COMMITTEE OF LEGAL EXPERTS ON BILLS OF EXCHANGE AND CHEQUES

Transcription

1 [Distributed to the Council and the Members of the League.] C.175. M Geneva, April 16th, LEAGUE OF NATIONS ECONOMIC COMMITTEE COMMITTEE OF LEGAL EXPERTS ON BILLS OF EXCHANGE AND CHEQUES REPORT TO THE ECONOMIC COMMITTEE The Committee of Legal Experts on Bills of Exchange and Cheques, which was convened by the Council of the League of Nations at the request of the Economic Committee, met at Geneva from November 21st to November 26th, 1927, from January 23rd to January 29th, 1928, and from April 11th to April 13th, I t held thirty meetings. I t was composed as follows : M. J. P e r c e r o u (Chairman), Professor in the Faculty of Law, Paris University ; Dr. H ans V. F l o t o w, Geheimer Oberregierungsrat, Berlin ; M. Karel H e r m a n n -O t a v s k y, Professor, Prague University ; M. Xavier J a n n e, Barrister-at-Law, Professor in the Faculty of Law, Liège University ; M. Joseph S t t l k o w s k i, Professor in the Faculty of Law, Posen University ; M. Max V i s c h e r, Barrister-at-Law and Notary, First Secretary of the Swiss Bankers Association, Basle ; M. Edouard L. V iv o t, Doctor of Juridical Sciences of the Faculty of Buenos Aires1 ; M. Auguste W e i l l e r, Barrister-at-Law, delegate of the Fascist General Banking Federation, Milan. Secretary : M. C. S m e t s. The Committee was also fortunate enough to obtain at its second session, when discussing cheque laws, the assistance of Mr. E. H. B a r c h a r d, Solicitor, Head of the Legal D epartm ent of Lloyds Bank. I. G e n e r a l C o n s id e r a t io n s. Before discussing in detail the problems subm itted to them for solution by the Council of the League, the experts considered w hat m ethods they should adopt, since these methods were bound to have some effect on the solutions which would eventually be proposed. The experts feel th at there can be no doubt as to the desirability of convening an international Conference as soon as possible. They are also convinced th at such a Conference m ight result in an agreement which would considerably reduce the difficulties caused by the divergences in the laws of the so-called continental type. In formulating this opinion, the experts are but echoing the resolution adopted by the Congress of the International Chamber of Commerce at Stockholm in June and July The experts also believe that, in dealing with so complicated and delicate a question, it will be desirable to adhere to a method the value of which has already been demonstrated by long experience, namely, th at representatives of the various countries should be convened only when a firm basis for discussion the result of very detailed preparatory work can be subm itted to them, and only when these proposals have already been examined by the various Governments th at will be invited to take part in the Conference. The experts therefore decided th at their first task would be to seek a basis on which, in their opinion, a draft could be prepared for the reduction of divergences in bills of exchange and cheque laws in the various bodies of law of the Continental group, including Latin America. 1 M. Vivot was not present at the last session. P ublications of the League of N ations 5/ (A) 6/28. Im p. de la T. de G. II. ECONOM IC A N D FINANCIAL II. 13.

2 The experts devoted particular attention to the results obtained by the experts who m et in December 1926 under the auspices of the Economic Committee. They adopted as the starting-point for their discussions the results of the Hague Conference of 1912, taking into account the observations put forward and the resolutions adopted by the International Chamber of Commerce. The experts hold th at the ideal solution of these difficult problems caused by the divergence of the various national laws on bills of exchange, promissory notes and cheques would be for all States of the Continental group to adopt a uniform Régulation which each would agree, under a Convention, to embody in its own legislation. They are, however, fully aware th at it would be a very difficult m atter to secure the adoption, by the Parliam ents of all countries concerne!, of a uniform text accepted under an international Convention on bills of exchange, promissory notes and cheques a text which the various Parliam ents would have to adopt without any change and which, once adopted, they would be obliged to m aintain unaltered during the period fixed under the Convention, as laid down in Article 28, paragraph 2, of the 1912 Hague Convention, the first article of which makes it obligatory for the contracting States to embody the uniform Begulation in their national laws. They have thus prepared various drafts which they submit as a basis for discussion and for the establishment of rules likely to be accepted by all States taking p art in the future Conference. They feel, however, th at the only undertaking which these countries could be invited to assume would be to submit to the approval of their Parliaments, within a definite period, a draft law embodying the accepted solutions as provisions of their national laws. The experts are of opinion that, with a view to securing definite progress the advantages of which would be felt in practice, an agreement should at least be reached between the greatest possible num ber of States on certain essential questions, the im portance of which is dem onstrated by difficulties of daily occurrence due to the divergence of laws on particular points difficulties of which all persons who, by profession, habitually deal with bills of exchange and cheques are aware. These essential questions are connected with the form of bills of exchange, acceptance, endorsement, m aturity, loss of rights, vis major and, finally, penalties for non-compliance with the stam p laws. II. B il l s o f E x c h a n g e a n d P r o m is s o r y N o t e s. The proposals which the experts have the honour to submit to the Economic Committee are largely based on the work of the 1910 and 1912 Hague Conferences and, in certain respects, on the resolutions of the International Chamber of Commerce. It is not claimed for these proposals th at they solve every question ; the experts feel that, for the present at least ; it would be extremely difficult owing to the very nature of the problems to secure uniform ity on certain points. They have therefore agreed th at laws m ust continue to differ in certain respects though it is to be hoped that the number of differences will not be increased. The disadvantage of such divergences m ay be partially overcome by laying down definite rules to govern the conflict of laws. The experts have therefore added to their proposals regarding bills of exchange and promissory notes a num ber of rules for the settlem ent of these conflicts. W hatever m ay be the fate of the experts proposals for the unification or, at any rate, partial unification of the laws on bills of exchange and promissory notes, the rules which they have put forward as a possible m ethod for the settlem ent on uniform lines of conflicts of law arising in this connection could in any case be accepted as a remedy for the present situation. At present, indeed, owing to the absence of such rules, the Courts of various countries often arrive at very different conclusions. Even States which are not parties to the desired agreement for legislation unification might, however, adhere to such a Convention. III. C h e q u e s. The experts have endeavoured in the m atter of cheques to follow a m ethod similar to the one adopted by them in the case of bills of exchange. Taking as their basis the Hague Résolutions regarding cheques and once again in several respects the resolutions of the International Chamber of Commerce they first of all prepared a series of rules regarding cheques which might, they think, be accepted by the various States invited to take part in the future Conference. As in the previous case, the Governments of these States would be called upon to subm it to their Parliam ents draft laws embodying the accepted solutions as provisions of their national law. These rules, the object of which is to attain as far as possible legislative uniformity in the m atter of cheques, are less comprehensive than those proposed for bills of exchange. T h e points on which States are allowed to exercise their own discretion in prom ulgating rules are more numerous ; indeed, since they are so numerous and im portant, the reservations are included not in the form of a simple note (as in the draft Convention on bills of exchange) but as p a rt of the actual text which embodies the suggested principles. There are two main reasons why assimilation is more difficult in the m atter of cheques. The first is th at cheques have been in common use for a shorter period than bills of exchange ; consequently, laws concerning cheques are in general of fairly recent date. It

3 may also be added th at in certain countries fiscal considerations in connection with cheques are a highly im portant factor. The second reason is that, in the Continental system of law, jurists at any rate, if not business men, are divided into two camps as regards their conception of the nature of a cheque. Some hold th a t a cheque is merely one form of the bill of exchange and that, generally speaking, the technique of exchange law might be applied. In their opinion, the cheque is a non-acceptable draft, so th at the drawer of the cheque is only regarded as a person who guarantees paym ent and is only subject to exchange recourse if the holder has presented the cheque for paym ent and has entered protest within the proper period. Others, however, with a view to strengthening as far as possible the security of cheques, m aintain th at the issue of a cheque involves transfer of the covering funds to the holder, and th at the holder has a direct right of action against the drawee who has received these funds. They say, further, th at cheques should not be revocable ; finally, in their opinion, a drawer issuing a cheque without funds to meet it is under an obligation of exchange ( est tenu cambiairement ) to the holder, even when the latter has allowed the prescribed period to elapse w ithout presenting or protesting the cheque. Such fundam ental divergences of opinion regarding the very nature of the cheque obviously constitute a serious obstacle in the path of the unification of cheque law as between countries holding these opposite points of view. The experts were therefore unable to progress as far in the unification of cheque law as they have done in the m atter of bills of exchange. It was even more necessary in this case to provide definite and fairly detailed rules for the settlem ent of the conflict of laws in the m atter of cheques. This the experts have endeavoured to do. They accordingly submit, as the second part of their proposals regarding cheques, a num ber of rules to govern the conflict of laws which the States participating in the future Conference might, they think, in all cases be able to accept. IV. C o n f l ic t o f L a w s. Certain of these rules and this rem ark also applies in the case of bills of exchange and promissory notes refer to the conflict of laws which will still subsist even between States accepting the proposed partial unification : indeed, these rules are an unavoidable corollary to partial unification. Other rules, however, refer to the conflict of laws which would be eliminated between all States adopting the partial unification, but which would still arise between these and other States, or between States not parties to the Convention. The best solution of this problem would seem to be to apply a single law to the effects of all obligations arising under bills of exchange, promissory notes or cheques, viz., the law of the State in which the instrum ent is payable. This solution has been adopted in certain cases (time for paym ent of the cheque, transfer of provision or cover, etc.), but most of the experts agree th at it is not applicable in every instance. The principle has therefore been m ain tain ed1 th at the effects of obligations arising under bills of exchange, promissory notes or cheques shall be governed by the law of the place of residence of the person who signs the undertaking. V. P r o c e d u r e. As pointed out at the beginning of this report, the experts are convinced th at a Conference should not be convened until the draft Conventions on which it is to work have been most carefully prepared. They would therefore suggest to the Economic Committee that their proposals should be communicated to the various Governments in order to ascertain the views of the latter. The drafts might then, in the light of these observations, be so modified or adapted as to make them more readily acceptable. Only when the draft Conventions have reached this stage would it be advisable to invite the various Governments to a Conference to consider their adoption. Geneva, April 13th, {Signed) J. P e r c e r o u. Joseph S u l k o w s k i. H e r m a n n - O t a v s k y. X a v ie r J a n n e. v. F l o t o w. M. Y i s c h e r. A u g u s te W e i l l e r. 1 Article 6 of the draft Convention concerning the conflict of laws in the m atter of bills of exchange and Promissory notes, and Article 11 of the draft Convention on cheques.

