LAW OF OBLIGATION ACT, PART 9, CHAPTER 47,DIVISION 1

Chapter 47

BILL OF EXCHANGE 

Division 1

General Provisions 

  • 925. Draft

(1) A draft is an order security by which the drawer orders the mandatary (the drawee) to pay a determinate sum of money to the person entitled on the basis of and specified in the draft at the maturity specified in the draft (payment of draft). The order shall be unconditional.

(2) A draft shall contain the following information:

1) the term “bill of exchange” in the language of the instrument;

2) an unconditional order to pay a determinate sum of money (the amount of the bill of exchange);

3) the name of the drawee;

4) the maturity;

5) the place of payment;

6) the name of the person to whom payment is to be made;

7) the date and place of the drawing of the draft;

8) the signature of the drawer.

(3) A draft may be drawn payable to drawer’s order or it may be drawn on the drawer. A draft may be drawn for account of a third party.

  • 926. Promissory note

(1) A promissory note is an order security by which the drawer of the promissory note unconditionally undertakes to pay the amount of the promissory note to the person entitled on the basis of and specified in the note at the maturity specified in the note.

(2) A promissory note shall contain the information provided for in clauses 925 (2) 1) and 4) to 8) of this Act and an unconditional undertaking by the drawer of the promissory note of the promissory note to pay the amount of the note.

  • 927. Formal deficiencies in bills of exchange

(1) An instrument is not deemed to be a bill of exchange if any of the requirements specified in subsection 925 (2) of this Act is wanting in the instrument and an instrument is not deemed to be a promissory note if any of the requirements specified in subsection 926 (2) of this Act is wanting.

(2) An instrument in which only the maturity is not specified is still deemed to be a bill of exchange. In such case, the bill of exchange is payable at sight.

(3) A bill of exchange in which the place of payment is not specified is payable at the place specified beside the name of the drawer.

(4) If a drawer knowingly leaves some of the information specified in subsection 925 (2) or 926 (2) of this Act out of a bill of exchange (a bill of exchange in blank), the drawer shall not subsequently set up defences against the holder of the bill based on the fact that the bill was completed otherwise than agreed between the drawer and the original holder of the bill. This does not apply if, upon acquisition of the bill of exchange, the holder knew or should have known that the bill was completed otherwise than agreed with the original holder of the bill.

  • 928. Parties to bill of exchange

(1) The parties to a bill of exchange are the persons who issue the bill, accept the bill or endorse the bill or give an aval to the bill.

(2) A person who was obligated on the basis of a bill of exchange before a party to the bill of exchange is an endorser with regard to the party.

(3) A person who becomes obligated on the basis of a bill of exchange after a party to the bill of exchange is a subsequent endorser with regard to the party.

  • 929. Permissible maturities

(1) A bill of exchange may be drawn payable:

1) at sight (a bill of exchange at sight);

2) at a fixed period after sight (a bill of exchange payable at a fixed period after sight);

3) at a fixed period after the date of issue of the bill (a bill of exchange payable at a fixed period after date);

4) at a fixed date (bill of exchange payable on a fixed day).

(2) Bills of exchange at maturities other than those provided for in subsection (1) of this section or at several maturities are void.

  • 930. Bill of exchange at sight

(1) A bill of exchange payable at sight shall be presented for payment within one year as of the date of issue of the bill unless the drawer has specified a different term in the bill of exchange. An endorser of a bill of exchange may abridge the term for presentment provided by law or specified by the drawer.

(2) If a drawer has prescribed in a bill of exchange at sight that the bill may not be presented for payment before a specified date, the term for presentment shall begin on that date.

  • 931. Draft payable at fixed period after sight

(1) The term for payment of a draft payable at a fixed period after sight commences to run as of the date indicated in the acceptance of the draft or as of the date on which a protest is drawn up.

(2) If no date is indicated in the acceptance of a draft and no protest is drawn up, the draft is deemed to have been accepted on the last day of the term for presentment for acceptance.

  • 932. Promissory note payable at fixed period after sight

(1) The term for payment of a promissory note payable at a fixed period after sight commences to run as of the date on which a stipulation for presentment is made on the promissory note or, in the case specified in subsection (3) of this section, as of the date on which a protest is drawn up.

