(A) practice. A set off, or defalcation in an action. Vin. Ab. h. t. (B) contracts. An allowance made upon prompt payment in the purchase of goods; it is also the interest allowed in advancing money upon bills of exchange, or other negotiable securities due at a future time And to discount, signifies the act of buying a bill of exchange, or promissory note for a less sum than that which upon its face, is payable. 2. Among merchants, the term used when a bill of exchange is transferred, is, that the bill is sold, and not that it is discounted.
Law Dictionary – Alternative Legal Definition
In a general sense, an allowance or deduction made from a gross sum on any account whatever. In a more limited and technical sense, the taking of interest in advance. By the language of the commercial world and the settled practice of banks, a discount by a bank means a drawback or deduction made upon its advances or loans of money, upou negotiable paper or other evidences of debt payable at a future day, which are transferred to the bank. Although the discounting of notes or bills, in its most comprehensive sense, may mean lending money and taking notes in payment, yet, in its more ordinary sense, the discounting of notes or bills means advancing a consideration for a bill or note, deducting or discounting the interest which will accrue for the time the note has to run. Loan Co. v. Towner, 13 Conn. 249. Discounting by a bank means lending money upon a note, and deducting the interest or premium in advance. The ordinary meaning of the term “to discount” is to take interest in advance, and In banking is a mode of loaning money. It is the advance of money not due till some future period, less the interest which would be due thereon when payable. Discount, as we have seen, is the difference between the price and the amount of the debt the evidence of which is transferred. That difference represents interest charged, being at the same rate, according to which the price paid, if invested until the maturity of the debt, will just produce its amount.
Discounting a note and buying it are not identical in meaning, the latter expression being used to denote the transaction when the seller does not indorse the note, and is not accountable for it Bank v. Baldwin, 23 Minn. 206, 23 Am. Rep. 683.
In practice. A set-off or defalcation in an action. Vin. Abr. “Discount.” But see Trabue’s Ex’r v. Harris, 1 Mete. (Ky.) 597. Discount broker. A bill broker; one who discounts bills of exchange and promissory notes, and advances money on securities.