Legal recourse in cases of non-acceptance and non-payment
The holder may exercise recourse against the endorsers, the drawer, and other obligated parties.
At maturity, if payment has not been made:
Even before the maturity date.
- If there has been a total or partial refusal of acceptance:
- In the event of the commencement of insolvency proceedings or liquidation of assets against the drawee, whether or not they accepted the bill, or in the event of a cessation of payments, even if not formally established by a judgment, or of an unsuccessful seizure of their assets;
- In the event of the commencement of insolvency proceedings or liquidation of assets against the drawer of an unacceptable bill.
However, guarantors against whom legal action is taken in the cases provided for in the last two paragraphs above may, within three days of the commencement of such legal action, submit a request to the president of the competent court of their domicile to request an extension of time.
If the application is deemed valid, the order will specify the date by which the guarantors are required to pay the bills of exchange in question, provided that the deadlines thus granted do not exceed the due date. The order will not be subject to objection or appeal.
Refusal of acceptance or payment must be evidenced by an authentic instrument, called a protest for non-acceptance or non-payment.
The protest for non-acceptance must be made within the time limits set for presentation for acceptance. If, in the case provided for in Article 95 of the regulation, first paragraph, the first presentation took place on the last day of the period, the protest may still be drawn up the following day.
A protest for non-payment of a bill of exchange payable on a fixed date or at a certain time from date or sight must be made on one of the two business days following the day on which the bill of exchange is payable. If it is a letter payable on sight, the protest must be drawn up under the conditions indicated in the preceding paragraph for drawing up the protest in case of non-acceptance.
A protest for non-acceptance dispenses with the presentation of the bill for payment and the protest for non-payment.
In the event of cessation of payment by the drawee, whether accepting or not, or in the event of seizure of their assets that remains pending, the holder may only exercise their rights of recourse after presenting the bill to the drawee for payment and after preparing a protest.
In the event of the commencement of insolvency proceedings or liquidation of assets against the drawee, whether accepting or not, as well as in the event of the commencement of such proceedings against the drawer of a non-acceptable bill, production of the judgment declaring the commencement of the proceedings is sufficient to allow the holder to exercise their rights of recourse.
When the holder agrees to receive payment by either an ordinary check or a wire transfer order to the Central Bank, the check or money order must indicate the number and due date of the instruments thus paid. This requirement does not apply to checks or wire transfer orders issued for the settlement of outstanding balances of transactions processed through a clearing house.
If payment is made by ordinary check and it is not honored, notification of the protest for non-payment of said check must be sent to the address for payment of the bill of exchange within the time limit stipulated in Article 56 of these regulations. The protest for non-payment of the check and the notification are conveyed in a single document, except where, for reasons of territorial jurisdiction, the involvement of two ministerial officers is necessary.
If payment is made by means of a wire transfer order and it is rejected by the Central Bank, or by means of a check and it is rejected by the institution holding the account to be debited, the non-payment is subject to a notification to the address of the issuer of said wire transfer order or check within eight days from the date of issue. This notification is drawn up by a bailiff or by any person legally authorized to carry out the enforcement, or by a notary.
When the last day of the period granted for serving notice of non-execution of a wire transfer order or postal check falls on a legal holiday, this period is extended to the next working day. Intermediate public holidays are included in the calculation of the period. Public holidays, even those not officially recognized, are treated as such under national custom.
The drawee of the bill of exchange who receives the notification must, if they do not pay the bill of exchange, the notification fees, and, if applicable, the protest fee, return the bill of exchange to the issuing official. The latter immediately draws up a protest for non-payment of the bill of exchange.
If the drawee does not return the bill of exchange, a protest is immediately drawn up. The failure to return the bill is noted therein. The third-party holder is... in this case, the holder is exempt from complying with the provisions of Articles 113 and 114 of the regulation.
The delivery of a wire transfer order in payment of a bill of exchange does not constitute novation.
The holder must notify their endorser of the non-acceptance or non-payment within four business days following the date of protest or the date of presentation in the case of a clause allowing for return without charge.
Notaries, bailiffs, or persons legally responsible for enforcement are required, under penalty of damages, when the bill of exchange indicates the name and address of the drawer, to notify the drawer, by registered letter, within forty-eight hours of registration, of the reasons for refusal to pay. This letter entitles the notary or bailiff to a correspondence fee in accordance with the applicable rates.
Each endorser must, within two business days following the day on which they received the notice... The endorser must be notified of the notice received, indicating the names and addresses of those who provided previous notices, and so on, working back to the sender.
The time limits indicated above begin upon receipt of the previous notice.
When, in accordance with the preceding paragraph, notice is given to a signatory of the bill of exchange, the same notice must be given within the same time limit to their guarantor.
If an endorser has not indicated their address or has indicated it illegibly, it is sufficient for the notice to be given to the endorser preceding them.
