Bill of Exchange Law
                                           in Europe – 2
                       Requirements of Bill of Exchange and Promissory Note

                                       Discussion questions

•             What is the major objective of „Geneva Bill of Exchange System“ (1930)?

•             What are the types of commercial papers?

•             What are the parties of a note? To a bill of exchange (draft)?

•             What liability does a maker have on a note?

•             What liability does a drawer have on a bill of exchange?

•             What liability does a drawee have on a bill of exchange?

•             Describe the principal types of payment via note and bill of exchange (payment by a
bill of exchange (bill of exchange issued "pro soluto") and payment by means of bill of exchange
(bill of exchange issued "pro solvendo")

                                          Promissory Note

•             Special variant of a credit paper

•             Promise of a drawer (maker) to pay to a creditor (payee) certain financial sum

•             Characteristic expression „I will pay“

•             Two basic participants - maker and creditor (payee).

•             Maker of a promissory note is a direct debtor obliged by his sign to pay at the
maturity

                                         Bill of Exchange

•            higher number of participants

•            drawer, payee and drawee

•            payment order of a drawer to a drawee to pay certain financial sum to a payee

•            characteristic expression „Pay to".



                     Participants of the Bill of Exchange and Promissory Note



•              Drawer (maker)

–          maker of a promissory note obliges himself to pay at the maturity, direct debtor

–          drawer of a bill of exchange (trasant) is in a position of indirect, regress debtor
(Article 9)

•              Payee

–          person, in whose favour the bill is issued,

–          "remitent„

–          person named on the face of the bill of exchange or a promissory note to receive payment

•              Drawee

–          addressee of payment promise of the drawer

–          a real debtor only by the acceptance (till this moment he is obliged only potentially;
under certain circumstances he even does not have to know that he became a drawee)





                    Participants of the Bill of Exchange and Promissory Note II



•             Persons giving an aval guarantee

–         Section 30-32

–         special guarantee for payment of a bill ("aval„).

–         guarantee my be given by a person who has signed the bill as well

–         the giver of an aval is bound in the same manner as the person for whom he has become a
guarantor



•             Parties of endorsement

–         Indorser

–         Indorsee







                                 Form of Bill of Exchange and Note



•             „Commercial Paper“ = Writing

•             Certificated v. Paperless form

•             The bill can not be entered in a book like shares or bonds

•             Printing, typewriting, handwriting or any other tangible form

•             Easily movable substance

•             Degree of permanence?

–      Check on the shirt

–      Note on the tissue

–      Note on the wall

–      „Negotiable cow“

–      Bill of exchange on the back









                                 Form of Bill of Exchange and Note



•         „If there is no place for other statements, a copy of the paper (Article I, Section 67
BECA) or allonge (Article I, Section 13 BECA) can be used.









                                             Signature



•             The bill of exchange or promissory note must be signed by the drawer or maker



•             The signature may be made only by handwriting by pen or pencil, not by typewriter, by
print or only by stamp or fingerprints (dabs)



•             Text of the paper is usually a result of filling in and signing of blank forms





                                         Forms of writing



•            UCC (USA) - § 3-114.  CONTRADICTORY TERMS OF INSTRUMENT

•            If an instrument contains contradictory terms, typewritten terms prevail over printed
terms, handwritten terms prevail over both, and words prevail over numbers.









                            Words prevail over numbers in European Law









                             Stipulation relating to bills of exchange



•           Two cumulative preconditions:

•       part of the text of the bill of exchange

•       written in the language in which the whole document is written









                                       Payment order, drawee



•           Unconditional payment order

•           Name of the drawee











                                             Maturity