4 DRAFT REGULATION1 ON RILLS OF EXCHANGE AND PROMISSORY NOTES.2 CH APTEB I. ISSUE AND FO EM OF A B IL L OF EXCHANGE. A bill of exchange contains : A r t i c l e 1. (1) The term bill of exchange inserted in the body of the instrum ent and expressed in the language employed in drawing up the instrum ent ; (2 ) An unconditional order to pay a determ inate sum of money ; (3) The name of the person who is to pay (drawee) ; (4) A statem ent of the time of paym ent ; (5) A statem ent of the place where paym ent is to be made ; (6 ) The name of the person to whom or to whose order paym ent is to be made ; (7) A statem ent of the date and of the place where the bill is issued ; (8 ) The signature of the person who issues the bill (drawer). A r t ic l e 2. An instrum ent in which any of the requirem ents mentioned in the preceding article are wanting is invalid as a bill of exchange, except in the cases specified in the following paragraphs : A bill of exchange in which the time of paym ent is not specified is deemed to be payable at sight. In default of special mention, the place specified beside the name of the drawee is deemed to be the place of paym ent ; and at the same tim e the place where the drawee resides. A bill of exchange which does not mention the place of its issue is deemed to have been drawn in the place mentioned beside the nam e of the drawer. A r t ic l e 3. A bill of exchange m ay be draw n payable to draw er s order. It m ay be drawn on the drawer himself. It m ay be drawn for account of a third person. A r t ic l e 4. A bill of exchange m ay be payable a t the residence of a third person either in the locality where the drawee resides or in another locality (domiciled bill). Note. The word, locality is inserted instead of place w ith a view to avoiding all interpretative errors regarding the meaning of place. A r t ic l e 5. W here a bill of exchange is payable at sight, or at a certain time after sight, the drawer m ay stipulate th at the sum payable shall bear interest. In the case of any other bill of exchange, this stipulation is deemed to be unw ritten. The rate of interest m ust be specified in the bill ; in default of specification, the stipulation shall be deemed to be unwritten. Interest runs from the date of the bill of exchange unless some other date is specified. Note. It did not seem to be very practical to specify any definite rate of interest in the general Regulation, since the rate m ay vary considerably according to circumstances. A r t ic l e 6. W here the sum payable by a bill of exchange is expressed in words and also in figures, and there is a discrepancy between the two, the sum denoted by the words is the amount payable. W here the sum payable by a bill of exchange is expressed more than once in words or more than once in figures, and there is a discrepancy, the smaller sum is the sum payable. A r t ic l e 7. If a bill of exchange bears the signature of persons incapable of contracting, the obligations of the other persons who have signed it are none the less valid. 1 This Regulation does not include the rules for settling the conflict of laws, which are e m b o d ie d in separate provisions. 2 T h e experts have taken as their basis for discussion the Hague Uniform Regulation referred to h e r e in a f te r as t h e U.K. All changes m ade in the tex t of this Regulation are italicised.

5 A r t ic l e 8. Whoever puts his signature on a bill of exchange as representing a person for whom he had no power to act is bound himself as a party to the bill. The same rule applies to the representative who has exceeded his powers. A r t ic l e 9. The drawer is the guarantor both of acceptance and paym ent. H e m ay release himself from guaranteeing acceptance ; every stipulation by which he releases himself from the guarantee of paym ent is deemed to be unwritten. CH APTBE II. ENDORSEM ENT. Ar t ic l e 10. Every bill of exchange, even if not expressly drawn to order, m ay be transferred by means of an endorsement. W hen the drawer has inserted in a bill of exchange the words not to order, or any equivalent expression, the instrum ent can only be assigned according to the form, and with the effects of an ordinary cession. The bill m ay be endorsed to the drawee, whether he has accepted or not, or to the drawer, or to any other party to the bill. These persons m ay endorse the bill afresh. A r t ic l e 11. An endorsement m ust be unconditional. Any condition to which it is made subject is deemed to be unwritten. A partial endorsement is null and void. Also, an endorsement to bearer is null and void. A r t ic l e 12. Every endorsement m ust be written on the bade of the bill of exchange or of a slip attached thereto ( allonge ). It m ust be signed by the endorser. An endorsement is valid even though the beneficiary is not specified, or the endorser has done nothing more than sign his name (endorsement in blank). Note. The experts have very carefully examined the proposal subm itted by the International Chamber of Commerce1 to the effect th a t a first paragraph should be inserted in Article 12 worded as follows : The signature of each endorser m ust agree w ith the name of the beneficiary which may be indicated by the drawer or by the preceding endorser, unless there can be no doubt as to the identity of the signature. The experts, however, did not feel bound to accept this proposal : they doubt whether it would be of any practical utility, as difficulties might frequently arise in connection with the verification of signatures. A r t ic l e 33. An endorsement transfers all the rights arising out of a bill of exchange. If the endorsement is in blank, the holder m ay : (1) Fill up the blank either with his own name or with the name of some other person ; (2 ) Endorse the bill again in blank, or to some other person ; (3) Transfer the bill to a third person without filling up the blank, and without endorsing it. A r t ic l e 14. In the absence of any contrary stipulation, the endorser guarantees the acceptance and payment. He m ay prohibit any further endorsement ; in this case he gives no guarantee to the persons to whom the bill is subsequently endorsed. A r t ic l e 15. The possessor of a bill of exchange is deemed to be the lawful holder if he shows his title through an uninterrupted series of endorsements, even if th e last endorsement is in blank. In this connection, cancelled endorsements are deemed to be null and void. W hen an endorsement in blank is followed by another endorsement, the person who signed this last endorsement is deemed to h a v 3 acquired the bill by the endorsement in blank.,,, 1 In the present report, to avoid repetition, resolutions adopted by the Congress of the Internationa] amber of Commerce a t Stockholm in June-July 1926 will be referred to as I.C.C. proposals.

6 W here a person has been dispossessed of a bill of exchange, in any manner whatever, the holder who shows his right thereto in the manner mentioned in the preceding paragraph is not bound to give up the bill unless he has acquired it in bad faith, or unless in acquiring it he has been guilty of gross negligence. Note. For the sake of clearness, the third sentence of the first paragraph of Article 15 (Uniform Regulation)1 has heen inserted as the second sentence in the present draft ; for the same reason, the words in this connection have also been added. A r t ic l e 16. Persons sued on a bill of exchange cannot set up against the holder defences founded on their personal relations with the drawer, or with previous holders, unless the holder has acquired the bill in bad faith. Note. The wording has heen altered on account of the very limited force of the expression fraudulent understanding, and also in order to bring the wording of this article into line with th a t of Article 15. A r t ic l e 17. When an endorsement contains the stipulation value in collection ( valeur en recouvrement ), for collection ( pour encaissement ), by procuration ( par procuration ) or any other phrase implying a simple mandate, the holder m ay exercise all rights flowing from the bill of exchange, but he can only endorse it in his capacity as agent. In this case the parties liable can only set up against the holder defences which could be set up against the endorser. The mandate contained in an endorsement by procuration is not revotced by the death of the party giving the mandate or by the fact that he has become incapable. Note. In certain countries, for instance in Belgium, endorsement in blank is at present held to be tantam ount to endorsement by procuration ; as the new draft makes endorsement in blank tantam ount to an endorsement transferring rights, it m ust be understood that, an endorsement is only an act of procuration when the will of the parties has been clearly expressed. The last paragraph has been inserted as an exception to ordinary law, with a view to increasing the credit of the bill of exchange and facilitating its circulation. A r t ic l e 18. When an endorsement contains the stipulation value in security, value in pledge, or any other stipulation implying a pledge, the holder m ay exercise all the rights flowing from the bill of exchange, but an endorsement by him only avails as an agency endorsement, without prejudice to the right of the creditor who holds the pledge to realise the pledge when the debt falls due. The parties liable cannot set up against the holder defences founded on their personal relations with the endorser, unless the holder has acquired the bill in bad faith. Note. The addition at the end of the first paragraph is intended to make it quite clear th at a creditor to whom a bill of exchange has been made over as a pledge may, like any other creditors holding a pledge, realise his pledge in accordance w ith the law of the land. The alteration in the second paragraph is intended to bring the wording into line with Articles 15 and 16. A r t ic l e 19. An endorsement after m aturity has the same effect as an endorsement before maturity. Nevertheless, an endorsement after protest for non-paym ent, or after the expiration of the limit of time fixed for drawing it up, operates only as an ordinary cession. C H A P T E R III. A C C E P T A N C E. A r t ic l e 20. Up to m aturity, a bill of exchange m ay be presented to the drawer for acceptance a t the place where he resides, either by the holder or by a simple possessor. A r t ic l e 21. In any bill of exchange, the drawer m ay stipulate th at it shall be presented for acceptance, with or without fixing a limit of tim e for presentment. Except in the case of a domiciled bill, or a bill drawn payable at a certain time after sight, he m ay prohibit presentm ent for acceptance. He m ay also stipulate th at presentm ent for acceptance shall not take place before a certain date. E v e ry endorser m ay stipulate that the bill shall be presented for acceptance with oi without fixing a limit of time for presentment, unless the drawer has prohibited acceptance. 1 W hen the letters U.S. (Uniform Eegulatiou) are preceded or followed by a number, that numb corresponds to the num ber of the article of the Hague Uniform Regulation.

