The bill of exchange is a circulating security which may be transferred many times until its maturity (and with a certain limitation even after maturity). The debtor may usually only guess who will present him the bill at the time of its maturity. Neither the original assignee nor the new ones have the duty to notify him about transfers. The debt from the bill is therefore constructed in such a way that the right to payment is exercised by the possessor by presenting the bill for payment to the direct debtor.
The possessor has the right to payment against direct debtors in the first place. It is either the acceptant (Article I, Section 28, Paragraph 1, BECA) or the drawer (Article I, Section 78, Paragraph 1, BECA). Presenting the bill for payment to these persons within prescribed periods is not only a right but in a sense a very important duty of the possessor the failure of which is sanctioned by the law in a relatively harsh manner.
In literature, the presenting of the bill for payment is rightly called a preserving act because if the bill were not duly presented at maturity for payment, the obligations of all indirect debtors from the bill would extinguish pursuant to Article I, Section 53, BECA.
However, from the practical point of view missing the presentment is not as fatal for the possessor as it might seem. The above mentioned statement is weakened by Article I, Section 46, Paragraph 2, BECA, according to which the failure to keep the time of presentment must be proven by the person who claims it (i.e. the debtor, usually). It is this unfavorable position of the debtor that is often the key opening a way for the creditor to achieve seemingly lost recourse.
The law recognizes two exceptions to the rule of compulsory presentment. The first exception concerns the bills of exchange that have already been protested because of non-acceptance. The very protest for non-acceptance provided the possessor with the right to recourse against indirect debtors and a new presentment of the bill would bring the possessor nothing. For this reason the possessor may, in certain circumstances, completely lose motivation for presenting the due bill for payment if there is a possibility of achieving the payment before the bill maturity from a solvent debtor under recourse.
The second exception may be, under certain circumstances, the cases when the presentment of the bill is barred by insurmountable obstacles caused by vis major (Article I, Section 54, BECA).
The person to whom the bill is presented is designated as presentee. With the bill of exchange it is the drawer, with the draft it is the drawee (regardless of the bill being accepted or not) but not its avalists. In case of the domiciled bill of exchange it is necessary to present the bill to the domicilee. As for indirect debtors, the bill is not presented to them at maturity, the possessor only exercising the right to recourse against them if needed.
There is a special payment procedure with the bills at sight that are payable on presentment (comp. Article I, Section 34, BECA). Unlike ordinary bills, with bills at sight the "classic" order maturity - presentment is actually reversed: the bill at sight must be first presented to be payable.
The bill at sight must be presented for payment within one year since the date of drawing at the latest (comp. Article I, Section 34, Paragraph 1, BECA). This period may be extended or shortened by the drawer. The period may also be shortened by the endorser; of course, with effects against himself. If the drawer has used his power to prohibit presentment of the bill before a certain date (comp. Article I, Section 34, Paragraph 2, BECA), the bill at sight may be duly presented only on that day. The above mentioned protective period for presentment of the bill (one year by operation of law) runs then from that day. If the creditor did not present the bill for payment within the required period the rights against the debtors extinguished.
As for the time of presentment of the other types of bills of exchange, Article I, Section 38, Paragraph 1, BECA, establishes that the bill should be presented for payment on the day of payment or on one of the two following working days. This applies for the bills with maturity on a certain day (fixed bills), the bills payable at a certain time after the date of drawing (time drafts) and the bills payable at a certain time after sight (time drafts).
With time drafts special preconditions must be fulfilled. With these bills the previous acceptance by the drawee must be furnished with a date (the due day results indirectly from this date). If this does not happen a protest must be made for non-dated acceptance4. Similarly, the bills of exchange at sight must be provided with the so-called dated sight (i.e. a clause that the bill was presented at a certain date). If the possessor omitted to protest the bill in a non-dated acceptance or at a non-dated sight, it holds (Article I, Sections 23 and 78, BECA) that the bill was accepted (or seen) on the last day of the stipulated period (corroboratively, this period is one year long, comp. the above mentioned provision). Rights against indirect debtors are extinguished, of course, too (comp. Article I, Section 53, Paragraph 1, BECA).
