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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 guarantee is for the drawer. Liability of the Guarantor Article 485 (1) The guarantor shall be liable
in the same way as the person for whom he has guaranteed. (2) The obligation of the
guarantor shall be valid also where the obligation for which it has been
undertaken is not valid for any reason whatsoever, except for defect in the
form. (3) The guarantor who has paid the bill of exchange shall assume the rights under it against the person for whom he has provided the guarantee, and against all persons liable to that person under the bill of exchange. Section V Maturity Manner of Determination Article 486 (1) The maturity of a bill of
exchange may be: 1. upon presentation; 2. after a certain term after the
presentation; 3. after a certain term after the
issue; 4. on a certain date. (2) A bill of exchange issued with maturity specified in some other way or by subsequent maturity, shall be null and void. Sight Bill of Exchange Article 487 (1) A sight bill of exchange shall
be payable upon presentation. It must be presented for payment within one year
following its issue. The drawer may specify a shorter or a longer term. The
endorsers may reduce the terms for presentation. (2) If the drawer notes down that the sight bill of exchange should not be presented for payment before a specified date, the term for presentation shall commence as from that date. Usance Bill of Exchange Article 488 (1) Maturity of a usance bill of
exchange shall be determined as from the date of acceptance or as from the
date of protest. (2) Where no protest exists, it shall be considered that the acceptance without indication of date has been made by the drawee on the last date of the term for presentation for acceptance. Interpretation of Terms Article 489 (1) Maturity of a bill of exchange
payable one or several months after its issue or presentation, shall be on the
respective day of the month for effect of the payment. If there is no such day
of that month, maturity shall fall on the last day of the month. (2) Where maturity has been set in
the beginning, in the middle or at the end of the month, these phrases shall
be understood to mean the first, the fifteenth or the last day of the month. (3) The phrase "half month" shall be understood to mean a term of fifteen days. Applicable Calendar Article 490 (1) Where the bill of exchange is
payable on a specific date at a place where the calendar is different from
that at the place of issue, maturity shall be determined in accordance with
the calendar at the place of payment. (2) Where a bill of exchange,
issued and payable at places with different calendars, is payable within a set
term after the issue, the date of issue and maturity shall be determined by
the calendar at the place of payment. (3) The terms for presentation of
the bill of exchange shall be calculated pursuant to the rules of paragraphs 1
and 2. (4) Paragraphs 1, 2 and 3 shall not apply if something else follows from a provision in the bill of exchange or from its contents. Section VI Payment Term for Presentation for
Payment Article 491 A bill of exchange payable on a certain day or within a specified term after its issue or presentation, must be presented for payment on maturity or on one the next two working days. Indication of payment Article 492 (1) Upon payment the drawee may
request the bearer to surrender to him the bill of exchange and to indicate
thereon that it has been paid. (2) The bearer may not reject
partial payment. (3) In the case of partial payment the drawee may request the payment to be indicated on the bill of exchange and receipt to that effect to be issued to him. Payment before and on
Maturity Date Article 493 (1) The bearer shall not be
obliged to accept payment of the bill of exchange before maturity date. (2) A drawee who pays before
maturity date shall pay on his own risk. (3) A person who pays on maturity date shall be relieved from his obligation, unless he has acted with gross negligence. He shall be obliged to verify the correct order of endorsements, but not the signatures of the endorsers. Currency of Payment Article 494 (1) Where the sum of the bill of
exchange has been quoted in currency which has no exchange rate at the place
of payment, the amount may be paid in local currency according to its value as
on maturity. Where the debtor is in delay, the bearer may by his own choice
request the sum under the bill of exchange to be paid in local currency at the
exchange rate on maturity or as of the date of payment. (2) The exchange rate of the
foreign currency shall be determined in accordance with commercial custom at
the place of payment. However, the drawer may set in the bill of exchange the
rate at which the amount should be calculated. (3) Paragraphs 1 and 2 shall not
apply if the drawer has stipulated that payment should be effected in a
specified currency. (4) Where a bill of exchange is payable in a currency which has the same name but different values in the country of issue and the country of payment, the bill of exchange shall be assumed to be paid in the currency of the country of payment. Deposit of the Amount Article 495 Where the bill of exchange is not presented for payment within the term under Article 491, the debtor may deposit the amount with a bank, at the risk and the expenses of the bearer. Section VII Protest Types of Protest Article 496 A refusal of acceptance or payment must be ascertained by protest due to default on acceptance or default on payment. Protest to Default on
Acceptance Article 497 (1) A protest due to default on
