A Promise to Pay

THE LAW OF BILLS OF EXCHANGE & PROMISSORY NOTES

“In Wylde v. Radford, 38 L. J. Ch. 51, Kindersly V.-C., expressed the view that a conveyance of land was not subject to the general lien. He said: “ The cases refer to a deposit of documents which are in their nature securities, but there is some ambiguity in the term “securities”. Anything may of course be deposited, and deeds or plate, after they have been deposited, may be said to be a security; but what is intended is such securities as promissory notes, bills of exchange, exchequer bills, coupons, bonds of foreign Governments, &c., and the
courts have held that if such securities are deposited by a customer with his banker, and there is nothing to show the intention of such deposit one way or the other, the banker has, by custom, a lien thereon for the balance due from the customer.” See, however, In re Bowes 33 Ch. D. 586, and Mutton v. Pent [1900] 2 Ch. 7, where it would seem to have been assumed that the lien would attach to a policy of insurance and a lease respectively.

The nature of the “securities” subject to the lien is further deducible from the condition that they must come to the banker’s hands in his capacity as banker; in the course of banking business. Very possibly it is part of a banker’s business to advance money, and any class of property may by proper means be made the subject of security. But save in the case of specific deposit as security, or by way of equitable mortgage, in which cases lien becomes immaterial, it is difficult to conceive how such things as leases or conveyances should come to the banker’s hands in the course of his business as such. The better view would seem to be that the lien only attaches to such securities as a banker ordinarily deals with for his custom, otherwise than for safe custody, when there is no question or contemplation of indebtedness on the part of the customer.”

Paget on The Law of Banking, 1904.

“Besides drawing bills of exchange, many bankers in the country are in the business of circulating promissory notes for small sums, payable on demand, which are current principally in the neighbourhood where they are issued. These notes, which can with facility be had by those who keep cash accounts with bankers, are very useful, particularly in manufacturing places, where it would be difficult to procure a sufficiency of cash, or small bank notes, for the purpose of paying workmen’s wages.

Many branches of business are extremely fluctuating; at some times requiring sums of money which a tradesman may not be in immediate possession of, and at other times not requiring the whole of his capital. Now, if he has an account with a banker, and is looked upon by him as a person of credit and responsibility, he can frequently procure from such banker, in the country at least, such sums as he may want in a temporary way, or until his returns enable him to replace them, on paying interest for the same. And, on the other hand, for the sums which he may have unemployed, he can also, in the country, generally procure interest, by paying them into the hands of his banker.

In consequence o[ these conveniences and advantages, those persons who are in the habit of receiving and paying considerable sums of money, generally find it very useful to have a current cash account with a neighbouring banker.

[…] In short, a promissory note is to be considered as a bill of exchange which the drawer draws upon himself, and accepts at the time of drawing.””

The Principles of Keeping Accounts With Bankers by William Lowrie, published in 1809.

“A BILL of Exchange is a written order or request, and a Promissory Note a written promise, for the payment of money absolutely and at all events; the one owing its existence and privileges to the law and custom of merchants, the other to the 3rd and 4th Anne, c. 9. (1)

(1) Before the statute of Queen Anne many attempts were made to put promissory notes on the footing of bills of exchange, but without success: vide Pearson v. Garrett, 4 Mod. 242 ; Cleric v. Martin, Lord Raym. 757:

The person who makes a bill is called the Drawer, the person to whom it is addressed the Drawee, and the person in whose favour it is made the Payee. Salk. 129; Burton v. Souter, Lord Raym. 774, and William* v. Cutting, Lord Raym. 825 ; Salk. 24 ; 7 Mod. 154 ; 11 Mod. 24 ; and sec 4 Term Kep. 151, 152.

[The Statute of Anne:]
“By the 3rd and 4th Anne, c. 9, § 1. ‘Whereas it hath been held, that notes in writing, signed by the party who makes the same, whereby such party promises to pay unto any other person, or his order, any sum of money therein mentioned, are not assignable or indorsable over, within the custom of merchants, to any other person; and that such person to whom the sum of money mentioned in such note is payable, cannot maintain an action by the custom of merchants against the person who first made and signed the same; and that any person to whom such note should be assigned, indorsed, or made payable, could not within the said custom of merchants maintain any action upon such note against the person who first drew and signed the same:’ Therefore, to the intent to encourage trade and commerce, which will be much advanced, if such notes shall have the same effect as inland bills of exchange, and shall be negotiated in like manner: Be it enacted, that all notes in writing, that after the 1st day of May, in the year of our Lord, 1705, shall be made and signed by any person or persons, body politic or corporate, or by the servant or agent of any corporation, banker, goldsmith, merchant or trader, who is usually intrusted by him, her or them, to sign such promissory notes for him, her or them, whereby such person or persons, body politic and corporate, his, her or their servant or agent as aforesaid, doth or shall promise to pay to any other person or persons, body politic and corporate, his, her or their order, or unto bearer, any sum of money mentioned in such note, shall be taken and construed to be, by virtue thereof, due and payable to any such person or persons, body politic and corporate, to whom the same is made payable, and also every such note payable to any person or persons, body politic and corporate, his, her or their order, shall be assignable or indorsable over, in the same manner as inland bills of exchange are or may be, according to the custom of merchants; and that the person and persons, body politic and corporate, to whom such sum of money is or shall be by such note made payable, shall and may maintain an action for the same, in such manner as he, she or they might do, upon any inland bill of exchange, made or drawn according to the custom of merchants, against the person or persons, body politic and corporate, who, or whose servant or agent as aforesaid, signed the same; and that any person or persons, body politic or corporate, to whom such note that is payable to any person or persons, body politic and corporate, his, her or their order, is indorsed or assigned, or the money therein mentioned ordered to be paid by indorsement thereon, shall and may maintain his, her or their action for such sum of money, either against the person or persons, body politic and corporate, who, or whose servant or agent as aforesaid, signed such note, or against any of the persons who indorsed the same, in like manner as in cases of inland bills of exchange.”

If the Drawee accept the bill, he is called the Acceptor.

The person who makes a note is called the Maker, and the person to whom it is payable, the Payee.

When a bill or note is indorsed, the person indorsing it is called the Indorser; the person to whom it is indorsed, the Indorsee.

A note, while in the hands of the payee, has this resemblance to a bill, that it is for the payment of money absolutely and at all events, and when transferred it is exactly similar to a bill of exchange.”

Summary of the law of bills of exchange, cash bills, and promissory notes by Sir John Bayley, published 12 June 1849.

“BILL OF EXCHANGE, contracts. A bill of exchange is defined to be an open letter of request from, and order by, one person on another, to pay a sum of money therein mentioned to a third person, on demand, or at a future time therein specified. 2 Bl. Com. 466; Bayl. on Bills, 1; Chit. Bills, 1; 1 H. Bl. 586; 1 B. & P. 291, 654; Selw. N. P. 285. Leigh’s N. P. 335; Byles on Bills, 1; 1 Bouv. Inst. n. 895.

2. The subject will be considered with reference, 1 . to the parties to a bill; 2. the form; 3. their different kinds 4. the indorsement and transfer; 5. the acceptance 6. the protest.

3. – §1. The parties to a bill of exchange are the drawer, (q. v.) or he who makes the order; the drawee, (q. v.) or the person to whom it is addressed; the acceptor, (q. v.) or he who accepts the bill; the payee, (q. v.) or the party to whom, or in whose favor the bill is made. The indorser, (q. v.) is he who writes his name on the back of a bill; the indorsee, (q. v.) is one to whom a bill is transferred by indorsement; and the holder, (q. v.) is in general any one of the parties who is in possession of the bill, and entitled to receive the money therein mentioned.

