Mandatory details of the bill. Mandatory details of a bill of exchange Details of a bill of exchange legal address or location
The mandatory details of the bill of exchange are established by the Uniform Law on Bills of Exchange and Promissory Note (UBL), which is Annex No. 1 to the Geneva Convention of June 7, 1930 No. 358 “On the Uniform Law on Bills of Exchange and Promissory Note”:
- bill mark “bill” in the text of the document;
- an unconditional order or obligation to pay a specified amount;
- name of the payer and the first holder;
- name of the remitter;
- time and place of payment;
- the date and place of drawing up the bill and the signature of the drawer.
If at least one of the required details is missing, the document cannot be recognized as a bill of exchange. Although there are a number of exceptions:
- if the payment period is not specified, the bill is considered to be payable upon sight;
- if the place of payment is not specified, the specified address of the payer is considered as such;
- if the place of issue is not specified, the address of the drawer is considered to be such;
- If the bill contains signatures of persons incapable of obliging or forged, then the signatures of other persons still do not lose force.
Types of bills
- Treasury (government) bills Treasury bills)
- Agency bills (Agencies sponsored by the government such as a government mortgage institution, etc.) (eng. Agency bills)
- Municipal bills (City, rural, township) (eng. Municipal bills)
- Commercial bills (legal entities) Commercial bills)
- Bank bills Bankers bills)
Regulatory acts
- Federal Law “On Bills of Exchange and Promissory Notes”
- Convention Concerning the Uniform Law of Bills of Exchange and Promissory Note
- Regulations on bills of exchange and promissory notes
Check(fr. chèque, English check/check) - security, containing an unconditional order from the drawer to the bank to pay the amount specified in it to the check holder. The drawer is a person who has funds in the bank, which he has the right to dispose of by issuing checks, the check holder is the person in whose favor the check was issued, the payer is the bank in which the drawer's funds are located.
The drawer does not have the right to revoke a check before the expiration of the established period for presenting it for payment.
There are cash checks and settlement checks. Cash checks are used to pay the check holder cash at a bank, e.g. wages, economic needs, travel expenses etc.
Settlement checks are checks used for non-cash payments; they are a document of the established form containing an unconditional written order from the drawer to his bank to transfer a certain amount of money from his account to the account of the recipient of the funds. Check acceptance- not provided, putting down the appropriate expressions will not give rise to legal consequences.
Bill of exchange law
A bill of exchange is a security, the issue and circulation of which is carried out in accordance with special legislation called bill law. This security certifies the debt of one person (debtor) to another person (creditor), expressed in monetary form, the rights to which can be transferred to any other person by order of the owner of the bill without the consent of the one who issued it.
Bill of exchange - original historical background all securities. The bill of exchange is the first and earliest form of security in the commodity world, from which essentially all other types of securities are derived. The bill itself originates from a simple promissory note. In the modern commodity world, the bill of exchange is actively used, but occupies a rather modest place in comparison with such mass types of securities as shares and bonds.
The difference between a bill and a share is that the latter is an equity security, and a bill is a debt security. Their unity comes from the fact that the basis of any security is loan capital, and not its commodity or productive form.
The difference between a bill and a bond is based on the differences arising from their specific forms of existence as securities:
- a bond is essentially an issue paper, while a bill of exchange has a more individual character (although you can also find issues of bills of exchange in large quantities on the market);
- the issue of bonds is subject to mandatory registration by the state, but bills of exchange are not;
- a bill of exchange can be used as a means of payment and settlement, but settlements using bonds are not permitted;
- the bond is sold under a contract of sale, and the bill is transferred by order of its owner, etc.
In contrast, a bill of exchange can only exist in documentary (paper) form.
Promissory note and bill of exchange
A bill of exchange exists in two forms: a promissory note and a bill of exchange.
Promissory note(solo bill) is an unconditional (unconditional) obligation of the debtor to pay a monetary debt to the creditor in the amount and on the terms specified in the bill and only in it. A promissory note is issued by the payer himself, and is essentially his promissory note.
Bill of exchange(draft) is an unconditional order of the person who issued the bill (drawer) to his debtor (payer) to pay the amount of money specified in the bill in accordance with the terms of this bill to a third party (drawer). A bill of exchange is a written document containing an unconditional order from the drawer to the payer on payment of the amount of money specified in the bill of exchange to a third party or to his order.
The basis of a promissory note. A promissory note usually appears as a result of a commodity transaction, when the buyer of the goods does not have the necessary Money and instead of money, he writes out this bill, according to which he undertakes to pay the seller the amount of money he requires after some period of time in the future. After this time, the holder of the bill presents the bill to the buyer (i.e., the debtor on this bill), who pays the specified amount of money and receives the bill in exchange (“cancelles” it). A promissory note is usually drawn up by the debtor in the name of his creditor and transferred to the latter.
Basis of a bill of exchange. A bill of exchange involves the “transfer” of a debt from one person to another. Typically, the person who writes the bill of exchange (the drawer) is both a creditor of one person and a debtor of another person. In a bill of exchange, the drawer requires that the one who owes him pays not himself directly, but directly to his creditor.
A bill of exchange has the Italian name “draft” (which in translation means “transfer”), and the drawer is called the drawer, the debtor on the bill is called the drawee, and the holder of the bill (the recipient of the bill) is called the remittor.
Required bill of exchange details
A bill of exchange is a strictly formal document, therefore, like any security, it has mandatory details.
A promissory note has the following details:
- bill mark, that is, the designation of a document with the word “ promissory note»;
- an unconditional obligation to pay a certain amount of money;
- payment term;
- place of payment;
- the name and address of the recipient of the payment to whom or on whose order it is to be made;
- place and date of compilation (day, month and year of compilation);
- signature of the drawer - provided by him in his own handwriting.
