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CONSULATE GENERAL OF
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| LEGAL FRAMEWORK |
| Commercial Law |
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PART THREE CHAPTER TWENTY ONE Section I (1) A Commercial transaction shall be any
transaction concluded by a merchant, related to the occupation exercised by
him. Applicability of
Provisions on Commercial Transactions The provisions on commercial transactions shall apply to both parties if the transaction is considered commercial for one of the parties and this Law does not provided otherwise. Sources The provisions of civil legislation shall apply to matters of commercial transactions not regulated by this Law, and where it is inadequate, the commercial customs shall apply. Where commercial customs vary, the customs of the place of performance shall apply. Abuse of Right The exercising of a right arising from a commercial transaction shall be inadmissible if it is exercised with the sole intention of causing injury to the other party. Section II (1) Catalogues, price-lists, tariffs and the
like, as well as announcements though the mass media or otherwise addressed to
an indefinite number of persons, shall be deemed to be an invitation to make
an offer in accordance with them. Public Offer An offer for entering into a transaction may also be addressed to an indefinite number of persons, including through the mass media. It should contain both the total quantity offered and the time limit for accepting the offer. In this case the offerer shall be bound until the quantity is exhausted within the specified time limit. Silence Equal to
Acceptance (1) An offer to a merchant with whom the
offerer has lasting commercial relations shall be considered accepted if not
immediately rejected. Form (1) To be valid a commercial transactions shall
require a written or other form only in the cases provided for by a law. Interest (1) Interest shall be due between merchants
unless otherwise agreed. Permission or Approval by
a State Authority (1) Where the validity of a commercial
transaction requires permission or approval by a state authority, the
transaction becomes valid when permission is granted. Confirmation by Third
Party (1) In the event a transaction has been
concluded subject to confirmation by a third party, it shall become valid upon
confirmation. Financial Duress A commercial transaction concluded between merchants may not be voided on grounds of financial duress or due to manifestly unfavourable terms. Commercial Transactions
under General Terms (1) A merchant may specify in advance general
terms for transactions concluded by him. They shall become binding upon the
other party should it: Determination of
Provisions by Third Parties (1) Where the parties have agreed that a third
party shall determine particular provisions, such provisions shall become
binding upon the parties only if the third party has determined them in
accordance with the objective of the contract, the remainder of its contents
and commercial custom. Supplementing of the
Contract by the Court Where the parties agree to supplement the contract upon the occurrence of certain circumstances, and should they fail to reach agreement in the event of such occurrence, either party may petition the court to do so. When rendering its decision the court shall take in consideration the objective of the contract, the remainder of its contents and commercial custom.
Actions without Authority
for Representation Where a person acts on behalf of a merchant without authority for representation, it shall be deemed that the merchant confirms such actions provided he has not objected immediately after learning of them. Section III A debtor in a transaction which is commercial with respect to him, shall exercise the care of a good husband. Term Where a contract does not specify a term for performance of an obligation, provided the nature of the transaction or the commercial custom do not require otherwise, the performance may be requested and may be made at any time during working hours at the place of performance. Joint and Several
Obligations Persons who undertake a joint obligation upon conclusion of a commercial transaction shall be considered joint and several debtors, unless it follows otherwise from the transaction. Non-cash Payment Where payment is effected by debiting and crediting bank accounts, it shall be deemed completed at the time of crediting the account of the creditor. Section IV (1) A debtor in a commercial
transaction shall not be liable for failure to perform due to force majeure.
Where the debtor was already in default, he may not invoke force majeure. Business Frustration A court may, upon request by one of the parties, modify or terminate the contract entirely or in part, in the event of the occurrence of such circumstances which the parties could not and were not obliged to foresee, and should the preservation of the contract be contrary to fairness and good faith. Earnest Money (1) Where upon the conclusion of a
contract one of the parties has given or promised something in case it backs
out, it may renounce the contract if its performance has not commenced. The
party which backs out shall be bound to pay earnest money, and if it has given
such earnest money upon conclusion of the contract, the party shall forfeit
it. Liquidated Damages The liquidated damages due under a commercial transaction concluded between merchants may not be reduced on grounds of excessive amounts. Section V (1) A contract for commercial
pledge which secures rights ensuing from a commercial transaction shall be
considered concluded in the event of: Satisfaction of the
Pledgee Creditor (1) Where the pledge contract has
been concluded in writing with a valid date and the parties have agreed that,
should the debtor be in delay, the satisfaction from the pledge may be
effected without court intervention, the creditor shall be entitled to sell on
his own the pledged item or securities, if they have a market or stock
exchange price. The creditor shall be bound to immediately notify the pledgor
of the sale and to pay him the remainder of the price obtained. Pledge without Surrender
of Possession The pledgor may keep the pledged item in his possession in the cases and in compliance with the procedure specified by a law. Pledge over Perishables If the pledged item is perishable, the creditor may sell it, provided the item has a market or commodity exchange price, and deposit the amount with a bank as his security. The creditor must notify the pledgor immediately of the sale. Set-off of Yield from
Pledged Item Where the pledged item produces yield, the pledge contract may provide for the right of the creditor to collect such yield on account of the debt. Commercial lien (1) A merchant shall be entitled
to a lien for his due claim from another merchant, under a transaction
concluded between them, on the movables and securities of the debtor received
by that merchant in a lawful manner. Such right shall exist as long as the