4. Some of the parties are sometimes fictitious persons. When a bill is made payable to a fictitious person, and indorsed in the name of the fictitious payee, it is in effect a bill to bearer, and a bona fide holder, ignorant of that fact, may recover on it, against all prior parties, who were privy to the transaction. 2 H. Bl. 178, 288; 3 T. R. 174, 182, 481; 1 Camp. 130; 19 Ves. 311. In a case where the drawer and payee were fictitious persons, the acceptor was held liable to a bona fide holder. 10 B. & C. 468; S. C. 11 E. C. L. R. 116. Vide, as to parties to a bill, Chit. Bills, 15 to 76, (ed. of 1836.)

5. – §2. The form of the bill. 1. The general requisites of a bill of exchange, are, 1st. that it be in writing. R. T. Hardw. 2; 2 Stra. 955; 1 Pardess. 344-5.

6.- 2d. That it be for the payment of money, and not for the payment of merchandise. 5 T. R. 485; 3 Wils. 213; 2 Bla. Rep. 782; 1 Burr. 325; 1 Dowl. & Ry. N. P. C. 33; 1 Bibb’s R. 502; 3 Marsh. (Kty.) R. 184; 6 Cowen, 108; 1 Caines, R. 381; 4 Mass. 245; 10 S. & R. 64; 14 Pet. R. 293; 1, M’Cord, 115; 2 Nott & M’Cord, 519; 9 Watts, R. 102. But see 9 John. R. 120; and 19 John. R. 144, where it was held that a note payable in bank bills was a good negotiable note.

7. – 3d. That the money be payable at all events, not depending on any contingency, either with regard to the fund out of which payment is to be made, or the parties by or to whom payment is to be made. 8 Mod. 363; 4 Vin. Ab. 240, pl. 16; 1 Burr. 323; 4 Dougl. 9; 4 Ves. 372; Russ. & Ry. C. C. 193; 4 Wend. R. 576; 2 Barn. & Ald. 417.

8. – 2. The particular requisites of a bill of exchange. It is proper here to remark that no particular form or set of words is necessary to be adopted. An order “ to deliver money,” or a promise that “ A B shall receive money,” or a promise “ to be accountable” or “ responsible” for it, have been severally held to be sufficient for a bill or note. 2 Ld. Raym. 1396; 8 Mod, 364.

9. The several parts of a bill of exchange are, 1st. that it be properly dated as to place.

10.- 2nd. That it be properly dated as to the time of making. As the time a bill becomes due is generally regulated by the time when it was made, the date of the instrument ought to be clearly expressed. Beawes, pl. 3 1 B . & C. 398; 2 Pardess. n. 333.

11. – 3d. The superscription of the sum for which the bill is payable is not indispensable, but if it be not mentioned in the bill, the superscription will aid the omission. 2 East, P. C. 951.

12. – 4th. The time of payment ought to be expressed in the bill; if no time be mentioned, it is considered as payable on demand. 7 T. R. 427; 2 Barn. & C. 157.

13. – 5th. Although it is proper for the drawer to name the place of payment, either in the body or subscription of the bill, it is not essential; and it is the common practice for the drawer merely to write the address of the drawee, without pointing out any, place of payment; in such case the bill is considered payable, and to be presented at the residence of the drawee, where the bill was made, or to him personally any where. 2 Pardess. n. 337 10 B. & C. 4; Moody & M. 381; 4 Car. & Paine, 35. It is at the option of the drawer whether or not to prescribe a particular place of payment, and make the payment there part of the contract. Beawes, pl. 8. The drawee, unless restricted by the drawer, may also fix a place of payment by his acceptance. Chit. Bills, 172.

14. – 6th. There must be an order or request to pay and that must be a matter of right, and not of favor. Mood. & M. 171. But it seems that civility in the terms of request cannot alter the legal effect of the instrument. “il vous plair a de payer,” is, in France, the proper language of a bill. Pailliet, Manuel de Droit Francais, 841. The word pay is not indispensable, nor the word deliver, which is equally operative. Ld. Raym. 1397.

15. – 7th. Foreign bills of exchange consist, generally, of several parts; a party who has engaged to deliver a foreign bill, is bound to deliver as many parts as may be requested. 2 Pardess. n. 342. The several parts of a bill of exchange are called a set; each part should contain a condition that it shall be paid, provided the others remain unpaid. Id. The whole set make but one bill.

16. – 8th. The bill ought to specify to whom it is to be paid. 2 Pardess. n. 338; 1 H. Bl. 608; Russ. & Ry. C. C. 195. When the name of the payee is in blank, and the bill has been negotiated by indorsement, the holder may fill the blank with his own name. 2 M. & S. 90; 4 Camp. 97. It may, however, be drawn payable to bearer, and then it is assignable by delivery. 3 Burr. 1526.

17. – 9th. To make a bill negotiable, it must be made payable to order, or bearer, or there must be other operative and equivlent words of transfer. Beawes, pl. 3; Selw. N. P. 303, n. 16; Salk. 133. If, however, it is not intended to make the bill negotiable, these words need not be inserted, and the instrument will, nevertheless, be valid as a bill of exchange. 6 T. R. 123; 6 Taunt. 328; Russ. & Ry. C. C. 300; 3 Caines’ R. 137; 9 John. It. 217. In France, a bill must be made payable to order. Code de Com. art. 110; 2 Pardess. n. 339.

18. – 10th. The sum for which the bill is drawn, must be clearly expressed in the body of it, in writing at length. The sum must be fixed and certain, and not contingent. 2 Stark. R. 375. And it may be in the money of any country. Payment of part of the bill, the residue being unpaid, cannot be indorsed. The, contract is indivisible, and the acceptor would thereby be compelled to make two payments instead of one. But when part of a bill has been paid the residue may be assigned, since then it becomes a contract for the residue only. 12 Mod. 213; 1 Salk. 65; Ld. Ray. 360.

19. – 11th. It is usual to insert the words, value received, but it is implied that every bill and indorsement has been made for value received, as much as if it had been expressed in totidem verbis. 3 M. & S. 352; Bayl. 40, n. 83.

20. – 12th. It is usual, when the drawer of the bill is debtor to the drawee, to insert in the bill these words: “and put it to my account” but when the drawee, or the person to whom it is directed, is debtor to the drawer, then he inserts these words : “and put it to your account;” and, sometimes, where a third person is debtor to the drawee, it may be expressed thus: “and put it to the account of A B;” Marius, 27;. C, om. Dig. Merchant, F 5; R. T. Hardw. 1, 2, 3; but it is altogether unnecessary to insert any of these words. 1 B. & C. 398; S. C. 8 E. C. L. R. 108.

21. – 13th. When the drawer is desirous to inform the drawee that he has drawn a bill, he inserts in it the words, “as per advice;” but when he wishes the bill paid without any advice from him, he writes, “without further advice.” In the former case the drawee is not authorized to pay the bill till he has received the advice; in the latter he may pay before he has received advice.

22. – 14th. The drawee must either subscribe the bill, or, it seems, his name may be simply inserted in the body of the instrument. Beawes, pl. 3; Ld. Raym. 1376 1 Stra. 609.

23. – 15th. The bill being a letter of request from the maker to a third person, should be addressed to that person by the Christian name and surname, or by the full style of their firm. 2 Pardess. n. 335 Beawes, pl. 3; Chit. Bills, 186, 7.

24. – 16th. The place of payment should be stated in the bill.