(2) A promissory note payable at a fixed period after sight shall be submitted to the drawer for a stipulation for presentment to be made within one year as of the date of issue of the promissory note unless the drawer has specified a different term in the promissory note. An endorser may abridge the term for presentment for payment provided by law or specified by the drawer of the promissory note.

(3) A stipulation for presentment shall contain the date of the stipulation and the drawer shall sign the stipulation. If the drawer of a promissory note refuses to write a stipulation for presentment, such refusal shall be confirmed by a protest.

  • 933. Payment of interest on bill of exchange

(1) In the case of a bill of exchange at sight or a bill of exchange payable at a fixed period after sight, the drawer may stipulate that the amount of the bill shall bear interest. In the case of any other bill of exchange, the obligation to pay interest is deemed not to be written on the bill.

(2) The rate of interest shall be specified in the bill of exchange. If the rate of interest is not specified in the bill of exchange, the obligation to pay interest is deemed not to have been written on the bill.

(3) In the case specified in subsection (1) of this section, interest shall be calculated as of the date of issue of the bill of exchange unless the drawer has specified a different date in the bill.

  • 934. Validity of signatures

If a bill of exchange bears a forged signature, the obligations of the other persons who signed it are none the less valid. If, pursuant to the provisions of civil law, a person who has signed a bill of exchange cannot bear the obligations arising from the signature, the obligations of the other persons who have signed the bill are none the less valid.

  • 935. Signing bill of exchange without right of representation

If a person signs a bill of exchange in the name of another person as the representative of the person, the signatory shall be liable for performance of the obligations arising from the bill even if he or she did not have the right to sign the bill of exchange in the name of the other person or if he or she acted in excess of his or her right of representation. If the signatory pays the bill of exchange, the signatory shall have the same rights as the person for whom the signatory signed the bill without or in excess of the right of representation would have had in the event of paying the bill of exchange.

  • 936. Parts of draft

(1) A draft may be drawn in a set of several parts.

(2) The text of each part shall contain the number of the part. If a number is not indicated, each part is deemed to be a separate draft.

(3) Upon payment made on one part of a set, the rights arising from all parts shall expire.

(4) If parts of a set are transferred to different persons, the endorser and the subsequent endorsers shall be liable on all of the parts which bear their signature and have not been restored.

  • 937. Liability of drawers

(1) The drawer of a draft shall be liable for both acceptance and payment of the draft. The drawer may preclude liability for acceptance by writing a corresponding stipulation on the draft. Every stipulation to release the drawer from liability for payment of the draft is deemed not to be written on the draft.

(2) The drawer of a promissory note undertakes to pay the note on the date of maturity. Upon failure to pay the promissory note on the date of maturity, the holder of the note may file a claim specified in subsection 970 (1) of this Act against the drawer.

  • 938. Limitation period for claims arising from bills of exchange

(1) The limitation period for claims arising from a bill of exchange against the acceptor shall be three years as of the date of maturity.

(2) The limitation period for claims of the holder of a bill of exchange against the endorser or the drawer shall be one year as of the date on which a protest against the bill of exchange is drawn up if the protest is drawn up within the specified period of time or one year as of the date of maturity in the case of release from a protest.

(3) The limitation period for claims of an endorser against another endorser or against the drawer shall be six months as of the date on which the endorser pays the bill of exchange or six months as of the date on which an action is filed against the endorser.

  • 939. Unjustified enrichment

(1) If performance of an obligation arising from a bill of exchange for the drawer or the acceptor cannot be claimed due to expiry of the limitation period for the claim or due to failure to perform an act necessary to file a claim arising from the bill, the holder of the bill of exchange may file a claim arising from unjustified enrichment against the drawer or the acceptor if the requirements for filing a claim are met.

(2) The limitation period for a claim arising from unjustified enrichment specified in subsection (1) of this section shall be three years as of the expiry of claims arising from the bill of exchange or as of the date when performance of obligations arising from the bill can no longer be claimed.

(3) A claim arising from unjustified enrichment specified in subsection (1) of this section shall not be filed against an endorser whose obligation arising from the bill of exchange has expired.

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