The bill of exchange has the following details:
- name or bill of exchange mark - " bill of exchange»;
- an unconditional requirement to pay a certain amount of money on a bill;
- indication of the monetary amount in figures and in words (corrections are not allowed);
- payment term;
- place of payment;
- name and address of the payee;
- place and date of compilation;
- name and location of the payer;
- drawer's signature.
Bill amount
Often indicated in both numbers and words. If there is a discrepancy, the bill is considered issued for the amount written in words. If there are several amounts in a bill of exchange, then the bill of exchange is considered to be issued for the smaller of them. It is not allowed to split the bill payment amount by due date or in parts. A bill of exchange is an abstract obligation to pay a certain sum of money, regardless of the reason for its issuance. If, for example, a bill of exchange is issued before the goods (asset) are received, then the risk is borne by the drawer, because he is the debtor on the bill, although he has not yet received the corresponding goods.
The promissory note can be issued taking into account interest on the “loan” provided to the debtor. This percentage can either be immediately included in the bill amount, or can be indicated separately. The interest rate on the bill amount can be indicated only if the payment period for the bill is established upon presentation or at such and such a time from presentation. In other cases, the interest rate is considered unwritten. This means that even if it is written, the payer of the bill is not obliged to pay this interest on it.
Payer's name and address
If the payer is a legal entity, then its legal address and its full name are indicated. If the payer is an individual, then the surname, first name, patronymic, place of residence, and passport details are indicated. In a promissory note, the payer is the drawer. In a bill of exchange, the drawer and the payer are different persons. For this reason, additional details appear in a bill of exchange, compared to a simple bill of exchange.
An unconditional obligation to pay on a bill of exchange and a requirement to pay on a bill of exchange. Since the promissory note is issued by the debtor, he undertakes in the promissory note to pay it.
A bill of exchange is issued by the creditor to his debtor, but not so that the latter pays himself, but so that the debtor pays to another person - the creditor of the drawer ("drawer of the bill"). Therefore, the bill of exchange does not contain an obligation, but a demand to pay. This is usually formalized with the following entry: “Pay... (name of the remittor) or to his order.” A bill of exchange can be drawn up in favor of the drawer himself. In this case, it says: “Pay in my favor or to my order,” or another equivalent in meaning.
Payment due date
Bill of exchange legislation establishes the following payment terms for bills of exchange:- “at sight” - payment is made upon presentation of the bill. It must be presented for payment within one year from the date of its preparation, but the drawer can stipulate the timing of presentation for payment, for example, “... upon presentation, but not earlier than March 1, ¼ of the year.” In case of delay, the bill loses its validity;
- “in such and such a time from presentation” - payment is made within a certain period of time after the date of presentation of the bill. The latter is recorded by a mark on the front side of the bill, which is actually an agreement to pay or the day of protesting the bill in acceptance;
- “in such and such a time from drawing up” - payment is made after a certain number of days from drawing up the bill;
- “on a specific day” - payment occurs on the day specified in the bill.
If the payment period is not specified in the bill, this means that it is payable upon sight within a year from the date of issuance of the bill. A bill of exchange that does not simultaneously indicate the date of issue and the due date for payment is invalid.
Place of payment- usually this is the location of the payer, unless otherwise specified in the bill. If the place of payment is not indicated in the bill, then the location of the payer will also be considered to be the place of payment. If the bill contains no place of payment and location of the payer, the bill is considered invalid. A bill of exchange will be invalid if it specifies more than one place of payment.
Indication of the place and date of drawing up the bill of exchange
The location of the drawer and the place of drawing up the bill may not coincide. If the place of its preparation is not indicated, then the bill is recognized as issued in the place indicated next to the name of the drawer. If the bill lacks both the place of drawing up and the location of the drawer, it will be invalid. The place of compilation is indicated specifically (for example, such and such a city). The non-existent place of drawing up the bill makes it invalid.
The date of the bill of exchange is required because it is necessary for calculating the due date for the bill of exchange and the period of the bill of exchange obligation. An unrealistic date for drawing up a bill means its invalidity.
Signature of the drawer is affixed after the full name and location of the drawer in the lower right corner of the bill and only in handwriting. Without a signature, the bill is considered invalid. If the bill is issued legal entity, then it is necessary to have the seal of the enterprise and two signatures: the director and the chief accountant. Forged signatures, signatures of non-existent persons and persons who do not have the right to sign in the organization of the drawer make the bill invalid.
The provision on a promissory note and a bill of exchange provides that payment on a bill accepted by the payer can be additionally guaranteed by issuing a guarantee (aval), which is given by a third party (usually a bank) both for the original payer and for each other person obligated on the bill.
Aval bills — This is a guarantee of payment on a bill by a bank or other person, called an avalist, who is not directly related to the bill. In the language of bill law, aval is a bill guarantee.
Aval is drawn up with a special avalist inscription, which is placed on the front side of the bill or on an additional sheet to the bill (allonge). The aval indicates for whom the guarantee was issued by the bank, the place and date of issue, the signature of the two first officials of the bank and its seal are affixed. Bills authorized by the bank are accounted for in its off-balance sheet account “Guarantees, sureties issued by the bank.”
The avalist and the person for whom he has guaranteed are jointly and severally liable for payment of the bill. If the bill of exchange is paid by the avalist, all rights arising from the bill of exchange are transferred to him.
Valuation of bills increases their reliability and contributes to the development of bill circulation.
The need for aval arises if the creditor does not trust the debtor, and therefore requires the provision of additional guarantees for the execution of the bill in the person of some organization that he trusts much more.