25. – 17th. As a matter of precaution, the drawer of a foreign bill may, in order to prevent expenses, require the holder to apply to a third person, named in the bill for that purpose, when the drawee refuses to accept the bill. This requisition is usually in these words, placed in a corner, under the drawee’s address: “ Au besoin chez Messrs. – at -,” in other words, “In case of need apply to Messrs. at -.”

26. – 18th. The drawer may also add a request or direction, that in case the bill should not be honored by the drawee, it shall be returned without protest or without expense, by subscribing the words, “ retour sans protet,” or “ sans frais;” in this case the omission of the holder to protest, having been induced by the drawer, he, and perhaps the indorsers, cannot resist the payment on that account, and thus the expense is avoided. Chit. Bills, 188.

27. – 19th. The drawer may also limit the amount of damages, by making a memorandum on the bill, that they shall be a definite sum; as, for example: “In case of non-acceptance or non-payment, re-exchange and expenses not to, exceed dollars.” Id.

28. – §3. Bills of, exchange are either foreign or inland. Foreign, when drawn by a person out of, on another in, the United States, or vice versa; or by a person in a foreign country, on another person in another foreign country; or by a person in one state, on another in another of the United States. , 2 Pet. R. 589 .; 10 Pet. R. 572; 12 Pick. 483 15 Wend. 527; 3 Marsh. (Kty.) R. 488 1. Rep. Const.; Ct. 100 4 Leigh’s R. 37 4 Wash. C. C. Rep. 148; 1 Whart. Dig. tit. Bills of Exchange, pl. 78. But see 5 John. R. 384, where it is said by Van Ness, Justice, that a bill drawn in the United States, upon any place within the United States, is an inland bill.

29. An inland bill is one drawn by a person in a state, on another in the same state. The principal difference between foreign and inland bills is, that the former must be protested, and the latter need not. 6 Mod. 29; 2 B. & A. 656; Chit Bills, (ed. of 1836,) p. 14. The English rule requiring protest and notice of non-acceptance of foreign bills, has been adopted and followed as the true rule of mercantile law, in the states of Massachusetts, Connecticut) New York, Maryland, and South Carolina. 3 Mass. Rep. 557; 1 Day’s R. 11; 3 John. Rep. 202; 4 John. R. 144; 1 Bay’s Rep. 468; 1 Harr. & John. 187. But the supreme court of the United States, in Brown v. Berry, 3 Dall. R. 365, and in Clark v. Russel, cited in 6 Serg. & Rawle, 358, held, that in an action on a foreign bill of exchange, after a protest for non-payment, protest for non-acceptance, or notice of non-acceptance need not be shown, inasmuch as they were not required by the custom of merchants in this country; and those decisions have been followed in Pennsylvania. 6 Serg. & Rawle, 356. It becomes a little difficult, therefore, to know what is the true rule of the law-merchant in the United States, on this point, after such contrary decisions.” 3 Kent’s Com. 95. As to what will be considered a foreign or an inland bill, when part of the bill is made in one place and part in another, see 1 M. & S. 87; Gow. R. 56; S. c. 5 E. C. L. R. 460; 8 Taunt., 679; 4 E. C. L. R. 245; 5 Taunt. 529; 1 E. C. L. R. 179.

30. – §4. The indorsement. Vide articles Indorsement; Indorser; Indorsee.

31. – §5. The acceptance. Vide article, Acceptance.

32. – §6. The protest. Vide article, Protest. Vide, generally, Chitty on Bills; Bayley on Bills; Byles on Bills; Marius on Bills; Kyd on Bills; Cunningham on Bills; Pothier, h. t.; Pardess. Index, Lettre de Change; 4 Vin. Ab. 238; Bac. Ab. Merchant and Merchandise, M.; Com. Digest, Merchant; Dane’s Ab. Index, h. t.; 1 Sup: to Ves. Jr. 86, 514; Smith on Mer. Law, Book 3, c. 1; Bouv. Inst. Index,.h. t.”

The definition of a Bill of Exchange from Bouviers Law Dictionary, Revised Sixth Edition 1856.

The esteemed barrister, Francis Bennion, who drafted the Consumer Credit Act 1974, noted on his own website in 2009 that he is yet to meet a member of the judiciary, let alone a member of the legal professions, who claimed to fully comprehend the Bills of Exchange Act 1882, although the note itself would now seem to have been removed from his site, for reasons best known to the webmaster.

In simple terms, in the absence of money of substance (currency backed by gold or silver), the promise to pay IS the credit which pays a bill, when tendered in acceptance of that bill, usually for value received. This credit can take the form of any lawful instrument of payment, including (without limitation) the ludicrously underrated remedy of a privately issued promissory note, which, while not exactly a bill of exchange, operates exactly like one.

As some of the research community are already well aware, in three corners of the commonwealth, court funds offices are accepting promissory notes which have been properly crafted by freemen-in-commerce, in order to settle and close various disputed accounts. Last year, I talked with a Canadian freeman who tendered a promissory note he made and indorsed himself to the clerk of a Court which had granted a possession order that was due to be enforced in 48 hours. Instead of being evicted from their property, the freeman and his wife received a credit in their consolidated loan account and the matter was settled and closed.

I also have secondhand knowledge of an Australian freeman who successfully tendered a note to discharge three mortgage accounts. The bank manager initially refused to accept it on the advice of his lawyer, but after they were confronted with the prospective operation of law commonly known as discharge, in accordance with the Australian Bills of Exchange Act, one of the mortgage accounts was zeroed within three days of the presentment. A few weeks later, the freeman received a credit for a few hundred thousand dollars in order to clear the other two balances.

Since the Canadian and Australian Bills of Exchange Acts are almost identical to the English version of 1882, the goal of my own research into this legal minefield was to establish an administrative framework by which the discharge of liabilities could be legally enforced by nothing more than the correct application of the law. To date, my success rate is 100%, but not without the sometimes monumental effort of lengthy administrative processes. It was therefore inevitable that I should seek a more efficient and less energy-sapping remedy, which others might find easier to adapt for their own purposes.

The purpose of this thread is to share the fruits of my research on the law of bills of exchange and promissory notes, a subject which I humbly suggest is deeply misunderstood by the majority of those who claim to know what they are talking about, notwithstanding the possibility of my own lack of emphatic comprehension.

“PROMISSORY NOTE, contracts. A written promise to pay a certain sum of money, at a future time, unconditionally. 7 Watts & S. 264; 2 Humph. R. 143; 10 Wend. 675; Minor, R. 263; 7 Misso. 42; 2 Cowen, 536; 6 N. H. Rep. 364; 7 Vern. 22. A promissory note differs from a mere acknowledgment of debt, without any promise to pay, as when the debtor gives his creditor an I 0 U. (q. v.) See 2 Yerg. 50; 15 M. & W. 23. But see 2 Humph. 143; 6 Alab. R. 373. In its form it usually contains a promise to pay, at a time therein expressed, a sum of money to a certain person therein named, or to his order, for value received. It is dated and signed by the maker. It is never under seal.

Researcher’s Note: It is not a rule that a promissory note cannot be under seal. If a note is issued under seal, it is also known as a ‘specialty’, and it will also be considered guaranteed by the owner of the seal.

2. He who makes the promise is called the maker, and he to whom it is made is the payee. Bayley on Bills, 1; 3 Kent, Com, 46.

3. Although a promissory note, in its original shape, bears no resemblance to a bill of exchange; yet, when indorsed, it is exactly similar to one; for then it is an order by the indorser of the note upon the maker to pay to the indorsee. 4 Burr. 669; 4 T. R. 148; Burr. 1224.