merchant has in his possession the movables and the securities. Section VI (1) An instruction issued to order
and addressed to a merchant for payment of money, delivery of securities or
other fungible goods, and which does not set the performance as subject to
counter performance, may be transferred by endorsement. This shall also apply
to documents for obligations issued to order by a merchant for items as above,
if the performance thereof is not conditioned upon counter performance. Effect of the Endorsement (1) All rights embodied in the
endorsed negotiable instruments are assigned through endorsement. CHAPTER TWENTY TWO Section I (1) A commercial sale shall be a sale which
constitutes a commercial transaction pursuant to the provisions of this Law. Term for Delivery Where no term has been agreed for delivery of the goods, the buyer may demand delivery within a reasonable term. Obligation for
Notification Where it has been agreed that the goods will be accepted at the warehouse of the seller, the parties shall determine within what time limits and in what manner the seller must notify the buyer that the goods are ready for delivery. Where that has not been determined, the notification shall be at least three days prior to the date of delivery, and should the parties be situated in different localities -- at least five days before that date. Documents Pertaining to
the Goods Upon request of the buyer the seller shall be obliged to issue an invoice, and also other documents as agreed between the parties. Service The seller shall be obliged to provide the necessary service according to the commercial practice, unless otherwise agreed. Compensation Should the sale be avoided and within an appropriate period of time after the avoidance the buyer has purchased replacement goods, or the seller has re-sold the goods, the party seeking compensation may receive the difference between the sale price and the price of the replacement transaction, as well as compensation. Inspection of the Goods The buyer shall inspect the goods in the course of time as necessary in view of the circumstances, and where the goods fail to meet the requirements, he shall immediately notify the seller. If the buyer fails to do so, the goods shall be considered approved as complying to the requirements, except for hidden defects. Obligation for Keeping (1) In the event of refusal to accept goods
forwarded from another place, the buyer shall be obliged to keep them with the
care of good merchant for the time period usually needed by the buyer to give
his instructions. Should the seller be in delay, the buyer may deliver the
goods for keeping to a third party, notifying the seller thereof. Determination of Price (1) The price shall be determined by the
parties upon conclusion of the contract. Time of Payment (1) The buyer shall be obliged to pay the price
upon delivery of the goods or of the documents entitling him to receive the
goods, unless otherwise agreed. Delay of Receipt (1) Where the buyer is in delay of receipt of
goods, the seller may: Section II (1) The parties may agree that the seller
deliver the goods to a third party indicated by the buyer. Distribution of Costs
Pertaining to Delivery of Goods (1) Where the goods have to be forwarded to a
place other than the place of delivery, the costs pertaining to forwarding and
transportation shall be on account of the buyer. Sale with Additional
Specification The parties may agree on a term during which the buyer shall specify the object of sale. In case of delay of the buyer, the seller may either do so or avoid the contract. Sale with Periodic
Performance In the case of a sale with periodic performance where the parties have agreed that seller may perform in advance, what has been given in excess during the preceding period shall be deducted from what is due. Sale with Buy-back Clause A sale with a buy-back clause must be in writing and with a fixed term for exercising the right of buy-back. The right of buy-back shall lapse upon expiration of the term. Sale with Advance Payment
of the Price The agreement for advance payment of the price must be in writing. If the seller fails to deliver the goods, he shall owe interest from the date of receipt of the price. In such a case the price paid shall be considered earnest money. Installment Sale (1) An installment sale shall be valid if
executed in writing. Sale by Assignment of
Negotiable Instruments In the case of sale of goods by assignment of a negotiable instrument the seller shall be relieved from the obligation to deliver the goods, by assigning the negotiable instrument to the buyer. The buyer shall be bound to pay the price immediately and at the point of delivery of the documents, unless otherwise agreed. Section III The seller shall provide publicity of the auction terms by announcement in at least one daily. Binding Force of Proposal A participant in the auction shall be bound by his proposal in compliance with the terms of the auction. Assignment of the Goods The person who conducts the bidding shall assign the goods to the bidder who has offered the highest price. The sale shall be considered concluded by assignment of the goods. Payment The buyer shall be bound to pay the price immediately, unless otherwise provided by the terms of the auction. The seller may cancel the contract if the buyer fails to fulfill this obligation. Nullification of Sale An auction sale concluded as a result of acts contrary to the law or good morals may de declared null and void upon the request of any interested party, within ten days following the assignment. In the case of an action for payment of the price, the buyer may demand nullification of the sale by means of an objection. CHAPTER TWENTY THREE (1) Under a leasing contract the lessor
undertakes to provide an item for use against payment. Risk In the case of a financial lease the risk of accidental destruction or damages to the article shall be on the account of the lessee. Obligations of Lessor (1) The lessor shall undertake the obligations
of lessor pursuant to Article 230 of the Law on Obligations and Contracts. Obligations of the Lessee (1) The lessee shall undertake the obligations
of lessee pursuant to Articles 232 and 233, paragraph 2, of the Law on
Obligations and Contracts, as well as the obligation to return the item upon
expiration of the term of the contract. Sub-leasing The lessee may give the item to be used by another party with the consent of the lessor. Reference (1) The rules of this Chapter shall also apply
mutatis mutandis to leasing of an enterprise. CHAPTER TWENTY FOUR (1) Under a commission merchant contract the
commission merchant shall undertake, for a commission, to perform on his own
behalf and on the account of the principal one or more transactions. Effect (1) Under a transaction concluded with a third
party for performance of the mandate, rights and obligations shall also arise
for the commission merchant in the case where he has informed the third party
of the principal's name. Obligations of the
Commission Merchant (1) The commission merchant must perform the
mandate with the care of good husband.
