Re Exchange - Definition - Law Dictionary Home Dictionary Definition re-exchange

Definition :

Re-exchange is 'the difference in the value of a bill occasioned by its being dishonoured in a foreign country in which it was payable. The existence and amount of it depend on the rate of exchange between the two countries. The theory of the transaction is this: a merchant in London endorses a bill for a certain number of Austrian florins, payable at a future date in Vienna. The holder is entitled to receive in Vienna, on the day of the maturity of the bill, a certain number of Austrian florins. Suppose the bill to be dishonoured. The holder is now, by the custom of merchants, entitled to immediate and specific redress by his own act in this way: he is entitled, being in Vienna, then and there to raise the exact number of Austrian florins by drawing and negotiating a cross-bill, payable at sight on his endorser in London, for as much English money as will purchase in Vienna the exact number of Austrian florins at the rate of exchange on the day of dishonour; and to include in the amount of that bill the interest and necessary expenses of the transaction', Byles on Bills.

The process of recovering expenses that resulted from dishnour of a bill of exchange in a foreign country, Black's Law Dictionary, 7th Edn., p. 1284.