7 A r t ic l e 22. Bills of exchange payable at a certain time after sight m ust be presented for acceptance within six m onths of their date. The drawer m ay abridge or prolong this time. These times m ay be abridged by the endorsers. A r t ic l e 23. W hen a bill of exchange is presented for acceptance, the holder is not obliged to leave it in the hands of the drawee. The drawee m ay demand th at a bill shall be presented to him a second time on the day after the first presentment. Parties interested are not allowed to set up th at the right to make this demand has not been exercised unless this fact is specified in the protest. A r t ic l e 24. An acceptance is written on the bill of exchange. I t is expressed by the word accepted, or any other equivalent term. It is signed by the drawee. The mere signature of the drawee on the face of the bill constitutes an acceptance. W hen a bill is payable at a certain time after sight, or when it m ust be presented for acceptance within a certain limit of time in accordance with a special stipulation, the acceptance m ust be dated as of the day when the acceptance is given, unless the holder requires th at it should be dated as of the day of presentment. If it is undated, the holder, in order to preserve his right of recourse against the endorsers and the drawer, m ust authenticate the omission by a protest drawn up within the proper time. A r t ic l e 25. An acceptance is unconditional, but the drawee may restrict it to part of the sum payable. Every other modification introduced by an acceptance into the tenor of the bill of exchange operates as a refusal to accept. Nevertheless the acceptor is bound according to the terms of his acceptance. Note. Article 25 U.E., paragraph 1, reads as follows : An acceptance is unconditional, but it may be restricted, etc. The wording has been changed in order to avoid all interpretative errors as to the meaning of the provision. A r t ic l e 26. When the drawer of a bill has specified a place of paym ent, other than the residence of the drawee, without mentioning the domiciliary, the acceptance m ust specify the person who is to pay the bill. In default of this specification, the acceptor is deemed to have undertaken to pay the bill himself at the place of paym ent. If a bill is payable at the residence of the drawee, he m ay in his acceptance specify an address in the same place where paym ent is to be effected. A r t ic l e 27. By accepting, the drawee undertakes to pay the bill of exchange at its m aturity. In default of paym ent, the holder, even if he is the drawer, has a direct action on the bill of exchange against the acceptor for all th at can be demanded in accordance with Articles 47 and 48. A r t ic l e 28. W here the drawee who has put his acceptance on a bill has cancelled it before the bill has left his hands, acceptance is deemed to be refused ; nevertheless, the drawee is bound, according to the terms of his acceptance, if he has cancelled it after he has in writing informed the holder or any other party who has signed the bill th at he has accepted it. CH APTER IV. AVALS. A r t ic l e 29. Paym ent of a bill of exchange m ay be guaranteed by an aval. This guarantee m ay be given by a third person, or even by a person who has signed as a party to the bill. A r t ic l e 30. An aval is either given on the bill itself, or on an allonge It is expressed by the words good as aval, or by any other equivalent formula. It is signed by the giver of the aval. It is deemed to be constituted by the mere signature of the giver of the aval placed on the face of the bill, except in the case of the signature of the drawee or of the drawer. An aval m ust specify for whose account it is given. In default of this, it is deemed to be given for the drawer.

8 8 A r t ic l e 31. The giver of an aval is bound in the same m anner as the person whom he guarantees. His engagement is valid even when the liability which he has guaranteed is inoperative for any reason other than defect of form. He has, when he pays the bill of exchange, the right to go back on the person he has guaranteed, and the guarantors of the latter. A r t ic l e 3 1 a (new ). The above provisions do not apply to what is known as aval by separate document ( aval par acte séparé ). Note. The experts pointed out th a t an aval of this kind is not a document of exchange ( acte camhiaire ), but an ordinary document. Consequently, non-acceptance of the provision proposed by the I. C. C. (Article 30)1 does not mean th at the experts are opposed to the practice of aval by separate document" which is custom ary in certain countries ; they think, however, th at it would be preferable to allow each country to regulate, as it prefers, an operation which is in reality a special kind of surety and not a true aval of exchange ( aval cambiaire ). This also seems to have been the opinion of the authors of the U. R., who were careful to insert in the Hague Convention an article (No. 5) to the effect th a t every Contracting State may provide th a t an aval (collateral guarantee) m ay be given in its own territory by a separate document. C H A PTEE V. TIM E OF PAYM ENT. A r t ic l e 32. A bill of exchange m ay be drawn payable : On a fixed day ; A t a certain time after date ; A t sight ; A t a certain time after sight. Bills of exchange at other m aturities or payable by instalm ents are null and void. Note. Certain countries apparently are in favour of maintaining the option of issuing bills of exchange payable in m arket ( en foire ). The experts hold th a t this practice is not w ithout inconvenience in th a t there may be uncertainty as to the exact date on which the bill is to mature. Ar t ic l e 33. A bill of exchange at sight is payable on presentm ent. It m ust be presented for paym ent within the legal or contractual limits of time fixed for the presentment for acceptance of bills payable at a certain time after sight. Note. It was suggested th a t the following phrase m ight be added at the end of this article : or on one of the two business days following. As the bill may be protested (Article 37) two days after the date on which it should have been presented w ithout there being any practical possibility of proving that the bill was presented within the period prescribed by law, the authors of this suggestion think th at it would he simpler and more practical to increase the time for presentm ent by the time allowed for protesting the bill (two business days). A theoretical objection was, however, raised to this solution on the grounds that nonpresentm ent for paym ent w ithin the time prescribed by law should properly be penalised by loss of recourse. Under these circumstances, the wording of the U.R. has been retained. A r t ic l e 34. The m aturity of a bill of exchange payable at a certain time after sight is d e te rm in e d either by the date of the acceptance, or by the date of the protest. In the absence of the protest, an undated acceptance is deemed so far as regards the acceptor to have been given on the last day of the limit of tim e for presentm ent either legal or contractual. A r t i c l e 35. W here a bill of exchange is drawn at one or more m onths after date, or after sight, the bill m atures on the corresponding date of the m onth when paym ent m ust be made. If there be no corresponding date, the bill m atures on the last day of this month. W hen a bill of exchange is drawn at one or more m onths and a half after date or sight, entire m onths m ust first be calculated. If the m aturity is fixed at the commencement or middle (m id-january or mid- February, etc.) or the end of the m onth, the 1st, 15th, or the last day of the m onth is to be understood. The expressions eight days or fifteen days indicated not one or two weeks, but a period of eight or fifteen actual days. The expression half-m onth means a period of fifteen days. 1 The I.C.C. proposes th a t paragraph 1 of Article 30 should be worded as follows : An aval is given either on the bill itself or on an allonge or in a separate deed".

9 A r t ic l e 36. W hen a bill of exchange is payable on a fixed day in a place where the calendar is different from the calendar of the place of issue, the date of m aturity is deemed to be fixed according to the calendar of the place of paym ent. W hen a bill of exchange drawn between two places having different calendars is payable at a certain time after date, the day of issue is referred to the corresponding day of the calendar in the place of paym ent, and the m aturity is fixed accordingly. The time for presenting bills of exchange is calculated in accordance with the rules of the preceding paragraph. These rules do not apply if a stipulation in the bill or even the simple terms of the instrument indicate an intention to adopt some different rule. CH APTER VI. PAYMENT. A r t ic l e 37. The holder m ust present a bill of exchange for paym ent either on the day on which it is payable, or on one of the two business days which follow. Presentm ent at a clearing-house is equivalent to a presentm ent for payment. The Contracting States shall themselves designate the institutions to be regarded as clearing-houses. Note. The experts were of opinion th at it would not be desirable to authorise the various countries to m aintain or adopt different rules for times of presentm ent and paym ent, as the I.C.C. proposed. If certain countries refuse to adopt this uniform period, the resulting conflict of laws may be settled under an article in the draft Convention to the effect th at the m atter shall tie dealt with according to the law of the place of payment. A r t ic l e 38. The drawee who pays a bill of exchange may require th at it shall be given up to him receipted by the holder. The holder m ay not refuse partial paym ent. In case of partial paym ent the drawee m ay require th at m ention of this paym ent shall be made on th j bill, and th at a receipt therefor shall be given to him. Note. The addition proposed by the I.C.C. has been rejected1. If the law of any one country prohibits partial paym ent, the effects elsewhere of such prohibition are regulated by Article 9 of the draft Convention on the conflict of laws. A r t ic l e 39. The holder of a bill of exchange cannot be compelled to receive paym ent thereof before maturity. The drawee who pays before m aturity does so at his own risk and peril. He who pays at m aturity is validly discharged, unless he has been guilty of bad faith or gross negligence. He is bound to verify the regularity of the series of endorsements, but not the signature of the endorsers. Note. The experts desire to point out th a t absolute failure to verify the identity of the person presenting the bill for paym ent may, in certain circumstances, am ount to gross negligence. The experts hesitated before adopting this wording of Article 39 because the rules it lays down may cause a certain amount of difficulty ; for instance, Italian legal practice requires verification implying reasonable diligence. The experts also hesitated for another reason : the drawee to whom the bill of exchange is presented for payment by a holder may not know how to act if the bill bears an illegible signature under the endorsement, so that the drawee is unable to ascertain whether this signature is really the name of the previous endorser. The words bad faith have been inserted in the last paragraph instead of fraud in order to bring this article into line w ith Article 15. The change was not accepted unanimously ; certain experts held th a t the expression bad faith was too comprehensive and less definite than fraud. A r t ic l e 40. When a bill of exchange is drawn payable in a currency which is not current in the place of payment, the sum payable may be paid according to its value, on the day when paym ent can be demanded, in the currency of the country, unless the drawer has stipulated th at payment shall be made in the specified currency (stipulation for actual paym ent in foreign currency). The usages of the place of paym ent determine the value of foreign currency. Nevertheless, the drawer m ay stipulate th at the sum payable shall be calculated according to the rate expressed in the bill, or to be determined by an endorser ; in this case the sum payable m ust be paid in the currency of the country. If the am ount of the bill of exchange is specified in a currency having the same denomination, but a different value in the place of issue and the place of paym ent, reference is deemed to be made to the currency of the place of payment. Note. The experts consider th at the rules laid down in this article are clear and equitable. At the same time they realise th a t difficulties may arise owing to m onetary instability in certain countries ; they feel, however that this is a question of financial policy outside their province. 1 The I.C.C. proposed to add a last paragraph to Article 38 worded as follows : However, each country has the right within its own territory to limit the obligation to accept partial paym ent to paym ents actually tendered ( paiement portable ).

