Letras de Cambio y Pagarés Notes PDF

# **Letras de Cambio y Pagarés** ## **1. Letras de Cambio y Pagarés** - **Definición:** - Both are credit instruments representing a payment obligation. - **Letter of Exchange:** A payment order issued by the drawer (librador) instructing the drawee (libado) to pay a third party (beneficiary...

# **Letras de Cambio y Pagarés** ## **1. Letras de Cambio y Pagarés** - **Definición:** - Both are credit instruments representing a payment obligation. - **Letter of Exchange:** A payment order issued by the drawer (librador) instructing the drawee (libado) to pay a third party (beneficiary). - **Promissory Note:** A written promise of payment by the issuer. - **Regulation:** - Law 18,092 governs issuance, circulation, and payment, establishing requirements and sanctions for non-compliance. ## **2. Importance of Credit Instruments** - **Streamlined Transfers:** Facilitates transfers of rights and streamlines trade. - **Certainty and Security:** Literal meaning and autonomy of content prevent disputes, ensuring clarity in rights and obligations. - **Ease of Negotiation:** Readily negotiable, fungible, and used as collateral, facilitating financing. ## **3. Concept of Credit Instruments** - **Definition:** Documents representing a credit right; possession is essential to exercise this right. - **Circulation:** Transferred by endorsement (signature of the rightful holder), allowing transmission without the involvement of the original creditor. ## **4. Historical Evolution** - Originated in ancient times (Classical Greece and the Middle Ages), parallel to international trade. - Created a system to simplify payments, reduce risks, and facilitate capital flow. ## **5. Characteristics of Credit Instruments** - **Necessity:** Only the holder can exercise the right; physical possession is essential. - **Literal Meaning:** Value and validity depend on literal content. What is not written in the document has no legal validity. - **Autonomy:** Independent of the original obligation; can be transferred without affecting the initial relationship. ## **6. Classification of Credit Instruments** - **By Content:** - **Payment:** Letters of exchange, promissory notes, and checks, requiring payment of a sum. - **Representing Goods:** Incorporate rights over goods. - **Share Participation:** Shares and bonds. - **By Form of Issuance:** - **To Bearer:** Does not mention the beneficiary; can be collected by anyone holding it. - **To Order:** Issued in favor of a specific individual, but transferable. - **Nominative:** Issued to a specific individual. ## **7. Letter of Exchange** - **Definition:** Document by which the drawer instructs the drawee to pay a specific amount to a designated person. - **Parties Involved:** - **Drawer (Librador):** The one who issues the letter. - **Drawee (Librado):** Person instructed to pay. - **Payee (Beneficiary):** The person to be paid. - **Endorser (Endosante) and Endorsee (Endosatario):** Involved in the transfer process through endorsement. - **Required Mentions:** Place and date of issuance, amount, payee's name, drawee´s address, place and date of payment, and drawer´s signature. If any of these details are missing, the letter is invalid. - **Acceptance:** The drawee accepts the letter by signing it, signifying a commitment to pay. - **Rejection (Protest):** If the drawee does not accept or pay, the beneficiary can lodge a protest. A formal act allowing the creditor to demand payment through legal means The protest can be based on failure to accept, a missing acceptance date, or non-payment. ## **8. Endorsement** - **Definition:** Allows transfer of rights contained in the letter to another holder. - **Types of Endorsement:** - **Transfer of Ownership:** Transfers the title. - **Collection on Commission:** Allows collecting the letter without transferring ownership. - **Guarantee:** Serves as collateral for a loan. - **Restrictions:** Must be complete, not conditional, and include the endorser's signature. ## **9. Acceptance and Rejection of the Letter of Exchange** - **Acceptance:** The drawee accepts the letter by signing it and indicating the word "accepted" or similar terms. Acceptance can include a date if payment is made within a specific timeframe.. - **Rejection (Protest):** If the drawee does not accept or pay, the beneficiary may lodge a protest. This formal act allows the creditor to pursue legal payment. There are various types of protests: failure to accept, failure to provide an acceptance date, or failure to pay. ## **10. The Guarantee (Aval)** - **Definition** An additional guarantee for payment of a letter of