What does "per aval" mean on a bill of exchange?

It marks a signature as a guarantee of payment. A bank that writes "per aval" or "good as aval" on a bill or note and signs it takes on, under the Geneva uniform law, the same liability as the party it names, usually the acceptor of a bill or the maker of a note. If it names no one, the law fills the gap: the drawer on a bill, the maker on a note.

What is the difference between an aval and a bank guarantee?

An aval is written on the instrument itself and passes automatically to each holder, so the paper can be sold without separate documents. Under the Geneva law the avalist is bound as the guaranteed party is bound. A bank guarantee is a separate contract, with its own wording, governing law and rules on assignment, and it can be drafted as a demand guarantee or as a secondary promise. Forfaiters take either; the aval is simpler to trade.

Is an aval recognised in English, Australian or New Zealand law?

Not as such. The bills of exchange statutes in all three markets have no aval. A signer who is neither the drawer nor the acceptor takes on an indorser's liability to a holder in due course, which is a narrower liability with its own conditions, such as notice of dishonour. An aval given in a country that follows the Geneva law may be governed by that country's law, so the question is which law applies to the signature.

Who pays if an avalised note is not paid at maturity?

The holder can claim from the avalising bank, which is bound as the party it guaranteed is bound, and from the maker, and under the Geneva law it may pursue them together or in any order. A bank that pays takes over the holder's rights against the party it guaranteed. An exporter that indorsed the note without recourse is outside the claim, though it may still answer to the forfaiter under their sale agreement.

// WORKED EXAMPLEHOW THE GUARANTEE WORKS

Aval: How a Bank Guarantees a Bill of Exchange

One signature on the paper, and the note carries a bank.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-07

// THE SHORT ANSWER

An aval is a bank's signature on a bill of exchange or promissory note that makes the bank answer for one party's obligation on that paper, so the instrument is worth what the bank is worth. A forfaiter or discounting bank asks for one because it can then buy the paper without looking past it: the guarantee sits on the instrument, moves with it to every later holder, and does not depend on the sale behind it. The aval belongs to the Geneva uniform law on bills; in the UK, Australia and New Zealand the same signature is read under statutes that do not use the concept.

BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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// 01 — WHY A BUYER'S BANK SIGNS THE PAPER

An exporter that gives a buyer time to pay can take a bill of exchange the buyer has accepted, or a promissory note the buyer has issued. Either is a promise to pay a fixed sum on a fixed date, and either can be sold, but only for what the buyer's name is worth to a stranger in another country. The aval puts a bank's name behind it. The buyer's bank writes words such as "good as aval" or "per aval" on the instrument, names the party it is backing, and signs. From then on the paper has two debtors for the same sum.

For the holder that changes the credit question. A forfaiter that buys an avalised note is, in substance, taking the risk of the avalising bank and its country, and it can sell the note on to an investor who needs to know nothing about the goods. That is why much forfaiting relies on the aval: a separate guarantee has to be transferred with each sale and may be governed by a different law.

// 02 — HOW THE GENEVA UNIFORM LAW MAKES IT WORK

The Geneva Convention of 7 June 1930 providing a uniform law for bills of exchange and promissory notes sets the aval out in three articles, and the countries that adopted the uniform law carry them in their own codes. The working parts:

Art 30 payment may be guaranteed by aval, for all or part of the sum

Art 31 given on the bill or an allonge, as 'good as aval' or similar, signed;

must say for whom it is given; if silent, deemed given for the drawer

Art 32 the avalist is bound as the party it guarantees is bound, even if

that party's liability fails, unless for a defect of form;

on paying, it takes the holder's rights against that party

Art 47 acceptors, drawers, indorsers and avalists are jointly and

severally liable, and the holder need not pursue them in order

Art 77 on a promissory note, an aval that names no one is given for the maker

Two consequences matter to a holder. The avalist's undertaking survives a failure in the obligation it backs, other than a defect of form, so it is not an accessory promise that falls with the buyer's. And at maturity the holder can go straight to the avalist without first suing the buyer.

// 03 — THE EXAMPLE

A maker of food-processing lines, constructed for this page like every figure in it, sells a US$900,000 line to a buyer in a country whose law follows the Geneva convention. The buyer issues three promissory notes of US$300,000, due at six, twelve and eighteen months, payable to the exporter's order. Its bank avalises each one, naming the buyer. The exporter indorses the notes without recourse to a forfaiter, as the uniform law allows an indorser to stipulate.

The first note is paid. Before the second falls due, the buyer says the line is faulty and stops payment.

Note 2 presented at maturity 300,000

Buyer, as maker: refuses, citing the goods 0

Avalist, bound as the maker is bound: pays 300,000

Avalist's claim: against the buyer, on the note 300,000

Exporter: out of the note; the quality dispute

is argued under the sale contract

The complaint about the line is between the buyer and the exporter and does not travel with the note. The forfaiter is paid by the bank whose risk it priced.