Anyone who has a notice to give may do so in any form, even by simply returning the bill of exchange.
They must prove that they gave the notice within the prescribed time limit.
This time limit will be considered observed if a letter giving the notice was mailed within said time limit.
Anyone who fails to give notice within the aforementioned time limit does not forfeit their rights; they are liable, if applicable, for the damage caused by their negligence, without the damages and interest exceeding the amount of the bill of exchange.
The drawer, an endorser, or a guarantor may, by including a "return without charge" clause, without a protest or any other equivalent clause inserted on the instrument and signed, exempt the holder from having a protest drawn up in order to exercise their rights of recourse. This clause does not exempt the holder from presenting the bill of exchange within the prescribed time limits or from giving notice.
The burden of proof of non-compliance with the time limits rests with the party invoking them against the holder.
If the clause is included by the drawer, it has effect with respect to all signatories;
if it is included by an endorser or a guarantor, it has effect only with respect to that endorser or guarantor. If, despite the clause included by the drawer, the holder has a protest drawn up, the costs remain their responsibility.
When the clause originates from an endorser or guarantor, the costs of a protest, if one is drawn up, may be recovered from all signatories.
All those who have drawn, accepted, endorsed, or guaranteed a bill of exchange are jointly and severally liable to the holder.
The holder has the right to take action against all such persons, individually or collectively, without being bound to observe the order in which they became obligated.
The same right belongs to any signatory of a bill of exchange who has repaid it.
An action brought against one of the obligors does not preclude action against the others, even those who came after the first party sued.
The holder may claim from the party against whom they are exercising their right of recourse:
- The amount of the bill of exchange not accepted or not paid, plus interest, if stipulated;
- Interest at the legal rate from the due date;
- The costs of the protest, the costs of any notices given, and any other expenses.
If the right of recourse is exercised before the due date, a discount will be deducted from the amount of the bill. This discount will be calculated according to the official reference rate of the Central Bank, as it exists on the date of the recourse at the holder's place of residence.
The party who has repaid the bill of exchange may claim from their guarantors:
- The full amount paid;
- Interest on said amount, calculated at the legal rate, from the day it was disbursed;
- The expenses incurred.
Any party liable against whom a claim is brought or who is subject to a claim may demand, upon payment, the delivery of the bill of exchange with the protest and a discharged invoice.
Any endorser who has repaid the bill of exchange may cancel their endorsement and those of subsequent endorsers.
In the event of a claim being brought after partial acceptance, the party repaying the amount for which the bill was not accepted may demand that this repayment be noted on the bill and that a receipt be issued. The holder must also provide them with a certified copy of the bill and the protest to enable the exercise of subsequent claims.
The holder forfeits their rights against endorsers, the drawer, and other obligated parties, with the exception of the acceptor, after the expiration of the specified time limits:
- For the presentation of a bill of exchange at sight or at a certain time after sight;
- For the preparation of a protest in the event of non-acceptance or non-payment;
- For presentation for payment in the event of a return without charge.
However, forfeiture only applies to the drawer if they prove that they have made provision at maturity. In this case, the holder retains recourse only against the party on whom the bill of exchange was drawn.
If the bill is not presented for acceptance within the time limit stipulated by the drawer, the holder forfeits their rights of recourse. both for non-payment and for non-acceptance, unless it appears from the terms of the stipulation that the drawer intended to be released only from the guarantee of acceptance.
If a time limit for presentation is contained in an endorsement, only the endorser may invoke it.
When the presentation of the bill of exchange or the execution of the protest within the prescribed time limits is prevented by an insurmountable obstacle such as a statute of limitations in any state or any other case of force majeure, these time limits are extended.
The holder is required to give notice of the force majeure event to their endorser without delay and to record this notice, dated and signed by them, on the bill of exchange or on an attached document. For all other matters, the provisions of Article 120 apply.
After the cessation of force majeure, the bearer must, without delay, present the letter for acceptance or payment and, if necessary, have a protest drawn up.
If force majeure persists for more than thirty days after the due date, remedies may be exercised without the need for presentation or preparation of a protest, unless such remedies are suspended for a longer period by application of a provision resulting from war, plague, or public calamity.
For bills of exchange payable at sight or at a certain time after sight, the thirty-day period begins on the date on which the holder, even before the expiry of the presentation periods, gave notice of the force majeure to their endorser; for bills of exchange payable at a certain time after sight, the thirty-day period is increased by the time after sight indicated in the bill of exchange.
Acts purely personal to the holder or to the person they have authorized to present the bill or prepare the protest are not considered to constitute force majeure.
Regardless of the formalities prescribed for exercising the warranty action, the holder of a bill of exchange protested for non-payment may, by obtaining the permission of the judge, seize as a precautionary measure the movable effects of the drawers, acceptors and endorsers.