Deviation from the Mandate (1) Should the commission merchant
deviate from the mandate, the principal shall not be obliged to recognize the
transaction executed on his account, and may claim damages. This rule shall
not apply where such deviation has been made in the interest of the principal
and the commission merchant was not able to request in advance new
instructions, or did not receive a timely response to his inquiry. Notification to the
Principal (1) Where the third party is in
default of its obligations, and also if damages are inflicted by anyone to the
property acquired or held by the commission merchant on account of the
principal, the commission merchant shall be bound to notify immediately the
principal and to provide the necessary evidence. Transaction on Credit A commission merchant authorized to conclude a transaction on credit shall be liable before the principal for the performance of the obligations by the third party, provided he has been or should have been of knowledge that the third party is unable to pay.
Commission Contract Del
Credere Where the commission merchant has guaranteed to the principal for the obligation of the third party, he shall be liable jointly and severally with the third party and shall be entitled to separate compensation. Accounting The commission merchant shall be bound to account before the principal and to transfer to him the results of the transaction executed. Obligations of the
Principal (1) The principal shall be obliged
to accept from the commission merchant the results of the transaction
executed, to inspect the goods acquired for him and to notify immediately the
commission merchant of any defects or losses, as well as to undertake the
obligations undertaken by the commission merchant towards the third party. Pledge Right of the
Commission Merchant The commission merchant shall be entitled to a pledge on the items acquired by him on account of the principal, or which the principal has delivered to him. Entering into Executive
Transaction (1) Where subject of the mandate
is the purchase or sale of goods or securities which have market or stock
exchange prices, the commission merchant may state that he himself sells to
the principal or buys from him the goods or securities at such prices. In such
case the amount of the remuneration shall be reduced in half. Refusal by the Commission
Merchant (1) Unless otherwise provided in
the contract, the commission merchant may not refuse to carry out an
undertaken mandate, except in the case of termination of the contract due to
default of the principle. The termination shall be effected in writing,
whereas the commission contract shall remain in force for two weeks as from
the date on which the principal has received notification from the commission
merchant of the refusal. Withdrawal of Mandate Should the principal withdraw his mandate entirely or in part, before the commission merchant has concluded the respective transactions with third parties, he shall be bound to pay the commission merchant the remuneration and the costs incurred for transactions concluded by him before the withdrawal. In such case the principal shall have the obligation pursuant to Article 359, paragraph 3. CHAPTER TWENTY FIVE (1) Under a forwarding contract a
forwarding agent shall undertake, for compensation, to conclude a contract for
transportation of cargo in his own name and on account of the principal. Forwarding Agent - Carrier The forwarding agent may carry out the transportation himself, entirely or in part. In such case he shall have the rights and obligations of a carrier as well. Several forwarding agents The forwarding agent may assign to subsequent forwarding agents the carrying out of the activities under Article 361, even without authorisation therefor from the principal. Obligation for
Notification (1) The principal shall be bound
to notify the forwarding agent about any special characteristics of the cargo. Compliance with
Principal's Instructions (1) The forwarding agent shall be
bound to comply to the instructions of the principal pertaining to the route,
direction and manner of transportation, as well as to the selection of
carriers and subsequent forwarding agents. Limitation of Actions An action for damages under a forwarding contract may be brought within one year. CHAPTER TWENTY SIX Under a contract of carriage a carrier shall undertake to carry out for compensation the transportation of a person, luggage or cargo to a certain place. Obligations of the Carrier (1) A carrier shall be bound to
carry out the transportation within the specified term, to keep the cargo as
from its acceptance to the delivery, to notify the consignee about the arrival
of the cargo and to deliver the cargo at the point of destination. Obligations of the Carrier
for Transportation of Passengers A carrier shall be bound to ensure to passengers appropriate conveniences and safety according to the type of transport vehicle and the distance of transportation. Obligations of the
Consignor (1) A consignor shall be bound to
deliver the cargo to the carrier in a state allowing it to undergo
transportation, according to its type and special requirements for various
types of cargo. Consignment Note (1) The consignor may request the
carrier to issue him a consignment note for the delivered cargo, which may
also be issued to order. Freightage (1) The consignor shall pay the
freightage upon the conclusion of the contract, unless otherwise agreed. Liability for Losses and
Damages (1) The carrier shall be liable
for losses, destruction or damages to the cargo, except where the damages are
due to force majeure, to the characteristics of the cargo, or to obviously
inappropriate packing, if the consignor has declared his consent pursuant to
