Obligation under the bill of exchange

Nature of the bill of exchange obligation differs significantly from typical civil law obligations. Its uniqueness is evidenced not only by such concepts as aval, endorsement, protest, retribution or rhyme, which function within the promissory note relationship, but above all by its distinctive features, clearly distinguishing it from all other obligations.

Not all lawyers practice in the area of bill of exchange law. It is a complex area of law, highly rigorous and formalised. In order to properly navigate it, it is necessary not only to have the knowledge necessary to undertake any activity related to the trading of bills of exchange, but also to have experience and the ability to think abstractly.

Obligation under the bill of exchange is always a written commitment. It establishes an unconditional obligation, independent of any other legal action, including contracts concluded. This means that it is an abstract obligation, for the validity of which it is irrelevant whether there was an obligation giving rise to the bill of exchange and whether it was valid. What is most relevant is only that a person affixed his or her signature to the promissory note, thereby incurring a promissory obligation. What was the cause and basis for this is not relevant.

The bill of exchange, as a valuable paper, fixes a strictly defined monetary debt. It contains an abstract and unilateral promise to pay, binds by promissory note all persons who sign on it, and is therefore a document confirming the existence of the obligation of those persons. The validity of any individual obligation does not depend on the validity of the obligations of the other persons signed on the promissory note, provided that the promissory note has all the elements necessary for its validity.

In contrast, the only person entitled to realise the property rights indicated on the promissory note is its legal holder, who, in order to realise his right under the promissory note, must first demonstrate it by an uninterrupted series of endorsements.

The promissory note debtor is not only the issuer of the promissory note, but also the endorser (giver - i.e. the person transferring the rights under the promissory note by endorsement) and the endorsee (guarantor). The liability of promissory note debtors, although joint and several, takes on a specific shape, which is directly related to the uniqueness of the promissory note obligation.

Regulations of the Civil CodeThe provisions governing joint and several liability cannot be applied directly here and in some cases are not applicable at all. Such a provision is e.g. Article 366 § 1 k.c. according to which, if any one of the joint debtors pays the creditor the entire debt, this relieves the other debtors of their obligation to perform.

In accordance with the law on bills of exchangepayment of the full amount of the bill of exchange only relieves all bill debtors if the person making the payment is the acceptor or issuer of the promissory note. The following shall also not apply at all Article 375 § 1 c.c.. stating that a joint and several debtor is entitled to defend himself against the creditor by means of both his personal pleas and those common to all debtors. Indeed, according to Article 17 of the law on bills of exchange The promissory note debtors shall not be entitled to raise objections against the holder of the promissory note based on personal relations with the issuer or previous holders, provided that the holder has not acted to the detriment of the debtor.

For a detailed explanation of what the obligation under the bill of exchange consists of, please contact lawyers. Good law firms have experience of dealing with cases involving the fulfilment of promissory obligations, on both sides of a dispute.

As a result, they are able to offer their clients representation, consultation and advice on promissory note business matters. Such assistance often proves invaluable.