usance

Usance is a term used in finance and commerce to denote the period allowed for the payment of a negotiable instrument, such as a bill of exchange or promissory note, or the period customary in a particular trade. The word comes from the French usance, meaning use or practice, and entered English through legal and commercial contexts.

In negotiable instruments, usance specifies when payment is due. A bill may be payable on sight or in usance for a stated number of days or months after the date or after presentation. Common formulations include three months’ usance or six months’ usance. Some systems also provide for days of grace that can extend the due date, though this practice is not universal and depends on jurisdiction and contract terms.

Beyond finance, usance can refer to the customary practice or usage within a given trade or market. In this sense, it denotes what is typically expected or accepted in the conduct of transactions, rather than a fixed calendar period.

Legal and contractual aspects: Usance terms are determined by the agreement between parties and by applicable commercial or negotiable instruments law. In letters of credit and other trade finance arrangements, usance terms are specified by the parties and governed by the governing law of the credit or contract. The concept highlights the distinction between immediate (sight) payment and payment after a defined period of time.