Bill of Exchange Colombia (Letra de Cambio)

A Bill of Exchange Colombia (Letra de Cambio) is a título valor (negotiable instrument) containing an unconditional order by one party (girador or librador) directing another party (girado or librado) to pay a specified sum of money to a designated beneficiary (beneficiario or tomador) at a determined or determinable future date, governed by the Código de Comercio (CCo) — Decreto 410 de 1971 — Articles 671 through 708 and the general título valor provisions of CCo Articles 619 through 668. The letra de cambio is the oldest and most formally structured negotiable instrument in Colombian commercial law, originating from medieval European trade practices and codified through the Geneva Convention on the Unification of the Law Relating to Bills of Exchange and Promissory Notes (1930).

The constitutional framework for negotiable instruments in Colombia derives from Article 333 of the Constitución Política de 1991, which guarantees economic freedom and free enterprise, and Article 58, which protects private property rights — including credit rights embodied in títulos valores. The Código de Comercio of 1971, influenced by the Geneva Uniform Law on Bills of Exchange, establishes a tripartite structure for the letra de cambio involving three distinct parties: the girador (drawer) who issues the order, the girado (drawee) who is directed to pay, and the beneficiario (payee) who is entitled to receive payment.

Under CCo Article 671, a letra de cambio must contain: the unconditional order to pay a specified sum (orden incondicional de pagar una suma determinada); the name of the girado (drawee); the designation of the beneficiario (payee) or the indication that it is payable to bearer; the maturity date (fecha de vencimiento); the place of payment (lugar de pago); the date and place of issuance (fecha y lugar de creación); and the signature of the girador (drawer). Article 621 of the CCo establishes additional general requirements for all títulos valores: the right embodied in the instrument, the signature of the creator, and delivery (entrega) to the beneficiary.

The letra de cambio qualifies as a título ejecutivo under Article 422 of the Código General del Proceso (CGP — Ley 1564 de 2012), providing the holder with access to the fast-track proceso ejecutivo (enforcement proceedings) without first obtaining a declaratory judgment. The holder (tenedor legítimo) may enforce the letra against the girador, the aceptante (the girado who has accepted the order), and any endorsers (endosantes) who transferred the instrument — all of whom are jointly and severally liable (solidariamente responsables) under CCo Article 672.

Aceptación (acceptance) is the act by which the girado (drawee) commits to pay the letra de cambio at maturity. Under CCo Article 680, acceptance must be written on the face of the instrument with the word "acepto" or equivalent expression and the girado's signature. Once the girado accepts, they become the aceptante and assume the position of principal debtor (deudor principal) under CCo Article 688. Refusal to accept (falta de aceptación) or refusal to pay (falta de pago) must be evidenced through a protesto (formal protest) before a Notario Público under CCo Articles 697 through 708, unless the letra contains the clause "sin protesto" (without protest) under CCo Article 697.

The Superintendencia Financiera de Colombia (SFC) supervises financial institutions that use letras de cambio in trade finance operations — banks providing cartas de crédito (letters of credit), descuento de cartera (portfolio discounting), and operaciones de redescuento through Banco de Comercio Exterior de Colombia (Bancóldex). Interest on letras de cambio is subject to the same ceilings applicable to all commercial credit instruments: under CCo Article 884, the maximum moratory interest rate is 1.5 times the interés bancario corriente certified by the SFC.

A Bill of Exchange (Letra de Cambio) Colombia is needed whenever a commercial transaction requires a formal, three-party payment instrument that provides the holder with executive enforcement capability under the Código General del Proceso (CGP — Ley 1564 de 2012) Article 422 and joint and several liability from the drawer, acceptor, and endorsers under Código de Comercio Article 672.

A letra de cambio is required when suppliers sell goods on credit and need a negotiable instrument that can be transferred to third parties through endorsement (endoso) under CCo Articles 654 through 667. Unlike a simple invoice or account receivable, the letra de cambio circulates as a self-contained credit instrument — the holder's right to payment is independent of the underlying sales contract under the principio de autonomía de los títulos valores (CCo Article 627). Colombian manufacturers, agricultural producers, and wholesale distributors commonly use letras de cambio to document deferred payment terms in commercial sales.

The document is needed when businesses require trade finance instruments for domestic and international commerce. Colombian banks supervised by the Superintendencia Financiera de Colombia (SFC) use letras de cambio in descuento de cartera (portfolio discounting) operations — the supplier draws a letra on the buyer, the buyer accepts, and the supplier discounts the accepted letra at the bank for immediate cash. Bancóldex (Banco de Comercio Exterior de Colombia) uses letras de cambio in its redescuento (rediscount) operations to channel credit to Colombian exporters.