Article 370, paragraph 3. Liability in the Case of
Subsequent Carriers (1) Where a carrier performs the
transportation entirely or in part with the participation of other carriers,
he shall be liable for their actions to the time of delivery of the cargo. Pledge Right A carrier shall be entitled to a pledge on the cargo for his dues under the contract. This right shall be exercised by the last carrier and shall exist until the rights of all carriers are satisfied. Obligation for Keeping the
Cargo Where it is not possible to find the consignee at the address indicated, or if he refuses to accept the cargo, the carrier shall be obliged to keep it or to deliver it for keeping to another party, notifying the consignor thereof in due time. In the case of perishable cargo, the rules for sale of items in the case of delay of a creditor, shall apply. Transportation of Luggage The respective rules for transportation of cargo shall apply to transportation of luggage. Limitation of Actions An action for damages under a
contract of carriage may be brought within one year, commencing: Special Rules The special rules for individual types of transportation shall be governed by separate Laws. CHAPTER TWENTY SEVEN Section I Under an insurance contract an insurer shall be bound to undertake a certain risk in return for payment of a premium, and where an insurance event occurs -- to pay to the assured or to a third party beneficiary an insurance indemnity or an amount of money. Form (1) An insurance contract is concluded in
writing as an insurance policy or another instrument in writing. Payment of First Premium The contract shall come into force upon payment of the first premium, unless otherwise agreed. Obligation for Declaration (1) Upon conclusion of the contract the assured
shall be obliged to declare the material circumstances of his knowledge and of
importance to the risk. Intentional Incorrect
Declaration or Holding Back (1) If the assured has intentionally
incorrectly declared or held back circumstances under which the insurer would
not have concluded the contract had he been of knowledge thereof, the insurer
may terminate the contract. He may exercise that right within one month after
coming of knowledge of such circumstance. Unintentional Incorrect
Declaration (1) Where upon conclusion of the contract the
parties have not been of knowledge of the circumstance under Article 383,
paragraph 1, each of them may, within two weeks after coming of knowledge of
such circumstance, propose amendment to the contract. Declaration of Newly
Occurred Circumstances (1) Throughout the duration of the contract the
assured shall be obliged to declare before the insurer any newly occurred
circumstances, for which the insurer has put questions in writing at the time
of conclusion of the contract. The declaration of circumstances should be
effected forthwith after coming of knowledge thereof. Insurance Premium (1) The first premium, as well as the lump
premium, shall be paid upon delivery of the policy, unless otherwise agreed. Prevention of Damages (1) The assured shall be obliged to take
measures to protect the property insured from damages. Obligation for
Notification (1) In the case of occurrence of an insurance
event the assured shall be bound to notify the insurer within seven days after
coming of knowledge thereof, unless the general conditions provide another
appropriate term. Insurance Payment (1) In the case of occurrence of an insurance
event the insurer shall be obliged to pay the indemnity or the sum insured. Insurance Interest (1) An insurance contract where there is no
interest in the insurance shall be invalid. Limitation Rights under an insurance contract shall expire by limitation after three years, and under "liability" insurance after five years from the date of occurrence of the insurance event. Compulsory Execution Compulsory execution for the sum insured under "life" and "accident" insurances shall not be allowed, as well as for the indemnity under "liability" insurance. Compulsory execution for insurance indemnity under property insurances shall be allowed in cases where it may be directed against the property insured. Section II The subject of a contract for property insurance may be any right that may be evaluated in money for the assured. Conclusion of Contract
without Authorization (1) A person who in his own name insures the
property of another, shall be personally liable for payment of the insurance
premium. Sum Insured (1) The amount for which property is insured
may not exceed its actual value. Actual value shall be considered the value
for which another property of the same quality could be purchased to
substitute the insured property. Over Insurance (1) Where a sum insured has been agreed which
exceeds the actual value of the property insured, the contract shall remain in
force, whereas the sum insured shall be reduced to the amount of the actual
value. Under Insurance (1) Where a sum insured has been agreed which
is less than the actual value of the property insured, and the insured item
has been destroyed or damaged, the indemnity shall be determined in accordance
with the ratio of the sum insured to the actual value. Insurance Indemnity (1) (Amended, SG No. 58/1997) In the case of
occurrence of an insurance event the insurer shall be obliged to pay the
insurance indemnity within the agreed time period. Such time period may not be
longer than fifteen days and shall commence as from the date on which the
assured has fulfilled his obligations under Article 389. Partial Destruction In the case of partial destruction of the insured property it shall be considered insured to an amount equal to the difference between the initial and the paid sum insured.