Aval is made on the front side of the bill, where a special place is provided for this (or on a special sheet called allonge).
Aval can be made both on a promissory note and on a bill of exchange. It can be complete or partial.
All endorsements on the bill, its acceptance or aval are executed within the established payment period. The due date for a bill of exchange is a mandatory requirement, and its absence renders the bill of exchange invalid.
Acceptance of a bill of exchange
This is the consent of the payer of a bill of exchange to pay it. The payer of a bill of exchange is a debtor in relation to the drawer. But since the bill of exchange is not issued by the debtor himself, but by his creditor, this same debtor must agree to pay this bill before the drawer transfers the bill to the recipient of the bill, i.e., his debtor. Otherwise, the latter will not accept the bill of exchange. In practice, situations are possible in which the recipient of the bill of exchange presents the bill of exchange for acceptance by the payer, if the issues of the debt are agreed upon in advance (for example, by telephone), and it is more convenient for the recipient of the bill of exchange (remitee) to receive acceptance, for example, if he and the payer are in the same city, and the drawer - in another.
The place for acceptance is provided on the front side of the bill of exchange to the left of the aval.
Acceptance, like aval, can be partial.
Bill circulation
This is the transfer of a promissory note or bill of exchange from one holder to another. A bill of exchange, as a classic security, can be freely transferred from one person to another. This is due to the fact that a bill of exchange is a right to receive a certain amount of money without any conditions on the part of the payer under it. Such a right, naturally, can be transferred on certain market conditions.
Endorsement
The current bill of exchange legislation provides for the possibility of transferring a bill of exchange to another person using an endorsement (endorsement).
Endorsement- this is a transfer inscription on a bill of exchange, meaning an unconditional order from its previous owner (holder) to transfer all rights under it to the new owner (holder). Transfer of a bill of exchange by endorsement means transfer, together with the bill of exchange, to another person and the right to receive payment under this bill.
The holder of the bill writes on the reverse side of the bill or on the additional sheet (allonge) the words: “pay to the order” or “Pay to the benefit” indicating who the payment goes to.
- Endorser- the person in whose favor the bill is transferred.
- Endorser- the person transferring the bill by endorsement.
Since the obligation contained in the bill is unconditional, the endorsement can only be the same.
Partial endorsement, i.e. transfer of part of the bill amount, is not allowed. The endorser personally signs the endorsement, which is sealed with his seal. He is responsible for acceptance and payment of bills of exchange and payment of promissory notes. However, he can relieve himself of responsibility for acceptance and payment if he makes the clause “without recourse to me.” In this case, he is excluded from the chain of persons obligated under the bill, which usually leads to a drop in the liquidity of the bill.
The holder of the bill may exclude the possibility of further transfer of the bill if he includes the words “not to order” in the text of the bill. In this case, the bill can only be transferred through a purchase and sale agreement.
Types of endorsement
There may be the following types of endorsements:- personal, which contains the name of the endorser, the signature and seal of the endorser and clearly states to whom the ownership of the bill is transferred;
- blank - it does not contain the name of the endorser and such a bill is bearer. The endorser has the opportunity to independently enter the name of the new bill holder or transfer the bill without making any further entries. A blank endorsement turns into a personal endorsement if the name of the bill holder is included in the text of the endorsement, which is done when the payment deadline arrives;
- collection- This is an endorsement in favor of a certain bank, authorizing the latter to receive payment on the bill. Such an endorsement has the form: “for collection” and gives the bank the right to present the bill for acceptance or payment;
- collateral is done when the holder of the bill transfers the bill to the lender as collateral for the loan issued. Typically, such a bill is accompanied by a clause: “currency as collateral” or another equivalent phrase. A collateral endorsement does not give ownership of the bill to the endorser.
Differences between endorsement and assignment
Cession — This is a transfer inscription on a registered security about the transfer of ownership rights to it.
The main differences between these two forms of endorsement are as follows:- an assignment is a bilateral contract, and an endorsement is a unilateral order from the holder of the bill;
- in an assignment, the seller of a security is responsible only for the validity of property rights, and not for their feasibility, and in the case of endorsement, the holder of a bill is responsible for both;
- an assignment is always a registered transfer, and an endorsement can be bearer;
- the assignment can be formalized both by an inscription on the security itself and by a purchase and sale agreement, and the endorsement can be formalized only by an inscription on the bill of exchange (or on an additional sheet to it - allonge).
Accounting for bills of exchange
Accounting for bills of exchange is the purchase of a bill of exchange by a bank before its maturity date. The holder of the bill transfers (sells) the bill to the bank by endorsement before the maturity date and receives for this the bill amount minus (for early receipt) a certain percentage of this amount, called discount interest or discount. The amount of the discount interest is set by the bank itself depending on the solvency of the bill holder who submitted the bill for accounting, and is calculated according to the formula
D = N× t× r / 100%× T,
- D - discount;
- N is the denomination of the bill;
- t is the time remaining until the bill is repaid (in days);
- r is the bank's discount interest rate;
- T—annual period (365 days).
The need to account for a bill arises if its holder needs money and cannot use the bill he has instead as payment by endorsement, and the due date for the bill has not yet arrived. Early presentation of a bill for payment does not give it any chance if the debtor does not have the money. The only place in the market where there is money is the bank, which trades not in goods, but in money. Consequently, when receiving a bill of exchange by endorsement, the bank can only transfer money in return. Since a bill is essentially a loan, discounting a bill is for the bank to issue a cash loan at its own interest. But the bank gives this loan not to the holder of the bill, but to the payer of the bill, who must return the loan to him plus interest on it. In total, this is the face value of the bill. The bank can pay for the bill to its holder only an amount equal to the loan, i.e. face value of the bill minus the interest discount.