10 10 A r t ic l e 41. When a bill of exchange is not presented for paym ent within the limit of time fixed by Article 37, every debtor is authorised to make a deposit of the am ount with the competent authority at the charge, risk and peril of the holder. CH APTBE VII. RECOU RSE FO R NON-ACCEPTANCE OR NON-PAYMENT. A r t ic l e 42. The holder m ay exercise his right of recourse against the endorsers, the drawer and the other parties liable : At m aturity : If paym ent has not been made. Even before m aturity : (1) If acceptance has been refused ; (2 ) W here the drawee, whether he has accepted or not, has failed, or has suspended paym ent, even if the suspension is not authenticated by a judgm ent ; or where execution has been levied against his goods without result ; (3) W here the drawer of a non-acceptable bill has failed. Note. The French, Italian and Belgian experts strongly urged th a t the persons liable should be allowed to choose between providing surety or making immediate paym ent. They added th a t they considered the practice to be both customary and equitable. A r t ic l e 43. Default of acceptance or paym ent m ust be evidenced by a formal document (protest for non-acceptance, or non-paym ent). Protest for non-acceptance m ust be m ade within the limit of time fixed for presentment for acceptance. If in the case provided for by Article 23, paragraph 2, the first presentment takes place on the last day of th a t time, the protest m ay nevertheless be drawn up on the next day. Protest for non-paym ent m ust be m ade either on the day when the bill is payable, or on one of the two following business days. Protest for non-acceptance dispenses with presentm ent for paym ent and protest for non-payment. I f the drawee, whether he be the acceptor or not, suspends payment, or if execution has been levied against his goods without result, the holder cannot exercise his right of recourse until after presentm ent of the bill to the drawee for paym ent, and after the protest has been drawn up. I f the drawee, whether he be the acceptor or not, becomes a declared bankrupt, or if the drawer of a non-acceptable bill becomes a declared bankrupt, the production of the judgment pronouncing the failure of the drawer suffices to enable the holder to exercise his right of recourse. Note. (a) The second paragraph of the U.K. text has been inserted as the third paragraph for the sake of logical sequence ; (b) I t seemed reasonable to adopt, in the case of the declared bankruptcy of the drawee, the same solution as th a t adopted in the case of the declared bankruptcy of the drawer. A r t ic l e 44. The holder m ust give notice of non-acceptance or non-paym ent to his immediate 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, those which follow the presentment. Every endorser must, within two days, give notice to his im m ediate endorser of the notice which 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 limit of time mentioned above runs from the receipt of the preceding notice. W here an endorser either has not specified his address or has specified it in an illegible m anner, it is sufficient th at notice should be given to the preceding endorser. A person who m ust give notice m ay give it in any form whatever, even by the simple return of the bill of exchange. He m ust prove that he has given notice within the time allowed. He shall be deemed to have given it 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 lose his right of recourse. He is responsible for the injury, if any, caused by his negligence, but the damages shall not exceed the am ount of the bill of exchange. Note. The experts point out, w ith regard to the first paragraph, taking into account the I.C.C. s proposal, th at from a juridical point of view there would be no objection to reducing the limit of tim e from four days to two. Certain countries, however, would find it difficult to accept a two-day lim it ; the period of four days has accordingly been retained. W ith regard to the fourth paragraph, the experts point out th a t it is not necessary to give the names and addresses of the previous endorsers when the bill itself is returned. It was also pointed out th a t, in accordance w ith the practice followed iu certain countries, for instance in France, every S tate will be entitled, in addition to the notices referred to in Article 44, to lay down that the public officer charged with drawing up the protest shall give notice of non-paym ent to the drawer of the bill of exchange when the bill contains the name and address of the latter. This meets the I.C.C. proposal, which reproduces Article 11 of the Hague Convention.

11 11 A r t ic l e 45. The drawer may, by the stipulation retour sans frais, sans protêt, or any other equivalent expression, allow the holder to dispense with a protest for non-acceptance or non-payment, in order to exercise his right of recourse. I f the stipulation is inserted by an endorser it shall be deemed to be unwritten. This stipulation does not release the holder from presenting the bill within the prescribed time, nor from giving notice of dishonour to a preceding endorser or the drawer. The burden of proving the non-observance of the limits of time lies on the person who seeks to set them up against the holder. This stipulation takes effect as regards all persons who have signed the bill. If, in spite of this stipulation, the holder has the protest drawn up, he m ust bear the expenses thereof. Note. The experts consider th at an endorser should not be allowed to insert a stipulation retour sans frais, retour sans p rotêt, since if he were allowed to do so there might be some doubt as to whether this stipulation could be enforced against subsequent endorsers. Hence the words or an endorser in Article 45 of the U.R., paragraph 1, have been om itted in the first paragraph. Consequently the words inserted by the drawer in the fourth paragraph have also been omitted, since the drawer alone is entitled to insert the stipulation. For the same reason the last sentence of the last paragraph of Article 45 U.R. has been omitted. A r t ic l e 46. All those who have drawn, accepted, endorsed or guaranteed by aval 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 belongs to every person who has signed the bill and taken it up. Proceedings against one of the parties liable do not prevent proceedings against others, though they m ay be subsequent to the person first proceeded against. Note. The change made only affects the French text ; the word solidairement has been inserted instead of à la garantie solidaire in the U. R. text. A r t ic l e 47. The holder m ay recover from the person against whom he exercises his right of recourse : (1) The am ount of the unaccepted or unpaid bill of exchange with interest, if interest has been stipulated for ; (2) Interest at the rate of six per cent from the date of m aturity ; (3) The expenses of protest and of the notices given by the holder to his imm ediate endorser and the drawer, as well as other expenses. If the right of recourse is exercised before m aturity, the am ount 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 on the place where the holder resides. Note. The experts held th a t it was desirable to raise the rate of interest from five to six per cent, the latter rate being more in keeping w ith the present economic conditions in most countries. This was also the opinion of the I.C.C., which proposed a minimum rate of five per cent. On a m ajority vote, the experts have om itted No. 4 of Article 47 Û.R., dealing with the right to commission. They think th a t as this right to commission is only customary in a few countries and as it might be levied concurrently with the similar commission mentioned in Article 48, No. 4, it would be preferable uot to mention this right as a m atter of common usage, b u t to allow each country to decide as it thinks best. The experts also felt th at it would be desirable to omit, in the last paragraph of Article 47, th e option under which the holder is allowed to calculate discount either according to th e official rate of discount or according to the m arket rate. They point out th at it is often difficult to determine the m arket rate in many countries, and th a t the decision might in any case be disputed. They adm it th a t the m arket rate is more in keeping w ith economic conditions, b u t the official rate is certain, and consequently easy to determine. They do not think, therefore, th a t the option should be maintained. A r t ic l e 48. 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 six per cent, starting from the day when he m ade paym ent ; (3) Expenses which he has incurred. Note. In conformity w ith the provisions of the previous article, the rate of interest has been raised to six per cent, and in conformity with the opinion of the majority, the right- to commission has been omitted. ' A r t ic l e 49. Every party liable against whom a right of recourse is, or m ay be, exercised can require, against paym ent, th at the bill shall be given up to him with the protest and receipted account. Every endorser who has taken up and paid a bill of exchange m ay cancel his own endorsement and those of subsequent endorsers.

12 12 A r t i c l e 50. In the case of the exercise of the right of recourse, after a partial acceptance, the party who pays the sum in respect of which the bill has not been accepted can require th at this paym ent should be specified on the bill, and th at he should receive a receipt therefor. The holder m ust also give him a certified copy of the bill, together with the protest, in order to allow the exercise of subsequent recourse. A r t ic l e 51. Every person having the right of recourse may, in the absence of an agreement to the contrary, reimburse himself by means of a fresh bill (redraft) which is not domiciled, and which is drawn at sight on one of the parties liable to him. The redraft includes, in addition to the sums m entioned in Articles 47 and 48, brokerage and the cost of the stam p of the redraft. If the redraft is drawn by the holder, the sum payable is fixed according to the exchange for a sight draft draw n on the place where the original bill was payable, upon the place where the party liable resides. If the redraft is draw n by an endorser, the sum payable is fixed according to the exchange for a sight draft at the place where the drawer of the redraft resides, drawn upon the place where the party liable resides. A r t ic l e 52. After the expiration of the limits of time fixed (1) For the presentm ent of a bill of exchange at sight or at a certain time after sight ; (2) For drawing up the protest for non-acceptance or non-paym ent ; (3) For presentm ent for paym ent 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 presentm ent for acceptance within the limit of time stipulated for by the drawer, the holder loses his right of recourse for non-paym ent, as well as for non-acceptance, unless it appears from the term s of the stipulation th at the drawer only m eant to release himself from the guarantee of acceptance. If the stipulation for a limit of time for presentm ent is contained in an endorsement, the endorser only can avail himself of it. Note. The question w hether the drawer is obliged to provide cover for the hill on m aturity and whether the holder has any special rights on this cover is not discussed in these proposals. The experts observe th a t in legislation which recognises the transferability of ownership in the provision or cover for the bill, or which lays down th a t the holder has an exclusive right over such cover, the loss referred to in this paragraph does not produce any effect as against the drawer who has not provided cover. Countries, therefore, which desire to m aintain this rule could modify the last sentence of the first paragraph as follows : the holder forfeits his right of recourse against the endorsers, against the drawer who has not provided cover for the bill, and against, etc. The meaning attributed by lawyers to the concept provision or cover varies from country to country ; it has not therefore been possible to combine the results of so many different conceptions w ith one text which could be accepted by all. Consequently the conflict of laws which may occur is dealt w ith in the draft Convention on this special subject. A r t ic l e 53. Should the accomplishment within the proper time of a proceeding necessary for the exercise or preservation of rights flowing from a bill of exchange be prevented by a legal provision enacted abroad or by an insurmountable obstacle (vis major), these rights shall, notwithstanding the expiration of the limit of time, still subsist, if the proceeding in question is accomplished as soon as possible after the obstacle has disappeared, and in any case within a period of thirty days. The holder is bound w ithout delay to give notice of the case of vis major to his immediate endorser, and to specify this notice, which he m ust date and sign, on the bill or on an allonge ; as regards other m atters, the provisions of Article 44 apply. Facts purely personal to the holder or to the person whose duty it is to present the bill or draw up the protest are not deemed to constitute cases of vis major. Note. 1. To the solution proposed in Article 53 there attaches a reservation in countries in which the holder becomes owner of the cover ; in the absence thereof the holder might immediately go back on the drawer, notw ithstanding the im pedim ent of vis major. 2. This solution, which is not unlike th a t suggested by the I.C.C., differs from the solution adopted in the U.K. draft, in which it was laid down th at when vis major continues to operate for more than thirty days after the m aturity of the bill, recourse may be exercised, and neither presentm ent nor drawing up the protest shall be necessary. The system accepted at The Hague seemed to the experts to be overcomplicated and contrary to current practice in most countries. C H A PT EE V III. IN T E R V E N T IO N F O E HO NO UE. A r t ic l e 54. The drawer or an endorser m ay specify a person who is to accept or pay in case of need. A bill of exchange may, under the conditions hereafter set forth, be accepted or paid by a person who intervenes for any person who has signed it. The intervener m ay be a third person, even the drawee, or the person already liable on the bill, except only the acceptor. The intervener is bound to give w ithout delay notice of his intervention to the party for whom he has intervened.