4. Most of the rules applicable to bills of exchange, equally affect promissory notes. No particular form is requisite to these instruments; a promise to deliver the money, or to be accountable for it, or that the payee shall have it, is sufficient. Chit. on Bills, 53, 54.

5. There are two principal qualities essential to the validity of a note; first, that it be payable at all events, not dependent on any contingency; 20 Pick. 132; 22 Pick. 132 nor payable out of any particular fund. 3 J. J. Marsh. 542; 5 Pike, R. 441; 2 Blackf. 48; 1 Bibb, 503; 1 S. M. 393; 3 J. J. Marsh. 170; 3 Pick. R. 541; 4 Hawks, 102; 5 How. S. C. R. 382. And, secondly, it is required that it be for the payment of money only; 10 Serg. & Rawle, 94; 4 Watts, R. 400; 11 Verm. R. 268; and not in bank notes, though it has been held differently in the state of New York. 9 Johns. R. 120; 19 Johns. R. 144.

6. A promissory note payable to order or bearer passes by indorsement, and although a chose in action, the holder may bring suit on it in his own name. Although a simple contract, a sufficient consideration is implied from the nature of the instrument. Vide 5 Com. Dig. 133, n., 151, 472 Smith on Merc. Law, B. 3, c. 1; 4 B. & Cr. 235 7 D. P. C. 598; 8 D. P. C. 441 1 Car. & Marsh. 16. Vide Bank note; Note; Reissuable note.”

The definition of a Promissory Note from Bouviers Law Dictionary, Sixth Edition 1856.

When I began this journey into legalese, commercial crack and statutory provisions, I was searching for a perpetually elusive pre-paid cestui que or foreign situs trust account, which many researchers still believe was created when their parents registered their birth, against which some US-based commercial redeemers have attempted to write bills of exchange, promissory notes, bonds and drafts.

In late 2009, the IRS released a public notice stating that some of those individuals have been prosecuted for fraud on the basis that the accounts the instruments were drawn on did not belong to the drawers. In other words, various numbers, from the social security number to every one of the numbers on the birth certificate, do not in any way correspond to the payment account for the beneficial interest of the birth bond.

Or at least, that’s what the IRS are claiming to be the case, although I see little reason why they would go to so much trouble to tell people that their presentments could provoke fraud charges if the IRS were merely attempting to divert attention away from the remedy. Therefore, I have regrettably concluded that the rumours I have been hearing for the past 18 months about successful IRS prosecutions against American Sovereigns must have held veracity. This news drove my determination to locate evidence of the pre-paid trust account or prove to myself that it didn’t exist. What I found was the Life Annuity, which I discuss in another chapter. Where that discovery led me was right back to the place where I began my research into negotiable instruments…

BILLS OF EXCHANGE ACT 1882

2 Interpretation of terms

In this Act, unless the context otherwise requires,—

“Acceptance” means an acceptance completed by delivery or notification.

“Action” includes counter claim and set off.

Researcher’s Note: It is of extreme importance to recognise that the acceptance of an instrument in payment of a debt is dependant on the drawer/maker being able to prove delivery of the presentment or that the acceptor served notice of said acceptance. In the event that a cause of action arises by dishonour, the drawer/maker has a the right to set off the value of the dishonoured instrument against the liability he was attempting to settle.

42 Non-acceptance
When a bill is duly presented for acceptance and is not accepted within the customary time, the person presenting it must treat it as dishonoured by non-acceptance. If he do not, the holder shall lose his right of recourse against the drawer and indorsers.

43 Dishonour by non-acceptance and its consequences
(1)A bill is dishonoured by non-acceptance—
(a)when it is duly presented for acceptance, and such an acceptance as is prescribed by this Act is refused or cannot be obtained; or
(b)when presentment for acceptance is excused and the bill is not accepted.
(2)Subject to the provisions of this Act when a bill is dishonoured by non-acceptance, an immediate right of recourse against the drawer and indorsers accrues to the holder, and no presentment for payment is necessary.

Researcher’s Note: My interpretation and synthesis of the section above, specifically in relation to the tender of promissory notes in payment of a bill which has been accepted for value received, is that when the payment is delivered to the acceptor, he has an immediate right of recourse against the maker and indorser of the note. However, when the acceptor dishonours the note by non-acceptance and returns it to the maker, the opposite is true; the maker and indorser have an immediate right of recourse against the acceptor and “no presentment for payment is necessary”; ie, the liability is discharged by the refusal to accept payment.

46 Excuses for delay or non-presentment for payment
(1)Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to operate presentment must be made with reasonable diligence.
(2)Presentment for payment is dispensed with,—
a)Where, after the exercise of reasonable diligence presentment, as required by this Act, cannot be effected. The fact that the holder has reason to believe that the bill will, on presentment, be dishonoured, does not dispense with the necessity for presentment.
b)Where the drawee is a fictitious person.
c)As regards the drawer where the drawee or acceptor is not bound as between himself and the drawer, to accept or pay the bill, and the drawer has no reason to believe that the bill would be paid if presented.
d)As regards an indorser, where the bill was accepted or made for the accommodation of that indorser, and he has no reason to expect that the bill would be paid if presented.
e)By waiver of presentment, express or implied.

47 Dishonour by non-payment
(1)A bill is dishonoured by non-payment (a) when it is duly presented for payment and payment is refused or cannot be obtained, or (b) when presentment is excused and the bill is overdue and unpaid.
(2)Subject to the provisions of this Act, when a bill is dishonoured by non-payment, an immediate right of recourse against the drawer and indorsers accrues to the holder.

Researcher’s Note: It is my considered interpretation that the above section prescribes that when a bill accepted for value received is due for payment and the acceptor fails to pay it, an immediate right of recourse accrues to the holder of the bill. Therefore, when a promissory note is presented to a bank in payment of an alleged debt and the bank dishonours the note by non-payment, the maker and indorser have an immediate right of recourse against the acceptor, to the value of the instrument plus interest and protest costs.

48 Notice of dishonour and effect of non-notice
Subject to the provisions of this Act, when a bill has been dishonoured by non-acceptance or by non-payment, notice of dishonour must be given to the drawer and each indorser, and any drawer or indorser to whom such notice is not given is discharged: Provided that—
(1)Where a bill is dishonoured by non-acceptance, and notice of dishonour is not given, the rights of a holder in due course, subsequent to the omission, shall not be prejudiced by the omission.
(2)Where a bill is dishonoured by non-acceptance, and due notice of dishonour is given, it shall not be necessary to give notice of a subsequent dishonour by non-payment unless the bill shall in the meantime have been accepted.

49 Rules as to notice of dishonour
Notice of dishonour in order to be valid and effectual must be given in accordance with the following rules:—
(1)The notice must be given by or on behalf of the holder, or by or on behalf of an indorser who, at the time of giving it, is himself liable on the bill.
(2)Notice of dishonour may be given by an agent either in his own name, or in the name of any party entitled to give notice whether that party be his principal or not.
(3)Where the notice is given by or on behalf of the holder, it enures for the benefit of all subsequent holders and all prior indorsers who have a right of recourse against the party to whom it is given.
(4)Where notice is given by or on behalf of an indorser entitled to give notice as herein-before provided, it enures for the benefit of the holder and all indorsers subsequent to the party to whom notice is given.
(5)The notice may be given in writing or by personal communication, and may be given in any terms which sufficiently identify the bill, and intimate that the bill has been dishonoured by non-acceptance or non-payment.
(6)The return of a dishonoured bill to the drawer or an indorser is, in point of form, deemed a sufficient notice of dishonour.
(7)A written notice need not be signed, and an insufficient written notice may be supplemented and validated by verbal communication. A misdescription of the bill shall not vitiate the notice unless the party to whom the notice is given is in fact misled thereby.
(8)Where notice of dishonour is required to be given to any person, it may be given either to the party himself, or to his agent in that behalf.
(9)Where the drawer or indorser is dead, and the party giving notice knows it, the notice must be given to a personal representative if such there be, and with the exercise of reasonable diligence he can be found.
(10)Where the drawer or indorser is bankrupt, notice may be given either to the party himself or to the trustee.
(11)Where there are two or more drawers or indorsers who are not partners, notice must be given to each of them, unless one of them has authority to receive such notice for the others.
(12)The notice may be given as soon as the bill is dishonoured and must be given within a reasonable time thereafter.