Rediscounting of billsThis is an operation related to the sale by a bank of a bill of exchange it has to the central bank, in the event that it itself has a need for additional funds.
Payment on a bill
The bill payment procedure is strictly standardized and includes:- the bill of exchange is presented for payment at the location of the payer, unless a different location is indicated in the bill of exchange;
- the payer must make payment immediately upon presentation of the bill, if the presentation of the latter is timely. Deferment of payment on a bill of exchange is allowed only in the event of force majeure circumstances;
- When calculating the maturity of a bill of exchange, the day on which it is issued is not taken into account. If the repayment date falls on a non-business day, the bill must be repaid on the next business day;
- presenting a bill of exchange for payment before its maturity does not oblige the debtor to pay on it, just as the debtor’s demand to the holder of the bill to accept payment before the maturity date of the bill cannot be satisfied;
- the debtor can pay only part of the amount on the day of repayment of the bill, and the holder of the bill does not have the right not to accept payment. In this case, a note is made on the front side of the bill indicating the repayment of part of the bill amount. The holder of the bill has the right to protest the unpaid amount and bring a claim against any of all persons obligated under the bill in the amount of the unpaid amount.
Use of bills of exchange in settlements
Bill of exchange is a payment obligation in which the buyer, or a third party, agrees to pay its owner (bearer) a certain amount upon expiration of a specified period specified in the bill.
Bill of exchange form of payment represents settlements between the supplier and the payer for goods or services with a deferred payment (commercial loan) based on a special document-bill.
When using bills of exchange, the following main tasks are solved:
- prerequisites are created for the timely and unconditional receipt of money for goods sold, work performed, services rendered. Registration of a commodity transaction with a bill of exchange does not require advance payment of the order, increases the degree of confidence of the supplier and buyer, and accelerates the turnover of the commodity-money supply;
- the bill favors commercial credit, allows you to carry out a transaction without money and set a payment period that is convenient for the supplier and the buyer (payer);
- as a type of credit money, a bill of exchange can be used in settlements with legal entities and individuals, when offsetting mutual claims of enterprises;
- how a security bill can be sold and purchased, provided as security for a loan; With its help, you can get a loan at a discount and make other financial transactions.
Features of the bill:
- abstract This is the actual separation of the bill from the original transaction as a result of which it arose. The bill exists as an independent security, completely unrelated to the fulfillment of any specific obligations under the contract (the specific type of transaction is not specified);
- indisputable. The obligees of a bill cannot raise any objection to their obligation to pay. There are specific legal procedures that make it easier to claim debt;
- can be transferred as a means of payment;
- always has a monetary obligation;
- The parties named on the bill are jointly and severally liable.
The bill can be used to pay off your own debt, it can be kept until the specified period and presented for payment; sell the bill before the due date.
Types of bills:
- Treasury bills— are issued to cover the state budget deficit.
- Friendly bills- arise when one enterprise, which is creditworthy, “out of friendship” issues a bill of exchange to another, experiencing financial difficulties, in order for the latter to receive a sum of money from the bank by taking into account the pledge of this bill. If the partner, in turn, issues a friendly bill to guarantee payment, then such a bill is called a counter bill.
- Bronze bills(not secured by valuables) are bills of exchange that do not have real security, issued to a fictitious person. Fraudsters receive income from such a bill by taking it into account at the bank. Bronze bills can also be issued to real companies. In this case, two companies exchange bills of exchange and take them into account in different banks. Before the maturity of the first bills, they again issue bills to each other and, with the help of their accounting, try to repay the old loan. In Russia, bronze bills are prohibited by law.
- Commercial bills- based on purchase and sale transactions on credit.
- Financial bills are based on a loan issued by an enterprise at the expense of available available funds to another enterprise. According to Decree of the President of the Russian Federation No. 1662, bills of exchange that formalize overdue accounts payable of enterprises are also classified as financial.
Promissory note issued by the borrower to the lender. It formalizes the debt of the borrower to the lender. It is the obligation of the borrower to pay the amount of money specified on the bill at a specified place at a specified time.
If one of the required features is missing, the bill is not valid.
Drawer- this is the person issuing the bill (for a promissory note, this is the borrower).
Payee- this is the person to whom the bill of exchange is sent (in the case of a simple bill of exchange, this is the creditor).
Bill holder- a person who is in possession of a bill of exchange and who receives money on the bill either when the bill matures or when the bill is discounted (sold) ahead of schedule repayment (for a simple bill - the creditor).
The promissory note does not indicate who the recipient of the money is. This is a bearer security.
The bill of exchange is issued by the creditor (drawer). It contains an order to the borrower to pay the specified amount to a third party (remittor) within a specified period.
The bank acts as the remitter.
When transferring a bill of exchange, a transfer inscription is placed on the back - an endorsement.
Discounting a bill is the release of money to the creditor.
Rice. 1. Scheme of bill circulation:- the goods are being delivered;
- acceptance is consent to payment at the buyer’s bank;
- transfer of accepted bill of exchange;
- payment order to the seller's bank to pay the bill;
- accounting of the seller's bill of exchange;
- presentation of a bill for payment on time;
- receipt of payment on a bill of exchange.
Advantages of using bills of exchange:
- the need for cash is reduced;
- payment deferment;
- payment guarantee;
- if the settlement chain is disrupted, funds can be obtained.
Problems of bill circulation:
- participants must have good knowledge of the rules of bill circulation;
- the procedure for prompt collection of funds on a bill of exchange is not regulated by law;
- bills of major issuers are suitable for real use.
