia.com/terms/b/billofexchange.asp


Anna Mirakyan
Armenia
Local time: 15:15
Works in field
Native speaker of: Native in RussianRussian, Native in ArmenianArmenian
PRO pts in category: 4

Peer comments on this answer (and responses from the answerer)
agree  Olga Shevchenko
21 mins
  -> Спасибо большое!

agree  Alexandr Kopiy
1 hr
  -> Спасибо большое!

agree  Andrey Parkhomenko: По простому векселю платит векселедатель, по переводному - третье лицо, акцептант. Это главное различие. У Вас, как я понял компания занимает деньги и выдает вексель. Какой - зависит от того кто будет платить.
1 hr
  -> Спасибо большое!
Login to enter a peer comment (or grade)

6 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
promissory note is better in the context; it is not a translation question


Explanation:
Both promissory notes and bills of exchange (subtype of drafts/bank checks) are so-called negotiable intsrument, instruments which can be negotiated (transferred) to 3rd persons who pay value for them without knowledge of any defenses the maker/issuer might have, it's called a "holder in due course" rule.

Therefore, translating it as простой v. переводной вексель, although correct, may create a confusion that a promissory note cannot be transferred to 3rd person for payment, but a draft can. Both instruments are negotiable (transferrable), so it can and often does happen for both instruments, through an endorsement.

I would prefer the term "promissory note" in this context not because this term is more general, as my colleague here says, but because a promissory note fits the purpose of what the company is aiming for better.

The company uses an unspecified negotiable instrument for the purpose of private borrowing, that's what a promissory note is for - it is a promise to pay a fixed amount of money at a definite time, but it is not an order to a bank, it is a private promise.

A check/draft/ bill of exchange is not a promise, but an order to a 3rd person to pay to a specified person or to a bearer (no name, to anybody) a certain amount, it is more of a payment instrument than a borrowing instrument.

==
Yet, since a promissory note is a 2-party paper and a draft/bill of exchange is a 3-party paper, and the set of parties and obligations is different, so if I were the asker, I would rather bring this to the attention of the employer and ask specifically which document is meant rather than insert your own understanding, this is not really a translation question, but a question of what kind of contract has been formed.

A bill of exchange can also be used for this purpose though, simply to defer payment, and therefore, again, it is not a translation question, but a question of fact and law, what kind of contract was formed.

==
As a side note, the 3rd party in a bank draft/ bill of exchange is not normally called an Acceptor, but simply a Drawee, the party who is to pay, or on whom funds should be drawn under the instrument. A Drawee does not have an obligation to the bearer of the draft to pay, that obligation arises only when the Drawee becomes an Acceptor by consenting to accept the draft (certified checks, for example). As far as I know, a bill of exchange is a simple draft, and the 3rd party's name on it is not an Acceptor, but a Drawee (трассат, лицо на которое выставлена тратта - коммерческий переводной вексель)

xxxTatiana N.
Local time: 07:15
Native speaker of: Russian
PRO pts in category: 4
Grading comment
Thank you very much! Your answer was the most complete, and you made things clear to me
Login to enter a peer comment (or grade)




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