13 13 I. Acceptance by Intervention (for H onour). A r t ic l e 55. There may be acceptance by intervention in all cases where the holder has the right of recourse before m aturity on a bill which is capable of acceptance. The holder may refuse an acceptance by intervention, even when it is offered by a person designated to accept or pay in case of need. If he permits the acceptance he loses his right of recourse before m aturity against the parties liable to him. Note. Several experts would prefer th a t the rule laid down in the second paragraph should not apply when the person who is to accept or pay in case of need has been designated by the drawer, particularly when this person happens to be in the same place as the drawee. They think that, in this case, the holder should be bound rather than entitled to present the bill for acceptance by the person designated to acts in case of need, and th a t if this person accepts, the holder should lose all right 0 1 recourse on the grounds of nonacceptance. A r t ic l e 56. Acceptance by intervention is specified on the bill of exchange. It is signed by the intervener. It specifies for whose account it has been given, and in default of this specification the acceptance is deemed to have been given for the drawer. A r t ic l e 57. The acceptor by intervention is liable to the holder and to the endorsers subsequent to the party for whose account he intervened in the same m anner as the latter. In spite of an acceptance by intervention, the party for whose honour it has been given and the parties liable to him can require the holder, in exchange for paym ent of the sum mentioned in Article 47, to give up the bill, and the protest, if any. II. Payment by Intervention. A r t ic l e 58. Paym ent by intervention m ay take place in all cases where either at m aturity or before maturity the holder has the right of recourse. At the latest it m ust be made on the morrow of the last day allowed for drawing up the protest for non-payment. A r t ic l e 59. If a bill has been accepted by intervention, or if persons have been specified to pay it in case of need, the holder m ust at the place of paym ent present the bill to all these persons, and, if need be, cause a protest for non-paym ent to be drawn up at the latest on the morrow of the last day for drawing up the protest. In default of protest within this limit of time, the p arty who has indicated the case of need, or for whose account the bill has been accepted, and the subsequent endorsers are discharged. A r t ic l e 60. Paym ent by intervention m ust include the whole sum which the p arty for whom it is made would have had to pay. The holder who refuses this paym ent loses his right of recourse against those who would have been discharged thereby. Note. The last words of the first paragraph of Article 60 U.K. concerning the right to commission have been om itted in conformity with the alteration made in Articles 47 and 48. A r t ic l e 61. Paym ent by intervention m ust be authenticated by a receipt given on the bill of exchange specifying for whom paym ent has been made. In default of this specification, payment is deemed to have been made for the drawer. The bill of exchange and the protest, if the protest has been drawn up, m ust be handed over to the person paying by intervention. A r t ic l e 62. The person who pays by intervention is subrogated to the rights of the holder against the party for whom he has paid, and against the parties liable to him. Nevertheless, he cannot endorse the bill of exchange afresh. Endorsers subsequent to the party for whom paym ent has been made are discharged. In case of competition for paym ent by intervention, the paym ent which effects the greater num ber of releases has the preference. A n y person ivho, with a knowledge of the facts, intervenes in a manner contrary to this rule loses his right of recourse against those who would have been discharged. Note. The change has been made in the third paragraph w ith a view to making the corresponding U.K. text clearer.

14 14 CHAPTER IX. PARTS OF A SET, AND COPIES. I. Parts of a Set. A r t ic l e 63. A bill of exchange can be drawn in two or more identical parts. These parts m ust be num bered and, in the body of the instrum ent itself, the number of parts issued must be indicated ; in default of which, each part is considered as a separate bill of exchange. Note. The m ajority of experts hold th at each part of a bill of exchange drawn in two or more parts should contain a statem ent as to the num ber of parts, in order to dispel any doubts which might be entertained by the drawee to whom it is presented for paym ent. They propose to omit the third paragraph of Article 63 U.R. ; this paragraph is of no practical utility and its provisions increase the holder s risks. A r t ic l e 64. Paym ent made on one part of a set operates as a discharge, even although there is no stipulation th at this paym ent annuls the effect of the other parts. Nevertheless, the drawee is liable on each accepted part which he has not recovered. An endorser who has transferred parts of a set to different persons, as well as subsequent endorsers, are liable on all the parts bearing their signatures which have not been restored. A r t ic l e 65. A party who has sent one part for acceptance m ust indicate on the other parts the name of the person in whose hands this part will be found. That person is bound to give it up to the lawful holder of another part. If he refuses, the holder cannot exercise his right of recourse until after he has a protest drawn up, specifying : (1) That the part sent for acceptance has not been given up to him on his demand ; (2) That acceptance or paym ent could not be obtained on another of the parts. II. Copies. A r t ic l e 66. Every holder of a bill of exchange has the right to make copies of it. The copy m ust reproduce the original exactly, with the endorsements and all other statements to be found thereon. I t m ust specify where the copy ends. I t may be endorsed and guaranteed by aval in the same manner and with the same effects as the original. A r t ic l e 67. The copy m ust specify the person in possession of the original instrum ent. This person is bound to hand over the aforesaid instrum ent to the lawful holder of the copy. If he refuses, the holder cannot exercise his right of recourse against the persons who endorsed the copy, until he has had a protest drawn up specifying th at the original has not been given up to him on his demand. CH APTER X. FO R G ER Y AND ALTERATIONS. Ar t ic l e 68. The forgery of a signature, even if it be th at of the drawer or of the acceptor, in no wise affects the validity of the other signatures. A r t ic l e 69. In case of alteration of the text of a bill of exchange, parties who have signed subsequent to the alteration are bound according to the terms of the altered text ; parties who have signed before the alteration are bound according to the term s of the original text. C H A PTER X I. PR ESC R IPTIO N. A r t ic l e 70. All actions arising out of a bill of exchange against the acceptor are barred after three years, counting from the date of m aturity. Actions by the holder against the endorsers and against the drawer are barred after one year from the date of the protest drawn up in proper time or from the date of maturity where there is a stipulation retour sans frais.

15 15 Actions of recourse by endorsers against each other and against the drawer are barred after six months, counting from the day when the endorser took up and paid the bill, or from the day when he himself was sued. Note. It is understood th a t the pleas of prescription referred to in Article 70 must, in order to take effect, be put forward by the party who desires to avail himself of them ; the magistrate cannot advance these considerations of his own motion. As regards the rights of recourse of the holder against a drawer who has not provided cover for the bill, the laws of each country will apply in accordance with the note to Article 52. A r t ic l e 71. Interruption of prescription only operates against the party with respect to whom the interrupting proceeding has been done. Note. As laid down in Article 16 of the Hague Convention, the legislation of each State, shall determine the causes of interruption or suspension of prescription in the case of actions on bills of exchange. CH APTBE X II. G ENERAL PROVISIONS. A r t ic l e 72. Payment of a bill of exchange which falls due on a legal holiday cannot be demanded until the next business day. So, too, all proceedings relating to a bill of exchange, notably presentment for acceptance and protest, can only be made on a business day. Where any of these proceedings must be taken within a certain limit of time whereof the last day is a legal holiday, the limit of time is prolonged till the first business day which follows the expiration of th at time. Interm ediate legal holidays are included in computing limits of time. A r t ic l e 73. Legal or contractual limits of time do not include the day which marks their point of departure. Note. The experts considered th a t paragraph 2 of this article should become a separate Article ; 73 (a). A r t ic l e 73 a. No day of grace, whether legal or judicial, is permitted. Promissory Notes payable to order.1 A promissory note contains : A r t ic l e 74. (1) The denomination of the instrum ent inserted in the body of it, and expressed in the language employed for drawing up the instrum ent ; (2) An unconditional promise to pay a determ inate sum of money ; (3) A specification of the time of paym ent ; (4) And of the place where paym ent m ust be made ; (5) The name of the person to whom, or to whose order, paym ent is to be made ; (6) Specification of the date and place where the promissory note is made ; (7) The signature of the person who issues the instrum ent (maker'). A r t ic l e 75. The instrument in which any of the requirements specified in the preceding article are ^anting is invalid as a promissory note, except in the eases mentioned in the following Paragraphs : A promissory note in which no time of paym ent is specified is deemed to be payable at sight. In default of special mention, the place where the instrum ent is issued is deemed to be the place of paym ent, and at the same time the residence of the maker. A promissory note which does not specifiy its place of issue is deemed to have been made 111the place designated beside the name of the maker. 1 Articles 74 to 77 are Articles 77 to 80 of the U.E.

16 16 A r t ic l e 76. The following provisions relating to bills of exchange apply to promissory notes so far as they are not inconsistent with the nature of this instrum ent, namely : Endorsem ent (Articles 10-19) ; Guarantee by aval (Articles 29-31) ; Time of paym ent (Articles 32-36) ; Paym ent (Articles 37-41) ; Recourse in case of non-paym ent (Articles 42-49, 51-53) ; Paym ent by intervention (Articles 54, 58-62) ; Copies (Articles 66 and 67) ; Forgeries and alterations (Articles 68 and 69) ; Prescription (Articles 70 and 71) ; Legal holidays, com putation of limits of tim e ; and Prohibition of days of grace (Articles 72, 73 and 73a). The following provisions are also applicable to a promissory note, namely : The provisions concerning the domicile of bills (Articles 4 and 26) ; stipulation for interest (Article 5) ; divergent statem ents of the sum payable (Article 6 ) ; consequences of signature by an incapable person (Article 7) or by a person who acts without authority or exceeds his authority (Article 8 ). = A r t ic l e 77. The m aker of a promissory note is bound in the same m anner as an acceptor of a bill of exchange. Promissory notes payable at a certain time after sight m ust be presented for the visa of the m aker within the limits of tim e fixed by Article 2 2. The limit of time runs from the date of the visa signed by the m aker of the note. The refusal of the m aker to give his visa with the date thereon m ust be authenticated by a protest (Article 24) the date of which gives the point of departure for the limit of tim e from sight.