Protest bill- this is the fact of refusal to pay a bill of exchange, officially certified by a notary, giving rise to joint liability of all individuals and legal entities associated with the circulation of this bill.
Current legislation provides for the presentation of a bill of exchange to a notary's office to protest non-payment on the next day after the expiration of the payment date on the bill of exchange no later than 12 noon. A bank that does not fulfill the client’s instructions to collect bills of exchange is responsible for promptly protesting them.
A bill not paid on time is presented to the notary's office with an inventory that contains the following data: detailed name and address of the drawer, whose bill is subject to protest; due date for the bill of exchange; amount of payment; detailed names of all endorsers of the bill and their addresses; reason for the protest; the name of the bank on whose behalf the protest is being made.
On the day the bill is accepted for protest, the notary's office presents it to the payer with a demand for payment. If the payer makes payment on the bill within the prescribed period, then this bill is returned to the payer with an inscription indicating receipt of payment.
If the payer refuses the notary’s office’s request to make payment on the bill, the notary draws up an act of protest against the bill of non-payment. At the same time, he enters into a special register, which is maintained in the office, all the data on the protested bill, and on the front side of the bill itself he puts a note about the protest (the word “protested”, date, signature, seal).
Bill of exchange is a document that has strictly established mandatory details.
Bill of exchange contains the following mandatory details:
1) bill marks;
2) bill amount;
3) name and address of the payer;
4) payment term;
5) name of the payee;
6) place of payment;
7) indication of the place and date of compilation;
8) signature of the drawer.
The above details comply with the requirements of the International Convention. The absence of at least one of the details of the bill makes it void. Let's take a closer look at each of the details.
1. Bill marks. The text of the bill must indicate that this document is a bill of exchange and all obligations arising from it are of a bill of exchange nature. For example, “...to pay this bill...”, “...the place of payment for the bill is...”.
2. Bill amount. The bill amount is indicated in numbers and words. If there is a discrepancy between them, then the bill is considered issued for the amount written in words. If the bill contains several amounts, the bill is considered to be issued for the smaller amount. It is not allowed to split the amount of the bill by period, that is, stage-by-stage payment of the bill. A promissory note is an abstract obligation to pay a certain amount of money.
3. Name and address of the payer. If the payer is a legal entity, then the legal address of the payer and its full name must be indicated. When the payer is an individual, the surname, first name, patronymic and place of residence of this person are indicated.
4. Payment term. Bill of exchange legislation defines several payment terms:
a) “Upon presentation.” Payment under a bill with such a term is made upon presentation of the bill, which must be presented for payment within one year from the date of its preparation. In such a bill, the drawer can stipulate the terms of presentation for payment. For example. “...upon presentation, but not earlier than March 1.... of the year". If this period is overdue, the bill loses its validity.
b) “In so much time from presentation. In this case, it is necessary to pay the bill within a certain period of time after the fact of presentation of the bill. The fact of presenting the bill for payment is recorded by a mark on the front side of the bill, which is in fact an agreement to pay or the day the bill is contested in acceptance.
c) “In so much time from compilation.” Such a due date for payment of a bill of exchange may be set as follows: one or more months from its issuance, and then it occurs on the corresponding day of the month in which payment must be made.
d) “On a certain day.”
If the due date is not specified in the bill, the bill is deemed to be payable upon sight. The requirement to pay on such a bill is valid for one year from the date of issuance of the bill. A bill of exchange that does not simultaneously indicate the dates of issue and payment is invalid.
5. Name of the payee. The bill of exchange must contain the full name of the remitting payee. Typically, the entry in the bill looks like this: “Pay ... (name of the remittor) or to his order. The drawer of a bill of exchange can also be the drawer himself. In this case, the bill will contain the following clause: “Pay in my favor or to my order” or another equivalent in meaning.
6. Place of payment. Since under a bill of exchange it is not the debtor who comes with payment to the creditor, but the creditor himself who comes to the debtor, this detail is one of the most important in the bill. The place of payment is usually the location of the payer, unless otherwise specified in the bill. If there is no place of payment in the bill of exchange details, the place of payment will be considered the location of the payer. If the details of the bill of exchange do not contain both the place of payment and the location of the payer, then the bill of exchange is considered invalid. It is also invalid if it indicates several places of payment.
7. Indication of the place and date of drawing up the bill. The location of the drawer and the place of drawing up the bill may not coincide. A bill of exchange that does not indicate the place of its drawing up is recognized as issued in the place indicated next to the name of the drawer. If the bill does not contain the place of drawing up and the location of the drawer (drawer), then it is considered invalid.
The date of the bill of exchange must be indicated, since it has great importance to calculate the payment period for the bill of exchange and the period of the bill of exchange obligation. Bills with obviously unrealistic dates are considered invalid.
8. Signature of the drawer. The signature of the drawer (drawer) is usually located after his full name and location in the lower right corner of the bill and is made only in handwriting. Without a signature, the bill is considered invalid. If the bill is issued by a legal entity, it is necessary to have the company's seal and two signatures - the director and the chief accountant. If there are forged signatures or signatures of non-existent persons on a bill of exchange, then the signatures of other persons remain valid and the bill of exchange is also valid. The signatures of persons not authorized to sign the bill are also valid, and all obligations arising from the bill will be attributed directly to the persons who signed the bill. Upon fulfillment of obligations under the bill, they acquire all rights of claim in relation to all persons obligated under the bill.
To the required details promissory note relate.