Transfer of insured
property (1) Where the insured property has
been transferred, the successor shall subrogate for the rights under the
contract, unless otherwise agreed. Subrogation into the
Rights of the Assured (1) By payment of the insurance
indemnity the insurer shall subrogate to the rights of the assured against the
person who has caused the damage. Insurance Against
Transportation Risks (1) An insurance contract for
road, air and river transportation shall cover all risks to which the cargo is
exposed, unless otherwise agreed. Subscription Insurance (1) The subscription insurance
contract shall provide coverage of the rights of the assured for a certain
period of time. Section III Under contract for "liability" insurance the insurer shall be obliged to cover, within the sum provided in the contract, the liability of the assured for property and non-property damages which he has caused to third parties. Notification (1) The assured shall be obliged
to notify within seven days the insurer of circumstances which could result in
occurrence of "liability". Within the same term the assured shall be
obliged to notify the insurer about claims raised against him, or payments
that he has effected. Direct Claim (1) The injured party to which the
assured is liable shall be entitled to claim indemnity directly from the
insurer. Settlement A settlement between the injured party and the assured, as well as the recognition of the obligation by the assured, shall have effect for the insurer provided he approves them. Right of the Assured The assured shall be entitled to claim from the insurer the insurance indemnity, provided he has satisfied the injured party. Section IV "Life" and "accident" insurance contracts shall be concluded against events relevant to the life, health or bodily integrity of the assured or of a third party. Sum Insured (1) Upon the occurrence of an
insurance event or of certain conditions specified in the contract, the
insurer shall be obliged to pay to the assured the sum insured, to an amount
specified in the insurance contract. Insurance on the Life of a
Third Party (1) A "life" or
"accident" insurance contract on the life of a third party shall
have effect only where concluded with the consent of such party provided in
writing. This rule shall not apply to a spouse, a relative of descending or
ascending line. Mutual Insurances (1) A contract for mutual
insurance may be concluded by spouses, persons of kinship and partners to a
partnership pursuant to Article 357 of the Law on Obligations and Contracts,
as well as by partners to a general partnership company. "Life" and
"Accident" Insurance in Favour of a Third Party (1) The assured may determine the
third party beneficiary at any time upon the conclusion of a "life"
or "accident" insurance contract, as well as at any time of its
duration. Right of the Third Party
Beneficiary (1) The sum insured shall not be
included in the estate of the assured, even where his heirs have been
specified as beneficiaries. Risks Excluded (1) The insurer shall be relieved
of his obligations under the contract, if: Payment of Premium (1) Should the assured under
"life" insurance fail to pay a due premium, the insurer may not seek
payment thereof by court procedure. Right to Buy off (1) In the case of
"life" insurance, upon request of the assured the insurer shall be
obliged to pay the buy-off value of the policy, provided at least two years
have expired from the commencement of the insurance and the premiums have been
regularly paid. CHAPTER TWENTY EIGHT (1) Under a contract for current
account two persons, where at least one of them is a merchant, may agree the
amounts receivable and payable ensuing from their mutual relations to be kept
under one account, which shall be periodically settled. The party to the
benefit of which a balance exists at the time of settlement, may demand it
together with interest from the date of settlement of the account even though
interest may have already been included therein. CHAPTER TWENTY NINE Section I (1) Under a contract of bank deposit a bank
shall undertake to keep for consideration the submitted thereto bank notes,
securities or other movable items. Monetary Deposit (1) In the case of a monetary deposit the bank
shall owe the sum of money to the depositor in the same currency and to the
same amount, as well as the agreed interest. Documents for Deposit (1) In the case of a monetary deposit the bank
shall issue to the depositor documents for all contributions to and payments
from the deposit. Authorization A proxy may draw sums from a monetary deposit, provided the power of attorney bears a signature certified by the notary public. Management of Securities A bank may undertake to manage deposited securities by exercising the rights thereon, unless otherwise agreed. Conditioned Deposit and
Deposit in Favour of a Third Party In the case of a conditioned deposit or in favour of a third party, if the condition does not occur or the third party dies, the deposited monies, securities or other movable articles shall be returned to the depositor. Section II (1) Under a current account contract a bank
shall open an account of a person through which it shall, in return for
payment, accept and effect on his instructions payments within the limits of
the amounts available. Fees, Expenses and
Interest (1) The holder of the account shall owe to the
bank a fee and the expenses made pertaining to operations effected. Notification The bank shall notify the holder of an account about operations effected, by a procedure and manner agreed between them, and unless otherwise agreed, monthly in writing. Provided the holder does contest the operation in writing within two weeks following the receipt of the notification, it shall be considered that he has approved it. Application of other
Provisions The provisions of the contract of mandate shall apply mutatis mutandis to the current account contract unless the circumstances indicate otherwise. Section III (1) Under a contract for bank credit a bank
shall be obliged to provide to a borrower a sum of money for a certain purpose
and under agreed conditions and term, and the borrower undertakes to use the
