This treaty and the separate peace treaties between Great Britain and the nations that supported the American cause — France, Spain, and the Dutch Republic — are known collectively as the Peace of Paris. Only Article 1 of the treaty, which acknowledges the United States' existence as free sovereign and independent states, remains in force.
Peace negotiations began in April 1782, and continued through the summer. Representing the United States were Benjamin Franklin, John Jay, Henry Laurens, and John Adams. David Hartley and Richard Oswald represented Great Britain. The treaty was signed at the Hotel d'York (presently 56 Rue Jacob) in Paris on September 3, 1783, by Adams, Franklin, Jay, and Hartley.
Regarding the American Treaty, the key episodes came in September 1782, when French Foreign Minister Vergennes proposed a solution that was strongly opposed by his ally, the United States. France was exhausted by the war, and everyone wanted peace except for Spain, which insisted on continuing the war until it could capture Gibraltar from the British. Vergennes came up with the deal that Spain would accept instead of Gibraltar. The United States would gain its independence but be confined to the area east of the Appalachian Mountains. Britain would take the area north of the Ohio River. In the area south of that would be set up an independent Indian state under Spanish control. It would be an Indian barrier state.
However, the Americans realized that they could get a better deal directly from London. John Jay promptly told the British that he was willing to negotiate directly with them, cutting off France and Spain. The British Prime Minister Lord Shelburne agreed. He was in charge of the British negotiations (some of which took place in his study at Lansdowne House, now a bar in the Lansdowne Club) and he now saw a chance to split the United States away from France and make the new country a valuable economic partner. The western terms were that the United States would gain all of the area east of the Mississippi River, north of Florida, and south of Canada. The northern boundary would be almost the same as today. The United States would gain fishing rights off Canadian coasts, and agreed to allow British merchants and Loyalists to try to recover their property. It was a highly favorable treaty for the United States, and deliberately so from the British point of view. Prime Minister Shelburne foresaw highly profitable two-way trade between Britain and the rapidly growing United States, as indeed came to pass.
Great Britain also signed separate agreements with France and Spain, and (provisionally) with the Netherlands. In the treaty with Spain, the territories of East and West Florida were ceded to Spain (without a clear northern boundary, resulting in a territorial dispute resolved by the Treaty of Madrid in 1795). Spain also received the island of Menorca; the Bahama Islands, Grenada, and Montserrat, captured by the French and Spanish, were returned to Britain. The treaty with France was mostly about exchanges of captured territory (France's only net gains were the island of Tobago, and Senegal in Africa), but also reinforced earlier treaties, guaranteeing fishing rights off Newfoundland. Dutch possessions in the East Indies, captured in 1781, were returned by Britain to the Netherlands in exchange for trading privileges in the Dutch East Indies, by a treaty which was not finalized until 1784.