1. The name “bill” included in the text and written in the language in which this document was drawn up.
2. A simple and unconditional obligation to pay. a certain amount.
3. Indication of the payment term.
4. Indication of the place of payment.
5. The name of the recipient of the payment to whom or whose order it should be made.
6. Indication of the place and date of drawing up the bill.
7. Signature of the drawer, that is, the one who issues the bill.
If in a promissory note no deadline specified payment, then the bill is subject to payment upon sight. The place of drawing up of the bill of exchange can be considered as the place of payment and the place of residence of the drawer. If the place of drawing up the bill is not indicated, then the place indicated next to the name of the drawer is considered to be the place.
Depending on how many parties are involved in the transaction, a promissory note and a bill of exchange are distinguished. Solo bill (simple) implies that two parties are involved in the transaction: the drawer (debtor) and the holder (creditor). That is, the payer and the drawer are one person. Essentially, it's an IOU. A promissory note contains the personal obligation of the drawer to pay the debt, while a transferable bill contains an instruction to a third party to pay the bill.
The buyer of goods (recipient of services) issues a bill of exchange to the seller as confirmation of his obligations to pay for the goods shipped (services provided);
The seller (drawer of the bill) ships the goods or provides services to the customer (drawer of the bill);
The seller presents the bill for payment on time;
The buyer pays for the goods delivered (services performed) - cancels the bill.
Required details of a promissory note
name of the bill(simple). Located at the top of the bill;
place and date of compilation;
bill amount(in numbers and/or words). A bill of exchange may be issued subject to interest, which may either be included in the bill amount or specified separately;
personal obligation of the debtor pay the bill amount by the specified date;
name and address of the payee;
payment term. There are several options: upon presentation of the bill, within some time from presentation, within a certain time after drawing up, on a certain day. If the payment period is not specified in the bill, this means that it is payable upon presentation within 1 year from the date of issuance of the bill;
place of payment(by default - payer's location);
drawer's signature(in the lower corner of the bill, handwritten). If the drawer is a legal entity, then the signatures are affixed by the director and the chief accountant, and next to it is the seal of the organization.
Aval (fr. aval, presumably from Arab. حوالة ) - surety By bill or check; permitted for any person except payer. The avalist is responsible equally with drawer, and his obligation valid even if the obligation which he guaranteed should be invalid on any ground other than defect of form. In this respect, aval is completely equal to surety, which is additional (accessory) in nature in relation to the main obligation, and bank guarantee.
14. Concept and basic details of a bill of exchange. Acceptance of a bill of exchange and bill of exchange guarantee.
Draft(from Italian tratta) or bill of exchange - a financial document drawn up in a strictly ordered form, which contains an unconditional order creditor (drawer) to the borrower (drawee) on payment within a specified period of time of a certain amount of money indicated in bill of exchange, to a third party ( to the remitter) or to the bearer of the bill. May be one of the documents of title foreign trade contract.
The bill of exchange must contain the following mandatory details:
1. The bill of exchange mark was included among the required details in order to, with the help of this additional, purely external, sign, separate the bill of exchange from other payment orders similar in form to it - checks, transfers, etc.
2. A simple and unconditional offer to pay a certain amount. The term “unconditional promise” must be understood as follows: “I promise to pay money for the goods received and interest on the trade credit, regardless of their presence in my account, as well as regardless of other circumstances and situations.” As in any monetary document, the bill indicates amount of payment. This amount is exact, i.e. not requiring any calculation for calculation, even based on the data contained in the bill itself.
3. The name of the one who must pay (the payer) is a necessary detail, since it is to him that the drawer’s order for payment is addressed. For a bill to be valid, it is required that the payer be identified on the bill in such a way that he can be identified, i.e. install exactly.
4. Indication of the payment term. The meaning of this detail is that with the maturity date, the holder’s right to demand payment on the bill arises, and the calculation of other bill terms begins from the payment date. The following payment terms are distinguished: “on presentation”, “at such and such a time from presentation”, “at such and such a time from preparation”, “on a specific date”.
5. Indication of the place where the payment should be made. The peculiarity of a bill of exchange obligation as an obligation under a security is that it is not the debtor who is obliged to fulfill the obligation to the creditor within the prescribed period on his own initiative, but, on the contrary, the creditor must come to the debtor and demand fulfillment of the obligation.” If the place of payment is not included in the bill of exchange, it is considered to be the place indicated next to the name of the payer for it. A bill of exchange is considered invalid if it lacks both the place of payment and the location of the payer, and also if it is not specified. The bill of exchange obligations of direct debtors - the drawer of a promissory note and the acceptor of a transferable bill - can be properly executed only if the bill of exchange is presented for payment in the proper place. The place of payment can be determined by indicating a locality or a specific address.
6. The name of the person to whom or to whose order the payment is to be made. The name of the remittor is one of the mandatory details of the bill, thus it does not allow the bill to be issued to bearer.
7. Indication of the date and place of drawing up the bill. The date of drawing up is necessary to determine the legal capacity of the drawer at the time of drawing up the bill, as well as to determine the term of the bill. A bill of exchange that does not indicate the place of its preparation is recognized as signed in the place indicated next to the name of the drawer (drawer) . If this is missing, the bill is considered invalid.
8. Signature of the person who issues the bill (drawer). The absence of the signature of the drawer in the promissory note and the drawer in the bill of exchange makes the latter devoid of any meaning. Without a signature, there is no written obligation, no promissory note. Unlike the text of the bill of exchange, the signature of the drawer must be affixed to the bill in his own hand and, moreover, in handwriting.
Acceptance of a bill of exchange is the acceptance by the drawee of the obligation to pay the bill of exchange on time by means of a special inscription.