17 17 The aim of which is : DRA FT ARTICLES OF A CONVENTION. (1) To render the validity and effects of undertakings entered into by means of bills of exchange and promissory notes independent of the observance of stam p laws ; (2) To lay down rules governing the conflict of laws in connection with bills of exchange and promissory notes. A r t ic l e 1. Penalties for the Non-observance of Stamp Laws. If their laws do not already make provision to this effect, the Contracting States undertake to alter their laws so th at the validity of obligations arising out of a bill of exchange or a promissory note or the exercise of the rights th at flow therefrom shall not be subordinated to the observance of the provisions concerning the stamp. Nevertheless, the Contracting States m ay suspend the exercise of these rights till the stamp laws have been complied with. They m ay also provide th at the quality and effects of an instrum ent immediately executory which, according to their legislation m ay be attributed to a bill of exchange, shall be subject to the condition th at the stam p law has, from the issue of the instrum ent, been duly complied with in accordance with their laws. Note. The above is a reproduction of Article 19 of the Hague Convention. All the experts, with one exception, recommend its adoption and emphasise the extreme importance of this question. The Committee of Experts which m et in December 1926 was of the same opinion when it stated th a t it attached the greatest importance to the adoption and application by the greatest possible num ber of countries of the provisions of Article 19 of the Hague Convention. A r t ic l e 2. Conflict of Laws ; General Provision. The Contracting States undertake to apply inter se, for the settlem ent of the conflicts of laws hereinafter mentioned in connection with bills of exchange and promissory notes, the rules set out in the following articles. A r t ic l e 3. Capacity. The capacity of a person to bind himself by a bill of exchange shall be determined by his national law. If this national law provides th at the law of another State is competent to deal with the question this latter law shall be applied. A person who lacks capacity according to the law specified in the preceding paragraph is nevertheless bound, if he entered into the obligation in the territory of a State according to whose law he would have the requisite capacity. Every Contracting State m ay refuse to recognise the validity of an engagement by means of a bill of exchange entered into by one of its citizens which would not tie deemed valid in the territory of the other Contracting States otherwise than under the application of the preceding paragraph of this article. Note. This proposal was only adopted by a m ajority vote. The experts had in view the necessity of establishing guiding principles for the settlem ent of conflicts of laws in this connection, and they hold th at the rule laid down in the first paragraph of 74 U.K. should obviously be taken as a basis for the settlement of conflicts. Moreover, they are of opinion th at very special importance should be attached to strengthening the credit of the instrum ent w ith a view to ensuring and facilitating its circulation ; from this point of view they felt that the lex loci contractus could not be neglected. They would be prepared to accept the rule already enunciated by the first Committee of Experts in December 1926, to the effect that every signature binds the signatory everywhere when it binds him in the country in which he signed. They feel, however, that the severity of this rule should be relaxed so as to prevent national laws for the protection of incapable persons being circumvented by the chance signing of an instrum ent in foreign territory. They have therefore inserted as a third paragraph in this article the text of Article 18 of the Hague Convention. A r t ic l e 4. Form of Contracts. The form of any contract arising out of a bill of exchange or promissory note is regulated by the laws of the State within whose territory this contract has been made. If, however, the obligations entered into by means of a bill of exchange are not valid according to the provisions of the preceding paragraph, but are in conformity with the laws of the State in which a subsequent contract has been entered into, the circumstance that the previous contracts (ire irregular in form does not invalidate the subsequent contract. Note. The experts think th a t it is desirable and necessary to add this condition to Article 75 TJ.E. so that a defect in form shall not endanger the circulation of the bill. A r t ic l e 5. Nature and Effects of the Obligations entered into. The effects of the obligations entered into by means of a bill of exchange or promissory n te are governed, without prejudice to the following articles, by the law of the residence f the signatory, unless some other place has been indicated in the instrum ent for the execution of the signatory s engagement.

18 18 The effects of the obligation entered into by the person giving an aval and by the acceptor for honour are governed by the laws applicable to the obligation entered into by the person on whose behalf the aval or acceptance for honour has been granted. A r t i c l e 6. Transfer of the Cover for the Bill ( Provision ). The question whether the beneficiary and succession holders of the bill have special rights on the cover ( provision ) and the nature of these rights, is determined by the law of the country in which the bill of exchange is payable. Note. In enunciating this rule the experts had in mind the absolute necessity, in their opinion, of enhancing the credit of bills of exchange to the greatest possible extent. They hold th a t this object is attained by choosing the law of the country in which the bill of exchange is payable. Thus, from the very moment of its issue, all concerned know w hat law is applicable and are consequently able to ascertain the effects of the instrument as regards transfer of the cover. Moreover, in order to discover the person to whom he may rightly make paym ent, the drawee has only to consult the laws of the country in which he resides. A r t ic l e 7. Partial Payment and Acceptance. The question whether acceptance m ay be restricted to part of the sum or whether the holder is bound to accept partial paym ent is governed by the law of the country in which the bill of exchange is payable. The same rule governs the paym ent of promissory notes. Note. This article comes into play only as between States which have not acceded to the unification or as between signatory and non-signatory States ; as between signatory States the question is settled by Article 25 of the Regulation as regards acceptance, and Article 38 as regards paym ent. A r t ic l e 8. Form and Time for protesting and other Proceedings. The form of and the limits of time for protest, as well as the form of other proceedings necessary for the exercise or preservation of rights concerning bills of exchange or promissory notes, are regulated by the laws of the State within whose territory the protest m ust be drawn up or the proceeding in question taken. Note. The experts have adopted the wording of Article 76 of the draft Regulation. This article confirms the application of the lex loci, which is undoubtedly the most acceptable solution. They feel bound, however, to recommend th a t countries which, in spite of the experts unanimous recommendation, retain a rather short period for the exercise of rights arising from protest (for instance, summons within fifteen days) should nevertheless fix adequate periods for cases in which the right of recourse is to be exercised against a person residing abroad. A r t ic l e 9. Loss or Theft of Bill of Exchange or Promissory Note ; Holder s Bankruptcy. The steps to be taken in case of the loss or theft of a bill of exchange or promissory note or in case of the holder s bankruptcy are determined by the law of the country in which the bill of exchange or promissory note is payable. A r t ic l e 10. General Reservation. The Contracting States reserve to themselves the right not to apply the principles of private international law contained in the present Convention so far as concerns : (1) An obligation undertaken outside the territories of the Contracting States ; (2) Any law which m ay be applicable in accordance with these principles, and which is not a law of one of the Contracting States. Note. The wording is th a t of Article 20 of the 1912 Hague Convention.

19 19 D E A PT R E G U LA TIO N 1 ON CH E Q U E S 2. A cheque contains : Issue and Form of Cheques. A r t ic l e 1. (1) The term cheque inserted in the body of the instrum ent and expressed in the language employed in drawing up the instrument ; (2) An unconditional order3 to pay a determ inate sum of money ; (3) The name of the person who is to pay (drawee) ; (4) A statem ent of the place where paym ent is to be made ; (5) And of the place and date when the cheque is issued ; (6 ) The signature of the person who draws the cheque (drawer). Note. (a) The change in No. (1) of Article 1 was adopted on a majority vote. (6) The word unconditional in No. 2 does not exclude the possibility of making paym ent in currency other than th a t stipulated in the cheque. (c) W ith regard to the formula adopted in Article 1, No. (4), the experts refer to the observation cited below which has been taken from the annex to the minutes of the ninth plenary meeting of the Hague Conference, 1912, page 197, Article 3 : The drawer may, however, indicate, in addition to the place for paym ent, other places a t which the cheque may be cashed, without any charge, by the holder. This does not mean a change of drawee ; the place indicated for cashing the cheque does not replace the place of paym ent for all necessary proceedings connected with the preservation of rights arising under the cheque ; it is merely an understanding with the drawee on behalf of the holder to indicate the place at which the latter may cash the cheque. (d) A mere error in the spelling of the word cheque ought not to invalidate the instrum ent as such. A r t ic l e 2. An instrum ent in which any of the requirem ents mentioned in the preceding article are wanting is invalid as a cheque, except in the cases specified in the following paragraphs ; In default of special mention, the place specified beside the nam e of the drawe 3 is deemed to be the place of paym ent, and, at the same time, the residence of the drawee. A cheque which does not mention the place of paym ent is deemed to be payable at the place of its issue. A cheque which does not specify the place of its issue is deemed to have been drawn in the place specified beside the name of the drawer. Note. W ith regard to the third paragraph, the experts point out th at naturally, if the drawee is resident at the place of issue, the cheque can only be paid at his place of residence. If the drawee cannot be found at the place of issue of the cheque, the protest must be drawn up according to the procedure followed in the case of a false address. A r t ic l e 3. A cheque m ust only be drawn on a person holding funds at the disposition of the drawer, and in conformity with an agreement, express or implied, according to which the drawee is bound to pay the cheque. Power is reserved to the Contracting States to regulate consequences, civil, penal and fiscal, where default is m ade in complying with the provisions specified in the preceding paragraph, or when a cheque, is issued post-dated, provided th at the validity of the instrument as a cheque be maintained in spite of this irregularity. Note. The changes in wording have been introduced for the sake of clearness. A r t ic l e 4. A cheque m ay be made payable to a specified person, or to his order. It may be made payable to bearer. A cheque m ade payable to a specified person with the words or to bearer, or any equivalent words, is deemed to be payable to bearer. A cheque which does not specify the payee is payable to bearer. A cheque m ay be draw n payable to draw er s order. Nevertheless, power is reserved to the Contracting States to prohibit the issue of bearer cheques drawn on the drawer himself. Note. The option of prohibiting the issue of bearer cheques drawn on the drawer himself has been inserted on account of the com petition which might arise between these cheques and banknotes. 1 This Regulation does not include rules for settling the conflict of laws ; these are embodied in separate Provisions. % 2 The experts took as the basis for their discussions the Resolutions of the 1912 Hague Conference. All changes made in the text of these resolutions are italicised. 3 The word ordre in the French tex t has been replaced by m andat.