A letra de cambio is needed when parties to a loan or credit arrangement want a negotiable instrument with broader liability coverage than a pagaré. While a pagaré creates liability only for the issuer (suscriptor) and any guarantor (avalista), a letra de cambio creates joint and several liability among the girador (drawer), the aceptante (acceptor), and all endosantes (endorsers) under CCo Article 672 — providing the holder with multiple sources of payment.

The document is required when creditors need to formalise a payment obligation from a third party. The tripartite structure of the letra de cambio — girador, girado, aceptante — makes it the appropriate instrument when the person who owes the money (girado) is different from the person initiating the payment order (girador). Common scenarios include: a company directing its debtor to pay a supplier directly; a principal directing a commission agent to pay a creditor; and a parent company directing a subsidiary to pay an intercompany obligation.

A letra de cambio is needed when the creditor intends to use the formal protest mechanism (protesto) under CCo Articles 697 through 708 to preserve enforcement rights against endorsers and the drawer. The protesto — executed before a Notario Público — creates an authenticated public record of non-acceptance or non-payment.

A valid Bill of Exchange (Letra de Cambio) Colombia under Código de Comercio Articles 671 through 708 and the general título valor provisions of Articles 619 through 668 must contain the following essential elements to qualify as a título ejecutivo enforceable through the proceso ejecutivo under CGP Article 422.

Unconditional Order to Pay: The document must contain a clear, unconditional order to pay a specified sum of money (orden incondicional de pagar una suma determinada de dinero) under CCo Article 671 numeral 1. The critical distinction from a pagaré is that the letra de cambio contains an order ("páguese") directed to a third party, rather than a promise ("prometo pagar") by the issuer. Conditional orders — such as "pay if goods are delivered" — disqualify the instrument as a título valor. The amount must be specified in both numbers and words, denominated in Colombian Pesos (COP) or, for international transactions, in the agreed foreign currency under CCo Article 624.

Drawer Identification and Signature: The full legal name, cédula de ciudadanía (or NIT for legal entities), and autograph signature of the girador (drawer) who issues the order under CCo Article 621. The girador is jointly and severally liable with the aceptante and endorsers under CCo Article 672. Where the girador is a legal entity, the representante legal must sign within the scope of authority registered on the Certificado de Existencia y Representación Legal issued by the Cámara de Comercio.

Drawee Designation: The full legal name and cédula de ciudadanía (or NIT) of the girado (drawee) — the person or entity directed to make payment under CCo Article 671 numeral 2. The girado becomes the aceptante (acceptor) and principal debtor only upon signing the letra with the word "acepto" under CCo Article 680. Until acceptance, the girado has no obligation under the instrument.

Beneficiary Designation: The full legal name and identification of the beneficiario or tomador (payee) — the person or entity entitled to demand payment. A letra de cambio may be issued "a la orden de" (to the order of) a named beneficiary, allowing transfer through endoso under CCo Article 651.

Amount and Interest: The sum to be paid (valor) in COP, specified in both numbers and words. Interest clauses may be included subject to the ceilings established by the SFC: the maximum remuneratory rate is the interés bancario corriente, and the maximum moratory rate is 1.5 times the interés bancario corriente under CCo Article 884. Exceeding these limits constitutes usura under Código Penal Article 305.

Maturity Date: The date on which payment is due under CCo Article 671 numeral 4. Under CCo Article 673, a letra de cambio may be payable: on a specified date (a día fijo); on demand (a la vista — payable upon presentation within one year of issuance under CCo Article 692); at a fixed period after sight (a cierto plazo vista — calculated from the date of acceptance); or at a fixed period after the date of issuance (a cierto plazo fecha).

Place of Payment: The city or location where payment must be made under CCo Article 671 numeral 5. If no place is specified, payment is due at the girado's domicile under CCo Article 691.

Date and Place of Issuance: The date and city where the letra de cambio is created under CCo Article 621. The date of issuance is critical for calculating prescription (prescripción): under CCo Article 789, the action against the aceptante prescribes three years from the maturity date, the action against the girador and endorsers prescribes one year from the date of protest or maturity (if "sin protesto").

Acceptance (Aceptación): The girado's written acceptance on the face of the instrument under CCo Article 680. Acceptance transforms the girado into the aceptante (principal debtor). Acceptance may be unconditional or partial (for a lesser amount) under CCo Article 682.

Forms-legal.com provides this Bill of Exchange (Letra de Cambio) Colombia template as a practical starting point for documenting commercial payment orders. Every letra de cambio should be reviewed by an abogado comercialista to confirm compliance with current SFC interest rate certifications, protest requirements under CCo Articles 697 through 708, and the specific circumstances of the commercial transaction. The Juzgados Civiles have jurisdiction over proceso ejecutivo proceedings to enforce letras de cambio under CGP Articles 422 through 467.