exchange. A guarantor ensures payment if the principal debtor does not comply. - **Function:** Can be included in the same document or a separate one, guaranteeing full or partial payment. - **Restrictions:** Must be signed and clearly indicated on the document. ## **11. The Promissory Note (Pagaré)** - **Definition:** Document where the issuer promises to pay a certain amount to another person within a specific timeframe. - **Required Mentions:** Place and date of issuance, amount, beneficiary's name, and issuer's signature. - **Functioning:** The debtor is committed to paying on the specified date. If not, the creditor can lodge a protest and demand payment. - **Restrictions:** Must include an unconditional promise to pay. If the place of payment is not specified, the debtor's place of issuance is assumed. ## **12. Differences between the Letter of Exchange and the Promissory Note** - **Maturity:** The letter of exchange does not allow for consecutive maturity dates, whereas the promissory note does. - **Acceleration Clause:** The promissory note can include an acceleration clause to demand payment before the scheduled date if the debtor fails to comply. - **Nature:** The promissory note is an admission of debt, while the letter of exchange is a promise to pay. - **This summary provides a comprehensive overview of each concept, functionality, involved parties, restrictions, and actions in case of acceptance or rejection of letters of exchange and promissory notes.** ## **1. Letter of Exchange** - **Definition:** Document by which the drawer orders the drawee to pay a specific amount to a designated person, the payee. - **Actores Involucrados** - **Drawer or issuer (Librador):** Person or entity that issues the letter. - **Drawee (Librado):** Person who is ordered to pay. - **Payee or beneficiary (Tomador):** The one who receives the payment. - **Endorser (Endosante):** Transfers the document through endorsement. - **Endorsee or Assignee (Endosatario):** Receives the right to collect through endorsement. - **Guarantor (Avalista):** Guarantees payment in case the drawee fails comply. - **Acceptor (Aceptante):** The drawee who accepts and commits to pay - **Holder (Portador):** The one who possesses the letter and has the right to demand payment. ## **Menciones Requeridas:** - The indication that it is a "Letter of Exchange" - Place and date of issuance (if not specified, the drawer´s address is assumed) - Unconditional payment order. - The determined or determinable amount. - Payee´s or beneficiary´s name. - Drawee´s name and address. - Place and date of payment (if not specified, the drawee´s address is assumed). - Drawer´s signature. - **Restrictions:** If any of these essential mentions are missing, the letter is invalid as an instrument of exchange. ## **2. Protest** - **Definition:** A formal solemn act carried out in the event that the letter of exchange is neither accepted nor paid on the date due. Protest provides legal proof of non-acceptance or non-payment. - **Protest Types:** - **Failure to Accept (Por Falta de Aceptación):** Used if the drawee does not accept the letter. - **Missing Acceptance Date (Por Falta de Fecha de Aceptación):** If a date is required for acceptance and it is not mentioned. - **Failure to Pay (Por Falta de Pago):** If it is not paid on the stipulated date. - **Protest Process:** The holder must go to a notary or public official to certify the failure to pay or accept, allowing legal action to demand payment. - **Consequences:** The protest allows the beneficiary to sue the principal debtor to collect the owed amount. ## **3. Promissory Note (Pagaré)** - **Definition:** It is a document in which the issuer promises to pay a certain amount to a beneficiary on a specific date and at a specific location. - **Actores Involucrados:** - **Issuance (Suscriptor):** Person who issues the promissory note and commits to pay. - **Beneficiary or Creditor (Beneficiario):** Person who will receive payment. - **Endorser (Endosante)** Can transfer the promissory note to another person through endorsement. - **Endorsee (Endosatario):** Receives the promissory note via endorsement. - **Menciones Required:** - Indication that it is a "Promissory Note". - Unconditional promise to pay the specific amount. - Place and date of issuance. - Date and place of payment (if there is no place specified, the place of issuance is assumed). - Beneficiary´s name or indication of "to bearer". - Issuer´s signature. - **Restrictions:** If any of these mentions are missing, the promissory note loses validity as an enforceable instrument. ## **4. Differences between the Letter