sum as agreed and to return it upon expiration of the term. Necessary Information The borrower shall be obliged to provide the bank with the necessary information relevant to the conclusion and performance of the contract. Early Claim (1) Further to the cases provided for in the
contract, the bank may request early return of the sum under the credit,
where: Section IV (1) By a letter of credit a bank shall order
another bank to pay to the person indicated in the letter of credit a sum up
to a specified amount. Rights and Obligations (1) The person authorized to receive the sum
shall be obliged to pay the issuing bank's fees and expenses. Section V (1) A documentary letter of credit shall be a
unilateral declaration in writing by a bank, by which it undertakes to pay to
the person indicated in the documentary letter of credit the sum of the
documentary letter of credit, provided he submits to the bank within the term
specified in the documentary letter of credit the documents listed therein,
and fulfills its other conditions. A documentary letter of credit shall come
into force after notification of the person. Irrevocability of the
Documentary Letter of Credit Unless anything else ensues from the documentary letter of credit, it shall be considered irrevocable and may be revoked or modified only with the consent of the third party. Revocable Documentary
Letter of Credit A revocable documentary letter of credit may be revoked unilaterally by the bank, as long as it is not carried out. Divisibility and
Non-Transferability of a Documentary Letter of Credit A documentary letter of credit shall be divisible and non-transferable, unless otherwise ensues therefrom. Confirmed Documentary
Letter of Credit Where an irrevocable documentary letter of credit is confirmed by another bank, it shall undertake to pay on its own and directly the sum under the letter of credit. Mandate and Documentary
Letter of Credit The provisions for contract of mandate shall apply to the relations between the principal and the bank which has opened the documentary letter of credit, as well as between the banks under the documentary letter of credit. Fee The principal shall owe a fee to the bank. Section VI Under a bank guarantee a bank undertakes in writing to pay to the person specified in the guarantee a certain sum of money in compliance with the conditions provided therein. Section VII Under a contract for bank collection a bank undertakes, for a fee, to collect by mandate from the principal his cash receivable or to effect another action for collection.
Definition of Bank
Documentary Collection Article 444 Under a contract for bank documentary collection the bank by mandate from the principal undertakes to deliver, in return for remuneration, to another person documents entitling him to dispose with goods, or other documents against payment of an amount which the bank undertakes to collect, or against effect of other actions for collection. Rights and Obligations Article 445 (1) The principal should pay to
the bank the agreed expenses. (2) Upon performance of bank
collection and of bank documentary collection the bank shall be liable only
for incorrect performance of the instructions provided. It shall not be
obliged to verify the form and compliance of documents. (3) A bank which uses the services of another bank in view of performing the orders of the principal, shall do so on his account. Subsidiary Applicable
Provisions Article 466 Unless the circumstances indicate otherwise the provisions for contract of mandate shall apply mutatis mutandis to the bank collection and the bank documentary collection. Special Provision Article 447 Contracts for bank collection and for bank documentary collection shall not be terminated upon the death of the principal. Section VIII Bank Transfer Definition Article 448 Under a contract for bank transfer the principal shall extend to the bank a certain monetary sum with orders to be paid to a person specified thereby. Execution Article 449 (1) The principal may cancel or
modify an order for transfer prior to its performance. (2) Where prior to the performance of the transfer the bank has notified the payee of the order, it may not be cancelled or modified. Obligation for Fees and
Expenses Article 450 The principal shall owe to the bank fees and the expenses made by the latter related to the transfer. Section IX Contract for Bank Safe Deposit Box Definition Article 451 (1) Under a contract for a bank
safe deposit box a bank accepts for a certain period of time to keep for
consideration bank notes, securities, other items and documents. Access to the
contents of the safe deposit box shall belong only to the user. (2) The contract for safe deposit
box may be with declared or not declared contents of the deposit before the
bank. (3) The bank shall not have the right to possess a copy of the key to the safe deposit box delivered to the user. Prohibited Items Article 452 (1) No items may be placed in the
safe deposit box which could endanger the safety of the box and the bank, as
well as items the acceptance of which is prohibited by law. (2) The bank shall control in an
appropriate manner the compliance with the requirement under paragraph 1,
without disclosure of the contents of the deposit, in the case it has not been
declared. (3) In the case of non-compliance with the obligation under paragraph 1, the bank may cancel the contract forthwith. Rights of the Bank on
Default of Payment Article 453 (1) Where a contract is cancelled
due to default on payment of the agreed remuneration, the bank may demand the
opening and ascertainment of the contents of the safe deposit box, with
participation of a notary public. The items found in the safe deposit box
shall remain for keeping with the bank, to which indemnity shall be due for
expenses as well as a fee. (2) For its dues under the contract the bank shall be entitled to lien on the deposit in the safe deposit box. Liability in the Case of Force Majeure Article 454 The bank shall be liable to the user should the deposit be destroyed due to force majeure. CHAPTER THIRTY BILL OF EXCHANGE
Section I General Provisions Contents Article 455 A bill of exchange shall contain: 1. the title "bill of
exchange" in the text of the document in the language in which the
document has been written; 2. unconditional order to pay a
