Legal Definitions - time bill

A time bill, also known as a time draft, is a written order from one party (the "drawer") to another party (the "drawee") to pay a specified sum of money to a third party (the "payee") at a future date or after a specific period, rather than immediately upon presentation. It essentially grants a period of credit, deferring the payment obligation until the designated future time.

• Example 1: International Trade Transaction

  A textile manufacturer in India ships a large consignment of fabric to a clothing retailer in France. Instead of demanding immediate payment upon shipment, the Indian manufacturer (the drawer) issues a time bill to the French retailer's bank (the drawee), instructing the bank to pay the manufacturer (the payee) the agreed amount in 90 days. This allows the French retailer time to receive the goods, process them, and potentially begin selling the clothing before the payment is due.

  This illustrates a time bill because the payment is explicitly set for a future date (90 days later), providing a credit period rather than requiring payment on demand.

• Example 2: Domestic Business-to-Business Credit Sale

  A wholesale electronics supplier provides a new inventory of high-definition televisions to a regional electronics store chain. To support the store's cash flow and allow time for sales, the supplier (the drawer) issues a time bill, instructing the electronics store chain (the drawee) to pay the supplier (the payee) the total invoice amount in 60 days. The store can then sell the televisions and generate revenue before the payment obligation matures.

  Here, the time bill functions as a formal credit instrument, deferring the payment for two months and clearly demonstrating the "future date" aspect of the term.

• Example 3: Project-Based Material Procurement

  A custom yacht builder purchases specialized marine-grade aluminum from a metal fabrication company for a new luxury yacht project. Given the lengthy construction timeline, the fabrication company (the drawer) issues a time bill to the yacht builder (the drawee), requiring payment for the materials in 120 days. The fabrication company is also the payee.

  This arrangement allows the yacht builder to incorporate the materials into the vessel and potentially receive progress payments from their client before the payment to the supplier is due. The time bill clearly establishes a future payment date (120 days), providing a structured credit period aligned with the project's duration.