of Exchange and the Promissory Note** - **Letter of Exchange:** - It is an order to pay issued by the drawer. - Does not allow for consecutive maturities. - It is a promise of payment that depends on the drawee's acceptance. - **Promissory Note:** - It is a direct promise to pay by the issuer to the beneficiary. - It can include an acceleration clause (expediting payment if the debtor fails to comply). - It is an admission of debt, independent of a third party’s acceptance. ## **1. Objective of Law 20,720** - **Purpose:** To regulate insolvency proceedings for reorganization or liquidation of companies and individuals in debt. - **Goals:** Provide an efficient solution for non-viable debtors and protect the interests of creditors. ## **2. Key Definitions** - **Judicial Reorganization Agreement** (Acuerdo de Reorganización Judicial): Contract between a debtor and creditors for restructuring liabilities and assets with judicial approval. - **Insolvency Bulletin** (Boletín Concursal): Public platform for registering insolvency processes and decisions. - **Debtor Company** (Empresa Deudora): Private legal entity, paying first-category taxes. - **Debtor and Creditor** (Deudor y Acreedor): Main parties involved in insolvency proceedings. ## **3. Types of Insolvency Proceedings** - **Reorganization:** Aimed at viable companies, allowing them to continue operating. - **Liquidation:** The sale of assets when a company is no longer viable. - **Renegotiation:** An alternative settlement process for individuals in debt. - **Cross-Border Insolvency** (Insolvencia Transfronteriza): Proceedings for insolvent businesses with international impact. ## **4. Observers (Roles and Functions** (Veedores) - **Primary Role:** To facilitate agreements between the debtor and creditors. - **Requirements:** Professional degree (10 semesters), five years of experience, and approval from an exam along with a guarantee in UF. - **Fees:** Agreed upon with the debtor and main creditors. - **Duties:** Provide a final report and act as mediators during the reorganization process. ## **5. Liquidators (Roles and Functions** (Liquidadores) - **Primary Role:** Administer and liquidate assets to distribute to creditors. - **Requirements:** Similar to observers, including a professional degree, experience, and passing an exam . - **Specific Duties:** - Seize and inventory the debtor's assets - Liquidate assets and distribute funds. - Register actions in the Insolvency Bulletin. ## **6. Initiation of Insolvency Proceedings** - **Reorganization:** Begins with a request from the debtor company, including a financial report. - **Voluntary Liquidation:** Requires a list of assets, pending legal proceedings, and a statement of liabilities. - **Forced Liquidation:** Can be initiated by creditors under certain conditions, (e.g., failure to pay debts). ## **7. Financial Protection During Insolvency Proceedings** - **Scope:** Suspends legal enforcement proceedings and keeps the debtor's contracts in effect. - **Duration:** Thirty days, with potential extension if creditors agree. ## **8. Cautions and Restrictions** - **Restrictions on the Debtor:** The debtor cannot encumber or sell essential assets without authorization. - **Observer Intervention:** To monitor the use and disposal of the debtor´s assets. ## **9. Determining Assets and Liabilities** - **Roles:** The observer verifies the claims of creditors and determines the value of assets to be sold. - **Process:** Publication in the Insolvency Bulletin and verification by a court. ## **10. Proposed Judicial Reorganization Agreement** - **Conditions:** Requires the approval of two-thirds of the creditors. - **Challenge:** Creditors can object due to procedural irregularities or false credit information. - **Effects of Approving the Agreement:** Binds all creditors; debts are restructured or canceled. ## **11. Creditors' Meetings** (Juntas de Acreedores) - **Types:** - **Constitutive:** Initial assessment of assets and liabilities. - **Ordinary:** Regular meetings to update procedures. - **Extraordinary:** For urgent matters or changes, like the removal of the liquidator. ## **12. Sale of Company assets:** - **Simplified Sale:** For small businesses or minor assets. - **Ordinary Sale:** Asset auction with auctioneers. - **Sale as an Economic Unit:** Assets sold together as a whole. - **Direct Purchase Offers:** Presented to the Creditors' Meeting for evaluation. ## **13. Continuation of Economic Activities** - **Provisional:** Decided by the liquidator to maximize recovery. - **Definitive:** Approved by the Creditors' Meeting to maintain operations until liquidation.