acceptance must be made within the terms specified for presentation for
acceptance. If in the case stipulated under Article 478, paragraph 1, the
first presentation has been effected on the last date of the term, the protest
may be effected on the next date. (2) The protest on default of acceptance shall relieve the bearer from presentation of the bill of exchange for payment, and also from protest due to default on payment. Protest to Default on
Payment Article 498 A protest to default on payment of a bill of exchange payable on a certain date or within a certain term after the issue or after the presentation, must be made on one of the two business days after the date specified for payment. If the bill of exchange is payable upon presentation, the protest must be made within the terms under Article 497, paragraph (1). Notification for Default
on Acceptance or Default on Payment Article 499 (1) The bearer should notify his
immediate endorser and the drawer for the default on acceptance and the
default on payment within four business days following the date of protest,
and in the case of provision "sans frais" -- after the date of
presentation. Each endorser shall be obliged within two business days
following the date of receipt of notification to notify his immediate endorser
thereof, indicating the names and addresses of those who have made the
preceding notifications, up to the drawer. Time periods shall run from the
date of receipt of the preceding notification. (2) Where pursuant to paragraph 1
notification was made to a person who signed the bill of exchange, it must be
made within the same term also to his guarantor. (3) Where an endorser has not
indicated his address or has done so illegibly, the notification must be made
to the endorser preceding him. (4) A notification may also be
effected by return of the bill of exchange. The person obliged to make
notification must prove that he has done so within the specified term. (5) A person who fails to make the notification within the time periods specified in paragraphs 1 - 4, shall be liable for damages to the amount of the sum under the bill of exchange. Relief from Protest Article 500 (1) The drawer, as well as any
endorser or guarantor through a provision "sans frais", "sans
protest" or a phrase of equivalent meaning signed on the bill of
exchange, may relieve the bearer from making a protest to default on
acceptance or default on payment, in order to lodge his recourse actions. (2) The provision of paragraph 1
shall not relieve the bearer from the obligation to present the bill of
exchange in due time and to make the relevant notifications. The burden of
proof that the above time periods have not been observed shall be on the
person referring to such a circumstance. (3) The provision stipulated by the drawer shall have effect in respect of all persons who have signed the bill of exchange. A provision written by an endorser or a guarantor shall have effect only in respect of himself. Where despite the provision written by the drawer the bearer lodges a protest, the expenses shall be on his account, and where the provision has been written by an endorser or a guarantor, all persons who have signed shall be liable for the expenses. Making a Protest Article 501 A protest shall be made upon a request in writing from the bearer by the notary public at the place of payment or acceptance. Contents of the Protest Article 502 (1) A protest shall contain: 1. a full transcript of the
document with all endorsements and notes; 2. the names of the persons in
favour of whom and against whom the protest is being made; 3. the inquiry to the person
against whom the protest is made, the response given or a note that the person
has not responded or could not be found; 4. in the case of acceptance or
payment through an intermediary - indication of by whom, for whom and how it
has been given; 5. place and date of the protest; 6. signature and stamp of the
notary public. (2) The making of the protest shall be indicated on the document. Protest against Several
Persons Article 503 Where acceptance or payment of a bill of exchange, a promissory note or a cheque are to be requested from several persons, one protest against all persons may be made. Entry of Protest Article 504 (1) The notary public must enter
in the register the contents of the protest thus made and issue transcripts to
the interested parties. (2) The original of the protest shall be delivered to the bearer. Section VIII Recourse Actions Grounds Article 505 (1) Where a bill of exchange has
not been paid on maturity, the bearer may bring recourse actions against the
endorsers, the drawer and the other liable persons. (2) additionally recourse actions
may be brought before maturity, provided: 1. the drawee rejects acceptance
of the bill of exchange, entirely or in part; 2. bankruptcy proceedings have
been instigated against the drawee, notwithstanding whether he has accepted
the bill of exchange or not; 3. the drawee has discontinued his
payments or the compulsory execution on his property has provided no result; 4. bankruptcy proceedings have been instigated against the drawer of the bill of exchange whose acceptance was refused. Subject of the Recourse
Action Article 506 (1) The bearer shall be entitled
to claim from the persons against whom he has brought the recourse action: 1. the sum under the bill of
exchange which has not been accepted or has not been paid, together with
interest if so agreed; 2. interest due by operation of
law as from maturity date; 3. expenses related to the
protest, the notifications made and other expenses; 4. commission which, unless
