Bills of Exchange

A bill of exchange is a type of securities by which the drawer unconditionally undertakes to directly or indirectly pay a certain amount of the bill of exchange to a specified person or orders another person to do so.

Bills of exchange can be as follows:

• A bill of exchange is a written order to pay a determinate amount of money to the holder of the bill;
• A promissory note is an unconditional promise to pay a determinate amount to the holder of the note.

A bill of exchange contains: 

• The term "bill of exchange" inserted in the body of the instrument and expressed in the language employed in the drawing up the instrument;
• An unconditional order to pay a determinate sum of money;
•  The name of the person who is to pay (payer);
• Time of payment;
• The place where the payment is to be made;
• The name of the person to whom or to whose order payment is to be made;
• The date and the place where the bill is issued;
• The signature of the person who issues the bill (drawer).

An instrument in which any of the requirements mentioned is wanting is invalid as a bill of exchange, except the following cases:

• A bill of exchange in which the time of payment is not specified is deemed to be payable at sight;
• In default of special mention, the place specified beside the name of the drawee is deemed to be the place of payment, and at the same time the place of the domicile of the drawee;
• A bill of exchange which does not mention the place of its issue is deemed to have been drawn in the place mentioned beside the name of the drawer.

A bill of exchange may be drawn payable to the drawer's order. It may be drawn on the drawer himself or for account of a third person.

A bill of exchange may be drawn payable:

1. At sight;
2. At a fixed period after sight;
3. At a fixed period after date;
4. At a fixed date.

Bills of exchange at other maturities or payable by instalments are null and void.

Guaranteeing. Payment of the entire amount of the bill of exchange or part thereof may be secured by a guarantee. Guaranteeing may be by a third party or a party liable under the bill of exchange. The guarantee is expressed by the word "guaranteed" or by any other equivalent expression and signed by the giver of a guarantee.

A promissory note contains:

1. The term "promissory note" inserted in the body of the instrument and expressed in the language employed in the drawing up the instrument;
2. An unconditional promise to pay a determinate sum of money;
3. The time of payment;
4. The place where payment is to be made;
5. The name of the person to whom or to whose order payment is to be made;
6. The date and the place where the promissory note is issued;
7. The signature of the person who issues the instrument (maker).

An instrument in which any of the requirements mentioned is wanting is invalid as a promissory note except in the following cases:

• A promissory note in which the time of payment is not specified is deemed to be payable at sight;
• In default of special mention, the place where the instrument is made is deemed to be the place of payment and at the same time the place of the domicile of the maker;
• A promissory note, which does not mention the place of its issue, is deemed to have been made in the place mentioned beside the name of the maker.