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Questions and Answers
What must be included for a bill of exchange to be considered valid?
What must be included for a bill of exchange to be considered valid?
What occurs if the period for payment is not specified on a bill of exchange?
What occurs if the period for payment is not specified on a bill of exchange?
In the case of ambiguity between the written sum in figures and words, which is valid for payment?
In the case of ambiguity between the written sum in figures and words, which is valid for payment?
What information must be provided about the drawee in a bill of exchange?
What information must be provided about the drawee in a bill of exchange?
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What is the obligation of the drawer if the endorser makes payment after the bill of exchange is dishonoured?
What is the obligation of the drawer if the endorser makes payment after the bill of exchange is dishonoured?
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What must occur if a bill of exchange is dishonored by non-acceptance or non-payment?
What must occur if a bill of exchange is dishonored by non-acceptance or non-payment?
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What should be done if there is insufficient space on a bill of exchange?
What should be done if there is insufficient space on a bill of exchange?
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Under what circumstances must a bill of exchange be presented for acceptance?
Under what circumstances must a bill of exchange be presented for acceptance?
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What is the time frame for a drawee to accept or refuse a bill of exchange?
What is the time frame for a drawee to accept or refuse a bill of exchange?
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What happens when the place for payment is not recorded on a bill of exchange?
What happens when the place for payment is not recorded on a bill of exchange?
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How can a bill of exchange be validly presented for acceptance?
How can a bill of exchange be validly presented for acceptance?
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When can a bill of exchange be still valid despite missing certain contents?
When can a bill of exchange be still valid despite missing certain contents?
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What happens if the beneficiary fails to present the bill in accordance with the law?
What happens if the beneficiary fails to present the bill in accordance with the law?
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When is the date of presentation for a bill sent via registered mail considered valid?
When is the date of presentation for a bill sent via registered mail considered valid?
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What must the beneficiary do if a period for acceptance is specified on the bill?
What must the beneficiary do if a period for acceptance is specified on the bill?
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What prevents the guarantor of the drawee from being exempted from payment obligations?
What prevents the guarantor of the drawee from being exempted from payment obligations?
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Study Notes
Bills of Exchange: Contents and Obligations
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Essential Bill Contents: A valid bill of exchange must include specific information:
- The words "Bill of Exchange"
- An unconditional payment order for a specific amount
- Payment period
- Payment location
- Drawee's (person or organization to pay) name and address
- Beneficiary's (person or organization receiving payment) name and address
- Issuing location and date
- Drawer's (person or organization issuing the bill) name and address
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Missing Information: If a bill lacks one of these elements, it's invalid unless:
- Missing payment date: immediate payment upon presentation
- Missing payment location: payment at the drawee's address
- Missing issuing location: assumed to be the drawer's address
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Amounts Mismatched: If the numerical and written amounts differ, the written amount prevails. If multiple written amounts differ, the smallest amount is valid.
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Additional Sheets: Bills can have supplementary sheets for guarantees, endorsements, etc. The preparer attaches it, signs both the sheet and the bill.
Drawer's Obligations
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Dishonored Bills: If a bill isn't accepted or paid (dishonored), the drawer is liable to the beneficiary for the amount.
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Payment by Other Parties: If an endorser or guarantor pays the beneficiary after dishonor, the drawer becomes obligated to reimburse that party the bill's amount.
Acceptance of Bills
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Acceptance Presentation: The beneficiary must present the bill for acceptance in specific situations:
- If drawer requires acceptance
- For bills with a payment date that is in accordance with article 42.1(b) of the law. This must occur within 1 year of signing and issuing.
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Valid Presentation: Presentation occurs at the right place, during drawee's business hours and before the payment date.
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Alternative Presentation: Bills can be presented via registered mail (postmark date is the presentation date).
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Acceptance Period: Drawee has two business days to accept or reject the bill. Mail presentation begins from the date the drawee signs for receipt.
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Failure to Present: If the beneficiary doesn't present the bill properly, the drawer, endorser, and guarantor (except the drawee's guarantor) are released from liability.
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Description
Test your understanding of the essential elements of a bill of exchange, including what makes it valid or invalid. This quiz covers obligations related to payment dates, amounts, and parties involved. Dive into the details of drafting and interpreting these significant financial instruments.