20 20 A r t ic l e 5. A cheque is drawn on a banker. A cheque drawn on any person other than a banker is not valid as a cheque. Power is reserved to the Contracting States, so far as relates to cheques payable in their territories : (a) To determine w hat persons shall be deemed to be bankers or what persons may in this respect be assimilated to bankers ; (b) To regulate the civil, fiscal and penal consequences of drawing a cheque on a person on whom it ought not to be drawn. Note. 1. Differing from the solution contained in Article 5, paragraph 1 of the Hague Resolutions, the experts propose that, in principle, the only instrum ent to be regarded as a cheque should be one which is drawn on a banker. This is the rule adm itted in most countries ; it is explained by the fact th a t funds must be available at sight. 2. However and this is the reason for the addition in (a) States should be allowed in this connection to treat as bankers persons engaged in very similar professions ; for instance, in France agents de change or caisses publiques. 3. The addition under (b) of the word civil is a consequence of excluding the possibility of drawing a cheque on a person who is not a banker. W hen such an instrum ent is no longer to be regarded as a cheque, its effects have still to be determined a point which is left to the legislation of the individual countries. A r t ic l e 6. The drawer is the guarantor of the paym ent of a cheque. Any stipulation by which the drawer discharges himself from this guarantee is deemed to be unwritten. A r t ic l e 7. The provisions of Articles 4, 6, 7 and 8 of the draft Regulation on bills of exchange and promissory notes (which relate to the issue and form of the instrum ent) shall apply to cheques. Nevertheless, the domicile, referred to in Article 4 of the Regulation on bills of exchange can only, in this case, be the domicile of a banker. Note. The reference to Article 4 of the Regulation on bills of exchange and the addition of the last paragraph as a consequence thereof were made at the request of one of the experts who stated th a t cheques domiciled elsewhere than at the domicile of the drawee were frequently used in his country and that the practice seemed to be a useful one. Endorsement. A r t ic l e 8. Every cheque, other than a cheque to bearer, m ay be transferred by endorsement, even if it is not expressly payable to order. W hen the drawer of a cheque has inserted in it the words not to order, or any equivalent expression, the instrum ent can only be assigned according to the forms and with the effect of an ordinary assignment. A r t ic l e 9. Any endorsement m ust be unconditional. Any condition to which it is made subject shall be deemed to be unwritten. A partial endorsement is null and void. An endorsement to bearer and an endorsem ent by the drawee are equally null and void. Any person, except the drawee, who puts his signature on the back of a cheque payable to bearer is guarantor (by aval ) for the drawer. An endorsement to the drawee is equivalent to a discharge, except in the case where the drawee has two or more establishments, and the endorsement is made in favour of a branch in some place other than th at on which the cheque has been drawn. A r t ic l e 10. The provisions of Articles 12 to 17 of the draft Regulation on bills of exchange and promissory notes (which relate to endorsement) shall apply to cheques, except so far as they have reference to acceptance. Guarantee and Payment. A r t ic l e 11. A cheque cannot be accepted. A statem ent of acceptance on a cheque is deemed to be unwritten. Nevertheless, the power of allowing the acceptance or certification or visa of a cheque is reserved to the Contracting States, which m ay regulate its effect. Note. The word certification has been substituted for the word certificat in the French as being clearer.

21 21 A r t ic l e 12. * Paym ent of a cheque may be guaranteed by an aval. This guarantee is given by a third person (other than the drawee), or even by a person whose signature is on the cheque. The provisions of Articles 30 and 31 of the draft Regulation on bills of exchange and promissory notes which relate to avals shall apply to cheques. A r t ic l e 13. A cheque is payable at sight. A ny contrary stipulation is deemed to be unwritten. Note. Article 13 of the Hague Resolutions (paragraph 2) reads as follows : An instrum ent containing any other time of paym ent is invalid as a cheque. In order to render the instrum ent as effective as possible the experts prefer the expression : Any contrary stipulation is deemed to be unw ritten. This is the wording proposed by the I.C.C. A r t ic l e 14. A cheque m ust be presented for paym ent within the time fixed by the law of the place of paym ent. This time shall be eight days at least. The Contracting States m ay increase this time or fix several times to apply respectively to cheques drawn in a country on that country or cheques drawn in one country on another country. Presentm ent of a cheque at a clearing-house is equivalent to presentm ent for paym ent. The Contracting States m ay specify the institutions which are to be deemed to be clearing-houses. Note. The minimum tim e within which a cheque must be presented for paym ent has been reduced from ten to eight days. It has been thought desirable to state in the third paragraph th a t the time for presentment may be increased in view of the distance between different places. A r t ic l e 15. W hen a cheque is drawn between two places having different calendars, the day of issue shall be referred to the corresponding day of the calendar of the place of payment. A r t ic l e 16. Neither the death of the drawer nor his incapacity arising after the issue of the cheque shall affect the cheque. The experts recommend : R e c o m m e n d a t io n. (1) That the various countries should enact such penal or civil measures as are best calculated to prevent the issue of a cheque without funds to meet it. (2) That States should take steps under their civil law to prevent the countermanding of the order contained in the cheque during the time for presentment. (3) That the possibility of countermanding the order contained in the cheque after the expiration of the time for presenting it should be determined by the laws of each State. Note. Recommendations (2) and (3) above replace Article 17 of the Hague Resolutions, which the experts were unable to adopt unanimously on account of the divergence of the various laws concerning the possibility of countermanding the order in the cheque and determining cases in which paym ent of cheques may be opposed. Article 17 of the Hague Resolutions has therefore been om itted and has been replaced by the above Recommendations. A r t ic l e 17 (A rticle 18 of th e Hague Resolutions). The drawee who pays a cheque m ay require th at it shall be given up to him receipted by the holder. The holder m ay not refuse a partial payment. In case of part paym ent the drawee m ay require th at the part paym ent shall be specified on the cheque and th at a receipt shall be given to him. Note. In paragraph 2 the holder is denied the right of refusing partial paym ent, though Article 18 of the Hague Resolutions allows him to do so. In making it obligatory for the holder to accept part paym ent, the experts had in mind both the interests of the persons liable and the provision of Article 38 of the draft Regulation on bills of exchange, which makes it obligatory for the holder to accept part paym ent. The solution a(topted by the experts is similar to that adopted by the I.C.C.

22 22 A r t i c l e 18 (Article' 19 of the H ague Resolutions). A cheque crossed on its face with two parallel lines can only be paid to a banker. The crossing m ay be by the drawer or by a holder. The crossing m ay be general or special. The crossing is general if there be only the two lines, or the word banker or some equivalent, or the words and Co ; the crossing is special if the name of a banker is written between the lines. A general crossing m ay be converted into a special crossing. B ut a special crossing cannot be converted into a general crossing. A specially crossed cheque can only be paid to the banker named. But if he does not cash it himself he m ay substitute another banker. A crossing and the banker s name may not be effaced. A n y effacement shall be deemed not to have taken place. The drawee who pays a crossed cheque to any person other than a banker if the cheque is crossed generally, or to any person other than the banker named, if the cheque is crossed specially, is responsible for the injury, if any, caused thereby, but the damages shall not exceed the am ount of the cheque. A ny State may, in so far as crossed cheques are concerned, assimilate professions analogous to that of a banker to the profession of banker. Note. The object of the addition in the seventh paragraph is to make it quite clear th a t an effacement of the crossing does not affect the validity of the cheque ; the latter continues to exist as a crossed cheque. The last paragraph was added to meet the wishes of countries which perm it the drawing of a crossed cheque on an agent de change for instance, or a "caisse publique (see above, Article 5). R e c o m m e n d a t io n. The experts recommend that countries which at present employ only the cheque payable in account (nur zur Verrechnung) should abandon this method in favour of the crossed cheque. Note. As a result of this Recommendation, Article 20 of the Hague Resolutions disappears. in question laid down rules for cheques payable in account. The article A r t ic l e 19 (Article 21 of the Hague Resolutions). The question whether the holder of a cheque has special rights on the fund against which it is drawn, and the right to m aintain an action against the drawee is left outside the present Regulation. Concerning the Right of Recourse. A r t ic l e 20 (Article 22 of the Hague Resolutions). The holder m ay exercise his right of recourse against the endorsers, the drawer, and the other parties liable, if the cheque, on presentm ent in due time, is not paid. Presentm ent and non-paym ent m ust be authenticated : (1) B y a formal instrum ent (protest for non-paym ent) ; or (2) By a declaration by the drawee, dated and written on the cheque, and specifying the day of presentm ent ; or (3) By a declaration dated from a clearing-house specifying th at the cheque has been forwarded in due time, and has not been paid. A ny State may : (a) Lay down that the right of recourse against the endorsers, the drawer and the other parties liable shall be lost unless the cheque is protested. (b) Decide what will be, in default of the protest or equivalent instruments drawn up within the time for presentment, the nature of the rights of the holder against the drawer who has not provided funds or who has countermanded the order in the cheque. Note. I t was recognised in the case of bills of exchange th at, if paym ent was refused, a protest drawn up in proper tim e was necessary for th e m aintenance of the rights of recourse. The above article, however, lays down th at, in the case of cheques, in order to simplify the formalities of protest and avoid the attendant expenditure, a protest proper m ay be replaced by a declaration made by the drawee in writing on the cheque or by a declaration dated from a clearing-house. This solution is at variance w ith th e practice obtaining in many countries, in which cheques must be protested like bills of exchange in general. The experts therefore felt th at it would be desirable, by adding a new paragraph (a) to Article 20, to allow countries, if they desire to do so, to m aintain their present rules regarding protest., They have also, under (&), made it possible for the various countries themselves to decide the n a t u r e o the rights, failing protest or equivalent instrum ents drawn up within the time for presentm ent, which the holder should be given against the drawer who has not provided funds or who has countermanded the order in cheque, since this question is connected with th at of the rights of the holder of a cheque on the fund agains which it is drawn (see Article 19 supra).