In the absence of special circumstances notice is not deemed to have been given within a reasonable time, unless—
(a)where the person giving and the person to receive notice reside in the same place, the notice is given or sent off in time to reach the latter on the day after the dishonour of the bill.
(b)where the person giving and the person to receive notice reside in different places, the notice is sent off on the day after the dishonour of the bill, if there be a post at a convenient hour on that day, and if there be no such post on that day then by the next post thereafter.
(13)Where a bill when dishonoured is in the hands of an agent, he may either himself give notice to the parties liable on the bill, or he may give notice to his principal. If he give notice to his principal, he must do so within the same time as if he were the holder, and the principal upon receipt of such notice has himself the same time for giving notice as if the agent had been an independent holder.
(14)Where a party to a bill receives due notice of dishonour, he has after the receipt of such notice the same period of time for giving notice to antecedent parties that the holder has after the dishonour.
(15)Where a notice of dishonour is duly addressed and posted, the sender is deemed to have given due notice of dishonour, notwithstanding any miscarriage by the [F1postal operator concerned].

51 Noting or protest of bill
(1)Where an inland bill has been dishonoured it may, if the holder think fit, be noted for non-acceptance or non-payment, as the case may be; but it shall not be necessary to note or protest any such bill in order to preserve the recourse against the drawer or indorser.
(2)Where a foreign bill, appearing on the face of it to be such, has been dishonoured by non-acceptance it must be duly protested for non-acceptance, and where such a bill, which has not been previously dishonoured by non-acceptance, is dishonoured by non-payment it must be duly protested for non-payment. If it be not so protested the drawer and indorsers are discharged. Where a bill does not appear on the face of it to be a foreign bill, protest thereof in case of dishonour is unnecessary.
(3)A bill which has been protested for non-acceptance may be subsequently protested for non-payment.
(4)Subject to the provisions of this Act, when a bill is noted or protested, [F1it may be noted on the day of its dishonour and must be noted not later than the next succeeding business day]. When a bill has been duly noted, the protest may be subsequently extended as of the date of the noting.
(5)Where the acceptor of a bill becomes bankrupt or insolvent or suspends payment before it matures, the holder may cause the bill to be protested for better security against the drawer and indorsers.
(6)A bill must be protested at the place where it is dishonoured: Provided that—
(a)When a bill is presented through [F2a postal operator], and returned by post dishonoured, it may be protested at the place to which it is returned and on the day of its return if received during business hours, and if not received during business hours, then not later than the next business day:
(b)When a bill drawn payable at the place of business or residence of some person other than the drawee has been dishonoured by non-acceptance, it must be protested for non-payment at the place where it is expressed to be payable, and no further presentment for payment to, or demand on, the drawee is necessary.
(7)A protest must contain a copy of the bill, and must be signed by the notary making it, and must specify—
(a)The person at whose request the bill is protested:
(b)The place and date of protest, the cause or reason for protesting the bill, the demand made, and the answer given, if any, or the fact that the drawee or acceptor could not be found.
(8)Where a bill is lost or destroyed, or is wrongly detained from the person entitled to hold it, protest may be made on a copy or written particulars thereof.
(9)Protest is dispensed with by any circumstance which would dispense with notice of dishonour. Delay in noting or protesting is excused when the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to operate the bill must be noted or protested with reasonable diligence.

Liabilities of Parties
53 Funds in hands of drawee
(1)A bill, of itself, does not operate as an assignment of funds in the hands of the drawee available for the payment thereof, and the drawee of a bill who does not accept as required by this Act is not liable on the instrument. This sub-section shall not extend to Scotland.
(2)[F1Subject to section 75A of this Act,]in Scotland, where the drawee of a bill has in his hands funds available for the payment thereof, the bill operates as an assignment of the sum for which it is drawn in favour of the holder, from the time when the bill is presented to the drawee.

Discharge of Bill
59 Payment in due course
(1)A bill is discharged by payment in due course by or on behalf of the drawee or acceptor.

Researcher’s Note: Now the language used in this part of the bill, as in many other parts, is not exactly an explicit expression of the operation of law, but it does clearly imply that payment in due course discharges a bill when accepted by the drawee or acceptor. Therefore, taking into account similar provisions in the Act of 1882, we can reasonably presume that a bill is discharged by the acceptor’s dishonour by non-acceptance of the instrument tendered.

“Payment in due course” means payment made at or after the maturity of the bill to the holder thereof in good faith and without notice that his title to the bill is defective.

(2)Subject to the provisions herein-after contained, when a bill is paid by the drawer or an indorser it is not discharged; but
(a)Where a bill payable to, or to the order of, a third party is paid by the drawer, the drawer may enforce payment thereof against the acceptor, but may not re-issue the bill.
(b)Where a bill is paid by an indorser, or where a bill payable to drawer’s order is paid by the drawer, the party paying it is remitted to his former rights as regards the acceptor or antecedent parties, and he may, if he thinks fit, strike out his own subsequent indorsements, and again negotiate the bill.
(3)Where an accommodation bill is paid in due course by the party accommodated the bill is discharged.

Part IV Promissory Notes
83 Promissory note defined
(1)A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer.
(2)An instrument in the form of a note payable to maker’s order is not a note within the meaning of this section unless and until it is indorsed by the maker.
(3)A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof.
(4)A note which is, or on the face of it purports to be, both made and payable within the British Islands is an inland note. Any other note is a foreign note.

84 Delivery necessary
A promissory note is inchoate and incomplete until delivery thereof to the payee or bearer.

85 Joint and several notes
(1)A promissory note may be made by two or more makers, and they may be liable thereon jointly, or jointly and severally according to its tenour.
(2)Where a note runs “I promise to pay” and is signed by two or more persons it is deemed to be their joint and several note.

86 Note payable on demand
(1)Where a note payable on demand has been indorsed, it must be presented for payment within a reasonable time of the indorsement. If it be not so presented the indorser is discharged.
(2)In determining what is reasonable time, regard shall be had to the nature of the instrument, the usage of trade, and the facts of the particular case.
(3)Where a note payable on demand is negotiated, it is not deemed to be overdue, for the purpose of affecting the holder with defects of title of which he had no notice, by reason that it appears that a reasonable time for presenting it for payment has elapsed since its issue.

87 Presentment of note for payment
(1)Where a promissory note is in the body of it made payable at a particular place, it must be presented for payment at that place in order to render the maker liable. In any other case, presentment for payment is not necessary in order to render the maker liable.
(2)Presentment for payment is necessary in order to render the indorser of a note liable.
(3)Where a note is in the body of it made payable at a particular place, presentment at that place is necessary in order to render an indorser liable; but when a place of payment is indicated by way of memorandum only, presentment at that place is sufficient to render the indorser liable, but a presentment to the maker elsewhere, if sufficient in other respects, shall also suffice.