The main elements that together make up a bill of exchange are called bill of exchange details. The bill of exchange must contain the following mandatory details:
the name “bill” included in the text of the document and expressed in the language in which this document was drawn up;
a simple and unconditional offer to pay a certain amount;
name and address of the person who must pay (payer-drawee);
name of the payee (remitee) to whom or on whose order the payment must be made;
indication of the payment term;
indication of the place of payment;
indication of the date and place of drawing up the bill of exchange;
name and signature of the drawer (drawer).
Since the absence of at least one of the required details invalidates the bill of exchange, let’s consider them in more detail:
1. Bill marks. The text of a document that is a bill of exchange must indicate that this document is a bill of exchange and all obligations arising from the document are of a bill of exchange nature.
The name “bill” must be present both in the title and in the text of the document. This is done in order to indicate the difference between a bill of exchange and related obligations and to make it difficult to transform a non-bill obligation into one.
For example: “...to pay this bill...”, “...the place of payment for the bill is...”.
2. Bill amount. Since a bill of exchange is a monetary document, it must indicate the amount of payment (currency of the bill of exchange). Once the amount is recorded in numbers, another time in words. The currency of the bill may be denominated in foreign currency. It is allowed to have two payment currencies, and between the amounts there should not be the word “or” - only the conjunction “and”. Corrections to the bill amount are not allowed (even if stipulated by the signature of the drawer), but in the event of a discrepancy between the amount indicated in figures and the amount written in words, the amount indicated in words is considered correct. It is not allowed to split the amount of the bill by period, i.e., stage-by-stage payment of the bill. The bill amount is in no way related to the main transaction, i.e. failure to fulfill or partial failure to fulfill the terms of the main transaction cannot be grounds for complete or partial non-payment of the bill.
Example. Enterprise A undertakes to pay enterprise B an amount of 100,000,000 rubles. within five days after shipment of the goods under contract No. 5/678.
The fact of non-shipment of goods cannot be the reason for refusal of payment on the bill, and such a condition will be considered unwritten. In bills of exchange with maturity dates at sight or at such and such a time from presentation, interest may accrue on the bill amount. In bills with other payment terms, interest may be included in the bill amount.
If these percentages are indicated separately, then the entry for them is made in accordance with the rules for registering the amount of the bill, discussed earlier.
Only a bill payable upon sight or within a certain period from sight may contain provisions for the accrual of interest on the bill amount. In a bill payable at other times, the interest provisions are considered unwritten.
A bill of exchange is an unconditional and abstract document, therefore, in the text, the bill amount should not be accompanied by any terms of payment or references to obligations under the transaction. Under the Uniform Bill of Exchange Act, any payment term in the text of a bill of exchange is considered unwritten. It should be noted that according to the Uniform Commercial Code of the United States and the English Bill of Exchange Law, a bill of exchange is not an abstract monetary obligation, and reference to the contract on the basis of which the bill of exchange is issued is not only possible, but also necessary.
3. Name and address of the payer. The legal address of the payer, its full name and form of ownership must be indicated if the payer is a legal entity. If the payer is an individual, then the surname, first name, patronymic and place of residence of this person are indicated.
In a bill of exchange, the payer is the drawee, who becomes the responsible person only after acceptance of the bill, by virtue of which he accepts the obligation to pay the bill within a certain period.
The name of the payer is indicated in the lower left corner on the front side of the bill.
4. Payment term, designated by a specific entry is a mandatory detail, and its absence in the bill of exchange makes the bill invalid. There are payment terms defined by bill of exchange legislation:
a) “Upon presentation.” Payment on a bill with such a term is made upon presentation of the bill. A bill of exchange with such a payment period may specify the minimum and maximum terms for presentation for payment.
In the case of drawing up a bill of exchange with a payment term “at sight”, the day of presentation is the day of payment; the bill must be presented for payment within a year from the date of its execution, otherwise the holder of the bill loses the right to receive payment. This payment period is the least convenient for the payer, since he must always have a certain amount of money ready. However, the drawer may specify a date before which the bill cannot be presented for payment. Endorses may subsequently reduce the payment period for the bill.
Example. “...upon presentation, but not earlier than February 1, 2006...” If the last date for presenting a bill of exchange for payment is not specified, the bill of exchange may be presented for payment within one year from the date of issue. If this period is overdue, the holder of the bill loses the right to claim the bill.
b) “In such and such a time from presentation.” This payment period determines the obligation to pay the bill within a certain period of time after the fact of presentation of the bill. The fact of presenting a bill for payment is recorded by a mark on the front side of the bill, which is actually an agreement to pay or the day the bill is protested for non-payment;
A bill of exchange with a term “in such and such a time from presentation or drawing up of the bill of exchange” is convenient for the payer: it provides the opportunity to prepare for payment. From the day the bill is presented (this is considered the day when the payer made a note on the bill agreeing to pay) the countdown of the payment period begins.
c) “In so much time from compilation.” Such a payment period for a bill of exchange is determined by the last date of the period of circulation of the bill of exchange, and this date is the date of payment, and not the day following it.
The due date for payment specified by specifying the exact number of days from the drawing up of the bill of exchange is considered to have occurred on the last of these days, and not on the day after it. In this case, the calculation of the payment period begins on the day the bill is issued (the day of the date is not included in the calculation of the period). It is acceptable to schedule payment at the beginning, middle or end of the month. These entries mean the first, fifteenth or last day of the month. A bill with a payment term “in such and such a time from presentation” must be presented for payment within a year from the date of its preparation, but for this it is necessary to present the bill to the payer in advance, so that the final term of the bill does not go beyond the established year.
d) If the bill is payable on a certain day, a specific calendar date (day, month, year) is indicated.