For the presentment of the bill of exchange a relatively short, three-day, period is established, starting on the day of payment and the following two working days. Reasons for such relatively short periods may be found in the efforts of the lawgiver to make the bill relationships clear as soon as possible: the indirect debtors may learn in quite a short time whether they will be affected because of non-payment.
The bill of exchange may be presented only on working days (comp. Article I, Section 72, Paragraph 1, BECA) from which follows that the day of maturity and the day of payment may differ (again, there is an exception for bills at sight which may be presented only on working days). The maturity day may be the payment day only when it is a working day. The following two working days are then the so-called presentment days.
This may be illustrated with a simple example. Suppose, there is a fixed bill of exchange with the day of maturity which falls on a Saturday. The maturity day is then Saturday, the payment day is Monday and the bill may be presented also on the following two working days, i.e. on Tuesday and Wednesday (presentment days). However, if Wednesday is a bank holiday the third presentment day is Thursday.
The bill of exchange is presented in the place of payment which always follows from the bill (at least indirectly - on the basis of the legal place of payment). Ideally, the place of payment is specified in such a definite way that no special and time-consuming search is needed. However, for the bill to be valid a relatively general piece of information suffices (for example, "Prague"). Nevertheless, such information is, understandably, not very clear for the bill participants. As it is with acceptance, the concrete place of presentment is specified according to rules included in Section 87, BECA.
The presentation of the bill of exchange shall be made in the premises where he does business or, if there are no such premises or if they cannot be located, in his apartment. The acts may be performed in other places only with the consent of both parties; the consent shall be noted in the protest.
The debtor is entitled to make the payment dependent on handing over the bill of exchange. Pursuant to Article I, Section 39, Paragraph 1, BECA, the debtor may demand that the bill should be handed over to him by the possessor with a receipt for payment. The payment is usually acknowledged on the reverse of the bill and accompanied by the signature of the presenter of the bill. The payment for the bill should always take place against the handing over of the bill. If the debtor does not withdraw the bill from circulation he exposes himself to the danger of double-payment (if a dishonest possessor has transferred the bill on a third person despite of it being paid for).
The possessor of the bill of exchange must not refuse partial payment (comp. Section 39, Paragraph 2, BECA). However, by partial payment of the direct debtor it is only the rights in the paid part that have expired and in the remaining scope it is necessary to deal with the bill as if it were not paid for. The drawer may determine the bill sum of money even in a currency which is not the legal tender in the place of payment. For these cases, the law establishes certain rules about payment in Article I, Section 41.
When a bill of exchange is drawn payable in a currency which is not that of the place of payment, the sum payable may be paid in the currency of the country, according to its value on the date of maturity. If the debtor is in default, the holder may at his option demand that the amount of the bill be paid in the currency of the country according to the rate on the day of maturity or the day of payment. The usages of the place of payment determine the value of foreign currency. Nevertheless, the drawer may stipulate that the sum payable shall be calculated according to a rate expressed in the bill. These rules shall not apply to the case in which the drawer has stipulated that payment must be made in a certain specified currency (stipulation for effective payment in foreign currency).
The bill of exchange, as a typical circulating security, may actually change its possessor without any restrictions. The debtor to whom the due bill is presented by an unknown person finds himself in an uncertain position: there is not enough time for investigating the entitlement of the presenter because of very short presentment periods. There is a danger that the debtor pays a person that has not been entitled to claiming the bill rights. Also, there are unfavorable consequences, of course, if the debtor does not pay: there may be recourse against him for non-payment (Article I, Section 48, BECA) and he may suffer a certain loss of reputation he has enjoyed so far.
This dilemma is solved to a large extent by Article I, Section 40, Paragraph 3, BECA.
The payment for the bill by the direct debtor is an ideal and desirable termination of bill relationships. By the proper payment for the bill by the drawee, or for the promissory note by the maker, all bill rights extinguish. However, it is not always the case that bill relationships are terminated in this desirable manner.
In case of non-payment for the bill (including only a partial payment) the possessor may exercise his right of recourse against indirect bill debtors, i.e. against the endorsers, the drawer, the givers of aval and the acceptor in honour (comp. Article I, Section 58, BECA). With partial payments recourse against indirect debtors is restricted, of course, to the unpaid part of the bill sum. If the bill does not include the clause "without protest", the further necessary step is protesting the bill.