88 Liability of maker
The maker of a promissory note by making it—
(1)Engages that he will pay it according to its tenor;
(2)Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse.

89 Application of Part II to notes
(1)Subject to the provisions in this part, and except as by this section provided, the provisions of this Act relating to bills of exchange apply, with the necessary modifications, to promissory notes.
(2)In applying those provisions the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first indorser of a note shall be deemed to correspond with the drawer of an accepted bill payable to drawer’s order.
(3)The following provisions as to bills do not apply to notes; namely, provisions relating to—
(a)Presentment for acceptance;
(b)Acceptance;
©Acceptance supra protest;
(d)Bills in a set.
(4)Where a foreign note is dishonoured, protest thereof is unnecessary.

93 When noting equivalent to protest
For the purposes of this Act, where a bill or note is required to be protested within a specified time or before some further proceeding is taken, it is sufficient that the bill has been noted for protest before the expiration of the specified time or the taking of the proceeding; and the formal protest may be extended at any time thereafter as of the date of the noting.

94 Protest when notary not accessible
Where a dishonoured bill or note is authorised or required to be protested, and the services of a notary cannot be obtained at the place where the bill is dishonoured, any householder or substantial resident of the place may, in the presence of two witnesses, give a certificate, signed by them, attesting the dishonour of the bill, and the certificate shall in all respects operate as if it were a formal protest of the bill.

The form given in Schedule 1 to this Act may be used with necessary modifications, and if used shall be sufficient.

FIRST SCHEDULE

Form of protest which may be used when the services of a notary cannot be obtained.

Know all men that I, A.B. [householder], of in the county of in the United Kingdom, at the request of C.D., there being no notary public available, did on the day of 188 at demand payment [or acceptance] of the bill of exchange hereunder written, from E.F., to which demand he made answer [state answer, if any] wherefore I now, in the presence of G.H. and J.K. do protest the said bill of exchange.
(Signed) A.B.
G.H. Witnesses.
J.K.
N.B.—The bill itself should be annexed, or a copy of the bill and all that is written thereon should be underwritten.

From the Companies Act 2006
52 Bills of exchange and promissory notes
A bill of exchange or promissory note is deemed to have been made, accepted or endorsed on behalf of a company if made, accepted or endorsed in the name of, or by or on behalf or on account of, the company by a person acting under its authority.

Researcher’s Note: By the same reasoning, a promissory note is dishonoured by non-acceptance if it is refused on behalf of the company that takes delivery of the presentment, thereby discharging the debt. If notice of non-acceptance is not served on the maker within 3 days of receipt of the presentment, it is presumed that the note has been accepted until proven otherwise.

From the Industrial and Provident Societies Act (Northern Ireland) 1969 (Chap 24)
27. Promissory notes and bills of exchange.
A promissory note or bill of exchange shall be deemed to have been made, accepted or endorsed on behalf of any registered society if made, accepted or endorsed in the name of the society, or by or on behalf or account of the society, by any person acting under the authority of the society.

INTERNATIONAL LAW

Convention Providing a Uniform Law For Bills of Exchange and Promissory Notes (Geneva, 1930) The League of Nations

PAYMENT

Article 38
The holder of a bill of exchange payable on a fixed day or at a fixed period after date or after sight must present the bill for payment either on the day on which it is payable or on one of the two business days which follow.
The presentment of a bill of exchange at a clearing-house is equivalent to a presentment for payment.

Article 39
The drawee who pays a bill of exchange may require that it shall be given up to him receipted by the holder.

The holder may not refuse partial payment.

In case of partial payment the drawee may require that mention of this payment shall be made on the bill, and that a receipt therefore shall be given to him.

Article 40
The holder of a bill of exchange cannot be compelled to receive a payment thereof before maturity.

The drawee who pays before maturity does so at his own risk and peril. He who pays at maturity is validly discharged, unless he has been guilty of fraud or gross negligence. He is bound to verify the regularity of the series of endorsements, but not the signature of the endorsers.

Article 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.

The foregoing 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).

If the amount of the bill of exchange is specified in a currency having the same denomination, but a different value in the country of issue and the country of payment, reference is deemed to be made to the currency of the place of payment.

Article 42
When a bill of exchange is not presented for payment within the limit of time fixed by Article 38, every debtor is authorised to deposit the amount with the competent authority at the charge, risk and peril of the holder.

Recourse for Non-Acceptance

Article 43
The holder may exercise his right of recourse against the endorsers, the drawer and the other parties liable:

At maturity:

If payment has not been made;

Even before maturity;

1. If there has been total or partial refusal to accept;
2. In the event of the bankruptcy (faillite) of the drawee, whether he has accepted or not, or in the event of a stoppage of payment on his part, even when not declared by a judgement, or when execution has been levied against his goods without result;
3. In the event of the bankruptcy (faillite) of the drawer of a non-acceptable bill.

Article 44
Default of acceptance or on payment must be evidenced by an authentic act (protest for non-acceptance or non-payment).

Protest for non-acceptance must be made within the limit of time fixed for presentment for acceptance. If in the case contemplated by Article 24, paragraph 1, the first presentment takes place on the last day of that time, the protest may nevertheless be drawn up on the next day.

Protest for non-payment of a bill of exchange payable on a fixed day or at a fixed period after date or sight must be made on one of the two business days following the day on which the bill is payable. In the case of a bill payable at sight, the protest must be drawn up under the conditions specified in the foregoing paragraph for the drawing up of a protest for non-acceptance.

Protest for non-acceptance dispenses with presentment for payment and protest for non-payment.

If there is a stoppage of payment on the part of the drawee, whether he has accepted or not, or if execution has been levied against his goods without result, the holder cannot exercise his right of recourse until after presentment of the bill to the drawee for payment and after the protest has been drawn up.

If the drawee, whether he accepted or not, is declared bankrupt (faillite d?clar?e), or in the event of the declared bankruptcy of the drawer of a non-acceptable bill, the production of the judgement declaring the bankruptcy suffices to enable the holder to exercise his right of recourse.

Article 45
The holder must give notice of non-acceptance or non-payment to his endorser and to the drawer within the four business days which follow the day for protest or, in case of a stipulation ‘retour sans frais’, the day for presentment. Every endorser must, within the two business days following the day on which he receives notice, notify his endorser of the notice he has received, mentioning the names and addresses of those who have given the previous notices, and so on through the series until the drawer is reached. The periods mentioned above run from the receipt of the preceding notice.

When, in conformity with the preceding paragraph, notice is given to a person who has signed a bill of exchange, the same notice must be given within the same limit of time to his avaliseur.

Where an endorser either has not specified his address or has specified it in an illegible manner, it is sufficient that notice should be given to the preceding endorser.

A person who must give notice may give it in any form whatever, even by simply returning the bill of exchange.

He must prove that he has given notice within the time allowed. This time-limit shall be regarded as having been observed if a letter giving the notice has been posted within the prescribed time.

A person who does not give notice within the limit of time mentioned above does not forfeit his rights. He is responsible for the injury, if any, caused by his negligence, but the damages shall not exceed the amount of the bill of exchange.

Article 46
The drawer, an endorser, or a person guaranteeing payment by aval (avaliseur) may, by the stipulation ‘retour sans frais’, ‘sans protet’, or any other equivalent expression written on the instrument and signed, release the holder from having a protest of non-acceptance or non -payment drawn up in order to exercise his right of recourse.

This stipulation does not release the holder from presenting the bill within the prescribed time, or from the notices he has to give. The burden of proving the non-observance of the limits of time lies on the person who seeks to set it up against the holder.