If the payment period is not specified in the bill, the bill is considered to be payable upon sight. The requirement to pay on such a bill is valid for one year from the date of issuance of the bill. A bill of exchange that does not indicate the date of issue and the due date at the same time is invalid.
The payment term also determines the dynamics of the discount on the bill (the bill amount can be fixed or variable).
Currency discount the bill of exchange is fixed, it does not change over time, and the payment amount percentage for a bill of exchange - increases, since such a bill of exchange contains the additional requisite “interest on a bill of exchange”.
Only bills with an undetermined payment term at the time of drawing up (“at sight”, “at such and such a time from presentation”) can be interest-bearing. Term bills are always discounted.
5. Name of the payee. The bill of exchange must contain the full name of the remitting recipient. Typically, the entry in a bill of exchange has the following form: “Pay (name of the remitee) or to his order. The bill of exchange cannot be issued to bearer. The drawer of a bill of exchange can also be the drawer himself.
If the recipient is the drawer, the instruction is given: “pay in our favor” or “pay according to our order.” The Uniform Bill of Exchange Law does not allow bills to be issued to bearer, since the bill must formalize a specific commodity transaction. English bill of exchange law, on the contrary, allows bills to be issued to the bearer, i.e. This detail is optional.
6. Place of payment. Due to the fact that under a bill of exchange it is not the debtor who comes with payment to the creditor, but the creditor himself to the debtor, this detail is one of the most important in the bill. The place of payment is usually the location of the payer, unless otherwise specified in the bill. If the place of payment is not in the document, it is considered to be the place of its preparation (promissory note) or the place indicated next to the name of the payer for it (bill of exchange). If there is no place of payment or location of the payer in the details of the bill of exchange, the bill of exchange is considered invalid. A bill of exchange is also considered invalid if it contains several places of payment.
If the bill of exchange does not match the place of payment and the location of the payer, it is called domiciled. The person from whom payment should be received (other than the payer) - domicile.
Most often, a bank is appointed as the domicile, and this can be either the bank where the payer is serviced (has a current account) or any other bank (for example, at the remittor’s place of residence). An external sign of such bills is the inscription: “the bill is payable (or payment) in ... the bank” - at the bottom of the bill under the signature of the payer. The bank pays the bill only if there are sufficient funds in the client’s account or if the payer has deposited the amount necessary for payment in the bank account. Otherwise, the bank refuses payment, and the bill is protested in the usual manner. Banks charge fees for paying bills from third-party payers.
7. Indication of the place and date of drawing up the bill. The location of the drawer and the place of drawing up the bill may not coincide. A bill of exchange that does not indicate the place where it was drawn up is considered to be issued in the place indicated next to the name of the drawer (drawer). If the bill does not include the location of the drawer, then it is considered invalid. The place where the bill is drawn up must be clearly indicated. It is unacceptable to indicate non-specific geographical locations (for example, the Russian Federation or the Krasnoyarsk Territory). If the bill specifies a place that has no relation to the actual place where the bill was drawn up, the bill is considered valid.
The date of the bill of exchange must be indicated, since it is of great importance for calculating the payment period for the bill of exchange and the period of the bill of exchange obligation. Bills with obviously unrealistic dates are considered invalid.
The date of drawing up is necessary to determine the legal capacity of the drawer at the time of drawing up the bill and the term of the bill, especially for bills of exchange for a period of “so much time from drawing up”.
8. Signature of the drawer. The absence of the drawer's (handwritten) signature on a commercial bill renders the bill meaningless. You should indicate: the full name of the legal entity that issued the bill; its legal address; the name of the position of the person who has the right to sign the bill on behalf of the enterprise. The drawer's signature is usually found after his full name and location in the lower right corner of the bill and is handwritten only. Without a signature, the bill is considered invalid. If the bill is issued by a legal entity, then the seal of the enterprise and two signatures are required: the director and the chief accountant. In the event that there are forged signatures on the bill, signatures of non-existent persons, signatures of other persons remain valid and the bill is also valid. The party that signs without having the authority to do so is liable and obliged to pay the bill together with other persons; Having paid, she acquires the same rights as an authorized representative.
Payment on a bill. The payment procedure for a bill of exchange is strictly standardized and consists of the following rules:
The bill of exchange is presented for payment at the location of the payer, unless a different location is specified in the bill of exchange.
The payer must make payment immediately upon presentation of the bill, if presentation of the latter is timely. Deferment of payment on a bill of exchange is permitted only in the event of force majeure circumstances.
When calculating the maturity of a bill of exchange, the day on which it is issued should not be taken into account. If the repayment date falls on a non-working day, the bill must be repaid on the next working day.
Presentation of a bill of exchange for payment before its maturity does not oblige the debtor to pay on it, just as the debtor’s demand to the holder of the bill to accept payment before the maturity of the bill cannot be satisfied.
The debtor can pay only a part of the amount on the day of repayment of the bill, and the holder of the bill does not have the right not to accept payment. In this case, a note is made on the front side of the bill indicating the repayment of part of the bill amount. The holder of the bill has the right to protest the unpaid amount and bring a claim against any of all persons obligated under the bill in the amount of the unpaid amount.
Domicile of bills is the assignment of a third party to the payers. Typically this function is performed by a bank. He enters into an agreement with the debtor on the bill of exchange for the domicile of the latter's bills, charging a commission interest for this service. The bank’s tasks include paying the client more quickly and complying with the procedure for presenting bills for payment. The bank makes payment on the client's bills of exchange presented for payment only if the latter provides in advance a sufficient amount of funds to repay the bills. Otherwise, the bank refuses payment to the bearers. An external sign of a domiciled bill of exchange is the words in the text of the bill: “payment at the bank...” or others of equivalent meaning.