certain sum of money; 3. name of the person who must pay
(drawee); 4. maturity; 5. place of payment; 6. name of the person to whom or
to whose order the sum must be paid (payee); 7. date and place of issue; 8. signature of the drawer. Incomplete Contents Article 456 (1) A document which does not
contain any of the requisites listed in Article 455, shall not be a bill of
exchange, except for the cases specified in the paragraphs below. (2) A bill of exchange in which no
maturity has been specified, shall be deemed payable on demand. (3) A bill of exchange in which no
place of payment has been specified, shall be deemed payable at the place
indicated next to the name of the drawee, which shall be assumed to be the
place of residence of the drawee. (4) A bill of exchange in which no place of issue has been indicated, shall be considered to be issued at the place indicated next to the name of the drawer. Bill of Exchange to the
Order of the Drawer and Against the Drawer Article 457 A bill of exchange may be issued to the order of the drawer himself, as well as against the drawer. Place of Payment Article 458 (1) A bill of exchange may be
payable at the place of residence of a third party, at the place of residence
of the drawee, or at another place. (2) Where the drawer has specified
in the bill of exchange a place of payment other than the place of residence
of the drawee, without indicating a third party with whom the payment is to be
effected, the drawee may determine this third party upon acceptance. It shall
be assumed, unless otherwise agreed, that the drawee has undertaken to pay
personally at the place of payment specified in the bill of exchange. (3) Where a bill of exchange is payable at the place of residence of the drawee, he may indicate upon acceptance an address within the same locality where the payment is to be effected. Obligation for Interest Article 459 (1) In a bill of exchange payable
on demand or within a certain term after presentation, the drawer may
undertake an obligation for interest on the amount. In the case of any other
bill of exchange such an obligation shall be considered null and void. (2) The amount of the interest
must be indicated in the bill of exchange. (3) Interest shall be charged as from the date of issue of the bill of exchange, unless another date has been specified. Differences in the Sum Article 460 (1) Where the sum has been written
in the bill of exchange in figures and in words, in the case of difference the
sum written in words shall be valid. (2) Where the sum has been written in the bill of exchange several times in words or in figures, in the case of difference the smallest sum shall be valid. Validity of Signatures Article 461 Should a bill of exchange bear signatures of persons who may not undertake obligations under a bill of exchange, false signatures, signatures of non-existent persons or signatures which, for some other reason, may not bind the persons who have signed or on behalf of whom the bill of exchange has been signed, the obligations of the other persons who have signed shall be valid. Signature Without
Authorization Article 462 A person who signs a bill of exchange as an agent without having such authority, or who exceeds his authority by doing so, shall be personally liable under the bill of exchange, and should he pay, he shall have the same rights as would have the represented person. Liability of the Drawer Article 463 (1) The drawer shall be liable for
the acceptance and payment of a bill of exchange. (2) The drawer may be relieved of liability for acceptance, but he may not be relieved from liability for payment. Blank bill of Exchange Article 464 If a bill of exchange, which has not been filled in at issue, is filled in not as agreed, the default on the agreed may not be counterposed against the bearer unless he has acquired the bill of exchange through abuse of authority or gross negligence. Objections of Debtors Article 465 Debtors under a bill of exchange may not use against the bearer objections based on their personal relationship with the drawer or with some of the former bearers, unless the bearer did not act in good faith in acquiring the bill of exchange. Section II Endorsement Transfer of a Bill of
Exchange Article 466 (1) Any bill of exchange, even
where not explicitly issued to order, may be transferred by endorsement. (2) Where the drawer has written
in the bill of exchange the words "not to order" or another phrase
of equivalent meaning, the bill of exchange shall be transferred under the
procedure for transfer of receivables. (3) A bill of exchange may be endorsed to the drawee, the drawer or any other person who has undertaken obligations under the bill of exchange. Such persons may again endorse the bill of exchange. Requirements Article 467 (1) An endorsement may not be
conditional. (2) A partial endorsement shall be
null and void. (3) An endorsement to the bearer shall have the same effect as a blank endorsement. Form Article 468 (1) The endorsement must be
written on the bill of exchange or on a sheet of paper attached thereto
(allonge). Is must be signed by the endorser. (2) The endorsement need not specify the person in whose favour it was made, or it may contain only the signature of the endorser (blank endorsement). In order to be valid, a blank endorsement must be written on the back of the bill of exchange or the allonge. Effect Article 469 (1) An endorsement shall transfer
all the rights under a bill of exchange. (2) In the case of a blank
endorsement, the bearer may: 1. fill in the blank space with
his own name or the name of another person; 2. make a blank endorsement on the
bill of exchange; 3. deliver the bill of exchange to another person, without filling in the blank space and without endorsing it. Liability of the Endorser Article 470 (1) The endorser shall be liable
for the acceptance and payment of the bill of exchange, unless otherwise
agreed. (2) An endorser may prohibit further endorsement. In such case he shall not be liable before the persons to whom the bill of exchange has been endorsed subsequently. Bearer Article 471 (1) The holder of a bill of
exchange shall be deemed the legitimate bearer, provided his right ensues from
the continuous order of endorsements, even where the last endorsement has been