If the stipulation is written by the drawer, it is operative in respect of all persons who have signed the bill; if it is written by an endorser or an avaliseur, it is operative only in respect of such endorser or avaliseur. If, in spite of the stipulation written by the drawer, the holder has the protest drawn up, he must bear the expenses thereof. When the stipulation emanates from an endorser or avaliseur, the costs of the protest, if one is drawn up, may be recovered from all the persons who have signed the bill.

Article 47
All drawers, acceptors, endorsers or guarantors by aval of a bill of exchange are jointly and severally liable to the holder. The holder has the right of proceeding against all these persons individually or collectively without being required to observe the order in which they have become bound.

The same right is possessed by any person signing the bill who has taken it up and paid it.

Proceedings against one of the parties liable do not prevent proceedings against the others, even though they may be subsequent to the party first proceeded against.

Article 48
The holder may recover from the person against whom he exercises his right of recourse:

1. The amount of the unaccepted or unpaid bill of exchange with interest, if interest has been stipulated for;
2. Interest at the rate of 6 per cent from the date of maturity;
3. The expenses of protest and of the notices given as well as other expenses.
If the right of recourse is exercised before maturity, the amount of the bill shall be subject to a discount. This discount shall be calculated according to the official rate of discount (bank-rate) ruling on the date when recourse is exercised at the place of domicile of the holder.

Article 49
A party who takes up and pays a bill of exchange can recover from the parties liable to him:

1. The entire sum which he has paid;
2. Interest on the said sum calculated at the rate of 6 per cent, starting from the day when he made payment
3. Any expenses which he has incurred.

Article 50
Every party liable against whom a right of recourse is or may be exercised, can require against payment, that the bill shall be given up to him with the protest and a receipted account.

Every endorser who has taken up and paid a bill of exchange may cancel his own endorsement and those of subsequent endorsers.

Article 52
Every person having the right of recourse may, in the absence of agreement to the contrary, reimburse himself by means of a fresh bill (redraft) to be drawn at sight on one of the parties liable to him and payable at the domicile of that party.

The redraft includes, in addition to the sums mentioned in Articles 48 and 49, brokerage and the cost of stamping the redraft.

If the redraft is drawn by the holder, the sum payable is fixed according to the rate for a sight bill drawn at the place where the original bill was payable upon the party liable at the place of his domicile. If the redraft is drawn by an endorser, the sum payable is fixed according to the rate for a sight bill drawn at the place where the drawer of the redraft is domiciled upon the place of domicile of the party liable.

Article 53
After the expiration of the limits of time fixed:
For the presentment of a bill of exchange drawn at sight or at a fixed period after sight;

For drawing up the protest for non-acceptance or non-payment;

For presentment for payment in the case of a stipulation retour sans frais, the holder loses his rights of recourse against the endorsers, against the drawer and against the other parties liable, with the exception of the acceptor.

In default of presentment for acceptance within the limit of time stipulated by the drawer, the holder loses his right of recourse for non-payment, as well as for non-acceptance, unless it appears from the terms of the stipulation that the drawer only meant to release himself from the guarantee of acceptance.

If the stipulation for a limit of time for presentment is contained in an endorsement, the endorser alone can avail himself of it.

Article 54
Should the presentment of the bill of exchange or the drawing up of the protest within the prescribed limits of time be prevented by an insurmountable obstacle (legal prohibition (prescription l?gale) by any State or other case of vis major), these limits of time shall be extended. The holder is bound to give notice without delay of the case of vis major to his endorser and to specify this notice, which he must date and sign, on the bill or on an allonge; in other respects the provisions of

Article 45 shall apply.
When vis major has terminated the holder must without delay present the bill of exchange for acceptance or payment and, if need be, draw up the protest. If vis major continues to operate beyond thirty days after maturity, recourse may be exercised, and neither presentment nor the drawing up of a protest shall be necessary.

In the case of bills of exchange drawn at sight or at a fixed period after sight, the time-limit of thirty days shall run from the date on which the holder, even before the expiration of the time for presentment, has given notice of vis major to his endorser. In the case of bill of exchange drawn at a certain time after sight, the above time-limit of thirty days shall be added to the period after sight specified in the bill of exchange.

Facts which are purely personal to the holder or to the person whom he has entrusted with the presentment of the bill or drawing up of the bill or drawing up of the protest are not deemed to constitute cases of vis major.

Article 75
A promissory note contains:

1. The term ‘promissory note’ inserted in the body of the instrument and expressed in the language employed in drawing up the instrument;
2. An unconditional promise to pay a determinate sum of money;
3. A statement of the time of payment
4. A statement of 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. A statement of the date and of the place where the promissory note is issued;
7. The signature of the person who issues the instrument (maker).

Article 76
An instrument in which any of the requirements mentioned in the preceding Article are wanting is invalid as a promissory note except in the cases specified in the following paragraphs.

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.

Article 77
The following provisions relating to bills of exchange apply to promissory notes so far as they are not inconsistent with the nature of these instruments, viz:

Endorsement (Article 11 to 20);
Time of payment (Articles 33 to 37);
Payment (Articles 38 to 42);
Recourse in case of non-payment (Articles 43 to 50, S2 to 54);
Payment by intervention (Articles 55, 59 to 63);
Copies (Articles 67 and 68);
Alterations (Article 69);
Limitation of actions (Articles 70 and 71);
Holidays, computation of limits of time and prohibition of days of grace (Articles 72, 73 and 74).

The following provisions are also applicable to a promissory note: The provisions concerning a bill of exchange payable at the address of a third party or in a locality other than that of the domicile of the drawee (Articles 4 and 27): stipulation for interest (Article 5); discrepancies as regards the sum payable (Article 6); the consequences of signature under the conditions mentioned in Article 7, the consequences of signature by a person who acts without authority or who exceeds his authority (Article 8); and provisions concerning a bill of exchange in blank (Article 10).

The following provisions are also applicable to a promissory note: Provisions relating to guarantee by aval (Articles 30-32); in the case provided for in Article 31, last paragraph, if the aval does not specify on whose behalf it has been given, it is deemed to have been given on behalf of the maker of the promissory note.

Article 78
The maker of a promissory note is bound in the same manner as an acceptor of a bill of exchange.

Promissory notes payable at a certain time after sight must be presented for the visa of the maker within the limits of time fixed by Article 23. The limit of time runs from the date of which marks the commencement of the period of time after sight.

ANNEX II – Articles 1-23 [OMITTED].

UNCITRAL Convention on International Bills of Exchange and International Promissory Notes, 1988

Article 1
2. This Convention applies to an international promissory note when it contains the heading “International promissory note (UNCITRAL Convention)” and also contains in its text the words “International promissory note (UNCITRAL Convention)”.
3. This Convention does not apply to cheques.

Article 2
2. An international promissory note is a promissory note which specifies at least two of the following places and indicates that any two so specified are situated in different States:

(a) The place where the note is made;
(b) The place indicated next to the signature of the maker;
© The place indicated next to the name of the payee;
(d) The place of payment, provided that the place of payment is specified on the note and that such place is situated in a Contracting State.
3. This Convention does not deal with the question of sanctions that may be imposed under national law in cases where an incorrect or false statement has been made on an instrument in respect of a place referred to in paragraph`1 or 2 of this article. However, any such sanctions shall not affect the validity of the instrument or the application of this Convention.

Article 3
2. A promissory note is a written instrument which:
(a) Contains an unconditional promise whereby the maker undertakes to pay a definite sum of money to the payee or to his order;
(b) Is payable on demand or at a definite time;
© Is dated;
(d) Is signed by the maker.