23 23 A r t i c l e 21 (Article 23 of the H ague Resolutions). Protest for default of paym ent, or the equivalent declarations of authentication mentioned in Article 20, m ust be made before the expiration of the time for presentment, either on the actual day of presentment if it is made on the last day of the time for presentment, or on one of the two business days folloiving, provided that these days still fall within the period for presentment. Note. These changes have been made in Article 23 of the Hague Resolutions because : (1) in Article 20 above other forms of authentication have been assimilated to protest ; and (2) in order to make it clear that, for the cheque as well as for the bill of exchange, the holder has no longer one day b u t two business days after paym ent has been refused in order to draw up the protest ; while (3) the protest m ust in every case be drawn up within the tim e for presentment. A r t ic l e 22. The holder may claim from the party against whom he exercises his right of recourse : (1) The amount of the cheque ; (2) Interest at the rate of 6 per cent as from the date of presentment ; (3) The costs of the protest or equivalent declaration, of the notices served by the holder on previous endorsers and on the drawer, and other expenses. A r t i c l e 23 (Article 24 of the Hague Resolutions). Except so far as regards acceptance, the provisions of the draft Regulation on bills of exchange and promissory notes relating to the right of recourse contained in Articles 44 to 46, 48 and 49 apply to cheques. Parts of a Set. A r t ic l e 24 (Article 26 of the Hague Resolutions). Except in the case of bearer cheques, every cheque drawn in one State and payable in another State, or in an oversea dominion of the same State, m ay be in a set of identical parts. When a cheque is in a set of parts, each part must be numbered and must indicate in the body of the instrument the number of parts issued, failing which each part is deemed to be a separate cheque. Note. The wording of the Hague article has been altered in order to bring it into line with Article 63 of the draft Regulation on bills of exchange. A r t ic l e 25 (Article 27 of the Hague Resolutions). Paym ent made on one p art operates as a discharge, even though there is no stipulation that this paym ent shall discharge the other parts. An endorser who has transferred parts to different persons and endorsers subsequent to him, are liable on all the parts bearing their signatures, which have not been restored. Forgeries and Alterations. A r t ic l e 26 (Article 28 of the Hague Resolutions). Except so far as regards acceptance, the provisions of Articles 68 and 69 of the draft Regulation on bills of exchange and promissory notes relating to forgery and alterations shall apply to cheques. Note. The words in italics have been added because, under Article 11 above, paragraph (1), cheques cannot be accepted. Prescription. A r t ic l e 27 (Article 29 of the Hague Resolutions). Actions of recourse by the holder against the endorsers and drawer are barred after six months from the time fixed for presentment. Actions of recourse by endorsers against previous endorsers and the drawer are barred after six months from the day on which the endorser paid the cheque or the day on which he was sued thereon. Note. If the drawer has not made cover or lias withdrawn it, each State is, according to Article 20 (6) above, allowed to decide the nature of the holder s rights against the drawer ; hence they are also entitled to determine the period of prescription applicable to these rights.

24 24 Article 28. The provisions of Article 71 of the Eegulation on bills of exchange shall apply to cheques. Note. The above is the last paragraph of Article 29 of the Hague Resolutions, given as a separate article for the sake of clearness. General Provisions. A r t ic l e 29 (Article 30 of the Hague Résolutions). The general provisions of Articles 72, 73 and 73(d) of the Regulation on bills of exchange and promissory notes shall apply to cheques. Note. Article 31 of the Hague Resolutions is included in the draft Convention for the settlement of the conflict of laws (Article 9).

25 25 The aim of which is : D E A FT ARTICLES OF A CONVENTION. (1) To render the validity and effects of undertakings entered into by means of cheques independent of the observance of stam p laws ; (2) To lay down rules governing the conflict of laws in connection with cheques. A r t ic l e 1. Penalties for the Non-Observance of Stamp Laws. If the laws do not already make provision to this effect, the contracting States undertake to alter their laws so th at the validity of obligations arising out of cheques, or the exercise of the rights th at flow therefrom, shall not be subordinated to the observance of the provisions concerning the stamp. Nevertheless, the Contracting States m ay suspend the exercise of these rights till the stamp laws have been complied with. They m ay also provide th at the quality and effects of an instrum ent immediately executory which, according to their legislation m ay be attributed to the cheque, shall be subject to the condition th at the stam p law has, from the issue of the instrum ent, been duly complied with in accordance with their laws. Note. From a practical point of view this question is of less importance in the case of cheques than in the case of bills of exchange or promissory notes. In some countries, however, the law in certain cases attaches to the fact th a t a cheque has been insufficiently stamped, or not stamped at all, various consequences at civil law for instance, loss of the right of recourse. I t would be desirable therefore, in this connection, for countries to enter into the same undertakings on this m atter, as in the case of bills of exchange ; this is the object of Article 1. This article, like the similar article referring to bills of exchange, was adopted by all the experts save one. A r t ic l e 2. General Provision. The Contracting States undertake to apply inter se, for the settlem ent of the conflicts of laws hereinafter mentioned in connection with cheques, the rules set out in the following articles. A r t ic l e 3. Capacity. The capacity of a person to bind himself by cheque shall be determ ined by his national law. If this national law provides th at the law of another State is competent to deal with the question, this latter law shall be applied. A person who lacks capacity according to the law specified in the preceding paragraph is nevertheless bound if he entered into the obligation in the territory of a State according to whose law he would have the requisite capacity. Every Contracting State m ay refuse to recognise the validity of an engagement by means of a cheque entered into by one of its citizens which would not be deemed valid in the territory of the other Contracting States, otherwise than under the application of the preceding paragraph of this article. Note. This proposal was only adopted by a m ajority vote. The experts had in view the necessity of establishing guiding principles for the settlement of conflicts of laws in this connection, and they hold th a t the rule laid down in Article 74 of the draft Regulations hould obviously be taken as a basis for the settlem ent of conflicts. Moreover, they are of opinion th at very special importance should be attached to strengthening the credit of the instrum ent, w ith a view to ensuring and facilitating its circulation ; from this point of view they felt that the lex loci contractus could not be neglected. They would be prepared to accept the rule already laid down by the first Committee of Experts in December 1926, to the effect th a t every signature binds the signatory everywhere when it binds him in the country in which he signed. They feel, however, th a t this rule should not be applied so rigidly as to make it possible for national laws concerning the protection of incapable persons to be circumvented by the chance signing of an instrum ent in foreign territory. They have therefore added as a third paragraph in this article the text of Article 18 of the Hague Convention. A r t ic l e 4. Form of Engagements. The form of any engagement arising out of a cheque is regulated by the laws of the State where this engagement has been entered into. Nevertheless, observance of the forms prescribed by the law of the place of payment is sufficient. If, however, the engagements entered into by means of a cheque are not valid according to the provisions of the preceding paragraph, but are in conformity with the laws of the State in which a subsequent engagement has been entered into, the circumstance that the previous engagements were irregular in form does not invalidate the subsequent engagement. Note. The addition made to the first paragraph of the above article is taken from Article 54 of the Polish Law of November 14th, 1924, on Cheques. Its object is to strengthen the credit of the instrum ent. As regards the second paragraph, see the note appended to Article 7 of the draft Convention concerning the conflict of laws in connection w ith bills of exchange. A r t i c l e 5. Persons on whom a Cheque may be drawn. The law of the country in which the cheque is payable shall be the law which determines the persons on whom a cheque m ay be drawn.

26 2b A r t i c l e 6. Form and Effects of Obligations entered into by means of Cheques. The effects of these obligations shall be determined by the law of the State in whose territories the obligations by means of a cheque were entered into. Note. This rale was only adopted on a m ajority vote. A r t ic l e 7. Transfer of the Fund. The question whether the payee and the successive holders of the cheque have special rights on the fund against which the cheque is drawn and the nature of those rights shall be determined by the law of the country in which the cheque is payable. Note. In stating this rule, the experts had in mind the absolute necessity in their opinion of enhancing the credit of cheques to the greatest possible extent. They hold th a t this object is attained by choosing the law of the country in which the cheque is payable. Thus, from the very moment of its issue, all concerned know w hat law is applicable, and are consequently able to ascertain the effects of the instrum ent as regards transfer of the fund against which it is drawn. Moreover, in order to discover the person to whom he may rightly make paym ent, the drawee has only to consult the laws of the country in which he resides. A r t ic l e 8. Effects of accepting a Cheque. The law of the country in which a cheque is payable shall determine whether the cheque can be accepted and what are the effects of such acceptance. A r t ic l e 9. Certification. The law of the country in which a cheque is payable shall determine whether a cheque can be certified and what are the effects of certification. A r t ic l e 10. Date of Payment of the Cheque. The question whether a cheque m ust necessarily be payable at sight or whether it may be drawn for a certain period after sight shall be determined by the law of the country in which the cheque is payable. A r t ic l e 11. Time for Presentment. The time for presentm ent shall be determined by the law of the country in which the cheque is payable. A r t ic l e 12. Crossing. The law of the country in which a cheque is payable m ay be crossed and what are the effects of this crossing. A r t ic l e 13. Partial Payment. shall determine whether the cheque The law of the country in which a cheque is payable shall determine whether the holder is bound to accept partial paym ent or not. Note. See the note to Article 8 of the draft Convention concerning the conflict of laws in connection with bills of exchange. A r t ic l e 14. Form and Time for Protest and other Proceedings. The form of protest and the time for protest, as well as the form of other proceedings necessary for the exercise or preservation of rights concerning cheques, are regulated by the laws of the State in whose territory the protest m ust be draw n up or the proceeding in question taken. Note. The experts have adopted the wording of Article 76 U.K. on bills of exchange. This article confirms the application of the lex loci, which in undoubtedly the most acceptable solution. They feel bound, however, to recommend th a t countries which, in spite of the experts unanimous recommendation, maintain a rather short period for the exercise of rights arising from protest, should nevertheless fix adequate periods for cases in which the right of recourse m ust be exercised against a person residing abroad. A r t ic l e 15. Loss or Theft of Cheque : Holder's Bankruptcy. The law of the country in which the cheque is payable determines the steps to be taken in the case of the loss or theft of a cheque or in the case of the holder s bankruptcy. A r t ic l e 16. General Reservation. The Contracting States reserve to themselves the power not to apply the principles of private international law contained in the present Conventions or in the regulation so far as concerns : (1) An obligation undertaken outside the territories of the Contracting States ; (2) Any law which m ay be applicable in accordance with these principles, and which is not a law of one of the Contracting States. Note. The wording is th a t of Article 20 of the 1912 Hague Convention on bills of exchange and p r o m is s o r y notes.