a blank endorsement. Crossed out endorsements shall be considered
non-existent. Where a blank endorsement is followed by another endorsement, it
shall be deemed that the signatory has acquired the bill of exchange by the
blank endorsement. (2) Where a person has been deprived of possession of the bill of exchange in any way, the bearer, who shall ascertain his right pursuant to paragraph 1, shall not be obliged to deliver it, unless where it was acquired in bad faith or by gross negligence. Endorsement by
Authorization Article 472 (1) In the case of endorsement
with provision "to be received", "for collection",
"by authorization" or another phrase to the meaning of
authorization, the bearer may exercise all the rights on the bill of exchange,
but he may transfer it only with endorsement by authorization. In such case
the persons liable may use against the bearer only the objections they could
counterpose against the endorser. (2) The authorization contained in an endorsement by authorization shall not be terminated upon the death or the legal disability of the authorizing person. Endorsement for Security Article 473 (1) In the case of endorsement
with provision "for guarantee", "for pledge" or another
phrase with the meaning of security, the bearer may exercise all the rights on
the bill of exchange, but he may transfer it only with endorsement by
authorization. (2) Debtors may not put against the bearer objections based on their personal relationship with the endorser, unless the bearer has acted in bad faith in acquiring the bill of exchange. Endorsement after Maturity
or Protest Article 474 (1) An endorsement made after
maturity shall have the same effect as an endorsement made before that. An
endorsement made after the protest, due to default of payment or after
expiration of the term for protest, shall have the effect of the transfer of a
receivable. (2) It shall be assumed, until proven to the contrary, that an endorsement without a date has been made before expiration of the term for protest. Section III Acceptance Presentation for
Acceptance Article 475 A bill of exchange may be presented to the drawee for acceptance at his place of residence by the bearer or the holder before maturity. Instruction or Prohibition
for Presentation Article 476 (1) The drawer may prescribe in
the bill of exchange that it should be presented for acceptance, and also to
specify a term for that. He may prescribe that the bill of exchange should not
be presented for acceptance before a specified term. (2) The drawer may prohibit in the
bill of exchange its presentation for acceptance, unless it is payable by a
third party or at a place other than the place of residence of the drawee, or
if it is payable within a specified term after the presentation. (3) Each endorser may prescribe that the bill of exchange be presented for acceptance, as well as to specify a term therefor, unless the drawer has prohibited presentation for acceptance. Term for Presentation Article 477 (1) A bill of exchange payable
within a certain period after presentation must be presented for acceptance
within one year of its issue. The drawer may reduce or extend that term. (2) The terms under paragraph 1 may be reduced by the endorsers. Secondary Presentation Article 478 (1) Upon presentation, the drawee
may request that the bill of exchange be presented to him again on the next
day. The interested parties may not object that such a request has not been
satisfied, unless it has been indicated in the protest. (2) The bearer shall not be obliged to deliver to the drawee the bill of exchange which was presented for acceptance. Form of Acceptance Article 479 (1) The acceptance shall be
written on the bill of exchange with the word "accepted", or with
another word of equivalent meaning, and shall be signed by the drawee. The
signature of the drawee on the face of the bill of exchange shall be
considered acceptance. (2) Where the bill of exchange is payable within a certain term following the presentation, or if it should be presented for acceptance within a specified term by virtue of a special provision, the acceptance must indicate the date on which this was done, unless the bearer requires the date of presentation to be indicated. If there is no date indicated, in order to preserve his recourse actions against the endorsers and the drawer, the bearer must ascertain the lack of date by protest. Unconditional Acceptance Article 480 (1) Acceptance may not be effected
under condition. (2) The drawee may limit the
acceptance to part of the sum. (3) Any other modification of the contents of the bill of exchange upon its acceptance shall be considered rejection of acceptance, but the drawee shall be liable in compliance with the conditions of his acceptance. Effect of Acceptance Article 481 (1) Upon acceptance the drawee
undertakes to pay the bill on maturity. (2) In case of default of payment the bearer, even where he is the drawer, shall have an action against the drawee pursuant to Articles 505 and 506. Repeal of Acceptance Article 482 (1) If the drawee who has accepted
the bill of exchange has crossed out the acceptance before return of the bill,
the acceptance shall be considered repealed. It shall be assumed, until proven
to the contrary, that the crossing out has been effected before the return of
the bill of exchange. (2) Where the drawee has notified in writing the bearer or some of the persons who have signed the bill of exchange of the acceptance, he shall be liable before them in accordance with the conditions of acceptance. Section IV Bill of exchange guarantee Definition Article 483 The payment of a bill of exchange may be secured entirely or in part through a guarantee. The guarantee may be given by a third party or by a person whose signature has already been put on the bill of exchange. Form Article 484 (1) The guarantee shall be put on
the bill of exchange or on the allonge. It shall be expressed by the words
"as guarantee" or another phrase of equivalent meaning, and must be
signed by the guarantor. (2) The signature on the face of
the bill of exchange shall be considered a guarantee, unless it is the
signature of the drawee or the drawer. (3) Where the guarantor has not indicated for whom he guarantees, it shall be considered that the guara |