Article 13
An instrument is transferred:
a) By endorsement and delivery of the instrument by the endorser to the endorsee; or
(b) By mere delivery of the instrument if the last endorsement is in blank

Article 24
An instrument may be transferred in accordance with article`13 after maturity, except by the drawee, the acceptor or the maker.

Article 35
1. If an instrument is materially altered:

(a) A party who signs it after the material alteration is liable according to the terms of the altered text;
(b) A party who signs it before the material alteration is liable according to the terms of the original text. However, if a party makes, authorizes or assents to a material alteration, he is liable according to the terms of the altered text.

2. A signature is presumed to have been placed on the instrument after the material alteration unless the contrary is proved.

3. Any alteration is material which modifies the written undertaking on the instrument of any party in any respect.

Article 39
1. The maker engages that he will pay the note in accordance with its terms to the holder, or to any party who takes up and pays the note.

2. The maker may not exclude or limit his own liability by a stipulation in the note. Any such stipulation is ineffective.

Article
44
1. The endorser engages that upon dishonour of the instrument by non-acceptance or by non-payment, and upon any necessary protest, he will pay the instrument to the holder, or to any subsequent endorser or any endorser’s guarantor who takes up and pays the instrument.

2. An endorser may exclude or limit his own liability by an express stipulation in the instrument. Such a stipulation is effective only with respect to that endorser.

Article 48
1. Payment of an instrument by the guarantor in accordance with article`72 discharges the party for whom he became guarantor of his liability on the instrument to the extent of the amount paid.

2. The guarantor who pays the instrument may recover from the party for whom he has become guarantor and from the parties who are liable on it to that party the amount paid and any interest.

Article 55
An instrument is duly presented for payment if it is presented in accordance with the following rules:

a) The holder must present the instrument to the drawee or to the acceptor or to the maker on a business day at a reasonable hour;
b) A note signed by two or more makers may be presented to any one of them, unless the note clearly indicates otherwise;
c) If the drawee or the acceptor or the maker is dead, presentment must be made to the persons who under the applicable law are his heirs or the persons entitled to administer his estate;
d) Presentment for payment may be made to a person or authority other than the drawee, the acceptor or the maker if that person or authority is entitled under the applicable law to pay the instrument;
e) An instrument which is not payable on demand must be presented for payment on the date of maturity or on one of the two business days which follow;
f) An instrument which is payable on demand must be presented for payment within one year of its date;
g) An instrument must be presented for payment:
(i) At the place of payment specified on the instrument;
(ii) If no place of payment is specified, at the address of the drawee or the acceptor or the maker indicated in the instrument; or
(iii) If no place of payment is specified and the address of the drawee or the acceptor or the maker is not indicated, at the principal place of business or habitual residence of the drawee or the acceptor or the maker;
h) An instrument which is presented at a clearing-house is duly presented for payment if the law of the place where the clearing-house is located or the rules or customs of that clearing-house so provide.

Article 58
1. An instrument is considered to be dishonoured by non-payment:

(a) If payment is refused upon due presentment or if the holder cannot obtain the payment to which he is entitled under this Convention;
(b) If presentment for payment is dispensed with pursuant to paragraph`2 of article`56 and the instrument is unpaid at maturity.

Article 59
If an instrument is dishonoured by non-acceptance or by non-payment, the holder may exercise a right of recourse only after the instrument has been duly protested for dishonour in accordance with the provisions of articles`60 to`62.

Article 60
1. A protest is a statement of dishonour drawn up at the place where the instrument has been dishonoured and signed and dated by a person authorized in that respect by the law of that place. The statement must specify:

a) The person at whose request the instrument is protested;
b) The place of protest;
c) The demand made and the answer given, if any, or the fact that the drawee or the acceptor or the maker could not be found.

2. A protest may be made:

(a) On the instrument or on a slip affixed thereto (“allonge”); or
(b) As a separate document, in which case it must clearly identify the instrument that has been dishonoured.

3. Unless the instrument stipulates that protest must be made, a protest may be replaced by a declaration written on the instrument and signed and dated by the drawee or the acceptor or the maker, or, in the case of an instrument domiciled with a named person for payment, by that named person; the declaration must be to the effect that acceptance or payment is refused.

4. A declaration made in accordance with paragraph`3 of this article is a protest
for the purpose of this Convention.

Article 61
Protest for dishonour of an instrument by non-acceptance or by non-payment must be made on the day on which the instrument is dishonoured or on one of the four business days which follow.

Article 65
1. Notice of dishonour may be given in any form whatever and in any terms which identify the instrument and state that it has been dishonoured. The return of the dishonoured instrument is sufficient notice, provided it is accompanied by a statement indicating that it has been dishonoured.

2. Notice of dishonour is duly given if it is communicated or sent to the party to be notified by means appropriate in the circumstances, whether or not it is received by that party.

3. The burden of proving that notice has been duly given rests upon the person who is required to give such notice.

Article 66
Notice of dishonour must be given within the two business days which follow:

(a) The day of protest or, if protest is dispensed with, the day of dishonour; or
(b) The day of receipt of notice of dishonour.

Article 71
A party who pays an instrument and is thereby discharged in whole or in part of his liability on the instrument may recover from the parties liable to him:

a) The entire sum which he has paid;
b) Interest on that sum at the rate specified in paragraph`2 of article`70, from the date on which he made payment;
c) Any expenses of the notices given by him.

DISCHARGE

Article 72
1. A party is discharged of liability on the instrument when he pays the holder, or a party subsequent to himself who has paid the instrument and is in possession of it, the amount due pursuant to article`70 or article`71:

(a) At or after maturity; or
(b) Before maturity, upon dishonour by non-acceptance.

2. Payment before maturity other than under paragraph`1`(b) of this article does not discharge the party making the payment of his liability on the instrument except in respect of the person to whom payment was made.

3. A party is not discharged of liability if he pays a holder who is not a protected holder, or a party who has taken up and paid the instrument, and knows at the time of payment that the holder or that party acquired the instrument by theft or forged the signature of the payee or an endorsee, or participated in the theft or the forgery.

4. a) A person receiving payment of an instrument must, unless agreed otherwise, deliver:

(i) To the drawee making such payment, the instrument;
(ii) To any other person making such payment, the instrument, a receipted account, and any protest.

b) In the case of an instrument payable by instalments at successive dates, the drawee or a party making a payment, other than payment of the last instalment, may require that mention of such payment be made on the instrument or on a slip affixed thereto (“allonge”) and that a receipt therefor be given to him.

c) If an instrument payable by instalments at successive dates is dishonoured by non-acceptance or by non-payment as to any of its instalments and a party, upon dishonour, pays the instalment, the holder who receives such payment must give the party a certified copy of the instrument and any necessary authenticated protest in order to enable such party to exercise a right on the instrument.
d) The person from whom payment is demanded may withhold payment if the person demanding payment does not deliver the instrument to him. Withholding payment in these circumstances does not constitute dishonour by non-payment under article`58.
e) If payment is made but the person paying, other than the drawee, fails to obtain the instrument, such person is discharged but the discharge cannot be set up as a defence against a protected holder to whom the instrument has been subsequently transferred.

Article 77
1. If a party is discharged in whole or in part of his liability on the instrument, any party who has a right on the instrument against him is discharged to the same extent.

FURTHER READING

A_practical_treatise_on_bills_of_exchang _A_treatise_on_the_law_of_promissory_notes_and_bills_of_exchange_vol_1_