Aval

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

An aval is a guarantee written on a bill of exchange or promissory note, typically by the importer's bank signing 'per aval', which binds the bank on the instrument in the same way as the party it guarantees. Because it travels with the paper, apart from the sale, an avalised bill can be discounted or sold on, and much forfaiting relies on it. The aval is a civil-law device, set out in the Geneva uniform law on bills. Under the UK's Bills of Exchange Act 1882 and the Australian and New Zealand Acts that follow it, anyone signing other than as drawer or acceptor is liable as an indorser instead.

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.