The trap is in article 31. On a bill of exchange drawn by the exporter, an aval that does not say whom it backs is deemed given for the drawer: the bank would be answering for the exporter's liability on the bill, not the buyer's, and on paying could look to the exporter. On a note the default is the maker, the buyer. Either way, a buyer of the paper reads the words of the aval before the name of the bank.

// 04 — HOW THE UK, AUSTRALIA AND NZ READ IT

The UK, Australia and New Zealand did not adopt the Geneva law, and their statutes have no aval. The UK's Bills of Exchange Act 1882, section 56, provides that a person who signs a bill otherwise than as drawer or acceptor incurs the liabilities of an indorser to a holder in due course. Australia's Bills of Exchange Act 1909 (section 61) and New Zealand's Bills of Exchange Act 1908 (section 56) carry the same rule under the same heading, "stranger signing bill liable as indorser".

An indorser's liability is narrower than an avalist's. It is owed to a holder in due course, it arises on dishonour, and under these Acts it generally depends on the holder giving notice of dishonour in time. The statute itself does not ask whose obligation the signature was meant to back, though courts have at times looked at what the signer intended. Where the bank signs in a Geneva-law country, which law governs its signature can decide what the signature means, and that is a question for the buyer of the paper to settle before it pays, not after. A forfaiter that is unsure how an aval will be read can ask for a separate bank guarantee instead, at the cost of paper that is less simple to sell on.

DEFINED IN ONE PARAGRAPH → · FORFAITING, WORKED → · DOCUMENTS AGAINST ACCEPTANCE →

// 05 — WHERE IT DECIDES A FILE

For a bank buying avalised paper, the file checks four things: that the aval names the party the bank means to rely on; that the signatories could bind the avalising bank, which a buyer of paper usually has authenticated through a correspondent bank; which law governs the signature; and whether the avalising bank's country will let it pay abroad. The aval moves the credit risk to a bank. It does not remove the country risk.

For a bank asked to give an aval, perhaps for an importing customer whose overseas supplier wants its bills backed, it is a firm payment obligation for the full face value, to whoever holds the paper at maturity. The bank books it against the customer's limit as it would a payment guarantee or an acceptance, and takes a counter-indemnity. In a common-law market its signature will be read under its own Act unless another law governs it.

USANCE LETTER OF CREDIT → · BANKER'S ACCEPTANCE → · PRODUCT FILE: BANK GUARANTEE →

// SOURCES

The documents the statements on this page rest on. Each was opened and checked when cited.

United Nations Treaty Collection, Convention providing a Uniform Law for Bills of Exchange and Promissory Notes (Geneva, 7 June 1930) — status of the League of Nations treaty — Records the Convention's date, entry into force on 1 January 1934 and the states that ratified it, among which the United Kingdom, Australia and New Zealand do not appear — sections 02 and 04.
Bills of Exchange Act 1882 (UK), section 56 — legislation.gov.uk — A person who signs a bill otherwise than as drawer or acceptor incurs the liabilities of an indorser to a holder in due course — section 04 and the FAQ.
Bills of Exchange Act 1909 (Cth) — Federal Register of Legislation — The Act's table of provisions carries section 61, 'Stranger signing bill liable as indorser', in its division on liabilities of parties — section 04.

// QUESTIONS PEOPLE ASK

What does "per aval" mean on a bill of exchange?: It marks a signature as a guarantee of payment. A bank that writes "per aval" or "good as aval" on a bill or note and signs it takes on, under the Geneva uniform law, the same liability as the party it names, usually the acceptor of a bill or the maker of a note. If it names no one, the law fills the gap: the drawer on a bill, the maker on a note.
What is the difference between an aval and a bank guarantee?: An aval is written on the instrument itself and passes automatically to each holder, so the paper can be sold without separate documents. Under the Geneva law the avalist is bound as the guaranteed party is bound. A bank guarantee is a separate contract, with its own wording, governing law and rules on assignment, and it can be drafted as a demand guarantee or as a secondary promise. Forfaiters take either; the aval is simpler to trade.
Is an aval recognised in English, Australian or New Zealand law?: Not as such. The bills of exchange statutes in all three markets have no aval. A signer who is neither the drawer nor the acceptor takes on an indorser's liability to a holder in due course, which is a narrower liability with its own conditions, such as notice of dishonour. An aval given in a country that follows the Geneva law may be governed by that country's law, so the question is which law applies to the signature.
Who pays if an avalised note is not paid at maturity?: The holder can claim from the avalising bank, which is bound as the party it guaranteed is bound, and from the maker, and under the Geneva law it may pursue them together or in any order. A bank that pays takes over the holder's rights against the party it guaranteed. An exporter that indorsed the note without recourse is outside the claim, though it may still answer to the forfaiter under their sale agreement.

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THE GLOSSARYIN ONE PARAGRAPHAval What is an aval on a bill of exchange, and why do forfaiters ask for one?