otherwise agreed, shall amount to one third of one percent of the sum under
the bill of exchange, and which may not exceed that amount. (2) Where the recourse action has been brought before maturity, the interest from the date of bringing the recourse action to maturity to the amount of the official discount rate of the central bank at the place of residence of the bearer shall be deducted from the sum of the bill of exchange. Action of the Debtor Who
Has Paid Article 507 A person who has paid the bill of
exchange may claim from the persons obliged before him: 1. the amount he has paid; 2. interest due by operation of
law on the amount paid as from the date of payment; 3. the costs incurred; 4. commission pursuant to Article 506, paragraph 1, item 4. Delivery of the Bill of
Exchange against Payment Article 508 (1) Each of the persons liable
under the bill of exchange, against whom a recourse action has been brought or
may be brought, shall be entitled to request that upon payment the bill of
exchange be delivered to him together with the protest, and that a receipt be
issued. (2) Each endorser who has paid the bill of exchange may cross out his endorsement and the endorsements of the subsequent endorsers. Recourse Action after
Partial Acceptance Article 509 If a recourse action has been brought after partial acceptance, the person who has paid the amount for which the bill of exchange has not been accepted, may request the payment made to be noted on the bill and a receipt to be issued to him. The bearer must also deliver to him a certified transcript of the bill of exchange and the protest, so that the person who has paid may bring subsequent recourse actions. Recourse Action upon
Discontinuance of Payments Article 510 If a drawee has discontinued his payments, notwithstanding whether he has accepted the bill of exchange, as well as if a compulsory execution against him proves without result, the bearer shall be entitled to bring a recourse action after presentation of the bill of exchange for payment to the drawer and after making a protest. Recourse Action in the
Case of Bankruptcy Article 511 (1) If bankruptcy proceedings have
been instigated against the drawee, notwithstanding whether he has accepted
the bill of exchange, as well as in cases of instigated bankruptcy proceedings
against the drawer of a bill of exchange which is not subject to acceptance,
the decision for instigating bankruptcy proceedings shall be sufficient
grounds for the bearer to bring his recourse action. (2) If bankruptcy proceedings have been instigated against a drawee, notwithstanding whether he has accepted the bill of exchange, or against the drawer of the bill of exchange whose acceptance has been refused, a court decision shall be required additionally. Recourse Bill of Exchange Article 512 (1) Whoever is entitled to a
recourse action may exercise it by issuing against some of the persons liable
before him a new bill of exchange (recourse bill of exchange), which shall be
a sight bill of exchange and shall be payable at the place of residence of
that person, unless otherwise agreed. (2) The recourse bill of exchange
shall cover further to the amounts under Articles 506 and 507 also other
expenses. (3) Where the recourse bill of
exchange has been issued to bearer, the amount shall be determined according
to the rate of the sight bill of exchange issued at the place of payment of
the initial bill of exchange, and payable at the place of residence of the
preceding endorser. (4) If the recourse bill of exchange has been issued by an endorser, its sum shall be determined according to the rate of the sight bill of exchange, issued at the place of residence of the drawer of the recourse bill of exchange, and payable at the place of residence of the preceding endorser. Joint and Several
Liability Article 513 (1) The persons who have issued,
accepted and endorsed the bill of exchange, or who have provided a guarantee,
shall be liable jointly and severally before the bearer. (2) The bearer may bring his
actions against all persons liable under the bill of exchange, jointly or
severally, without taking in consideration the order in which they have become
liable. Entitled to the same right shall be any liable person who has paid the
bill of exchange, in respect of persons who have become liable before him. (3) The bearer who has brought an action against one of the debtors under the bill of exchange, shall not forfeit his rights against the other debtors, including those who have signed after the one against whom he has brought the action. Omission of Terms Article 514 (1) The bearer shall forfeit his
rights against the endorsers, the drawer and the other liable persons, with
the exception of the drawee, if he misses the terms: 1. for presentation of the sight
bill of exchange or the usance bill of exchange; 2. for making a protest due to
default on acceptance or on payment; 3. for presentation for payment
under a "sans frais" provision. (2) If the bearer misses the term
specified by the drawer for presentation of the bill of exchange for
acceptance, he shall forfeit his right to recourse for default on acceptance
and on payment, unless it ensues from the contents of the bill of exchange
that the drawer wanted to exclude only the liability for acceptance. (3) Where the provision with a term for presentation is included in an endorsement, only the endorser may refer to it. Force Majeure Article 515 (1) Where the presentation of the
bill of exchange or the lodging of a protest within the specified time periods
are prevented by force majeure, the time periods shall be extended,
respectively. (2) The bearer shall be obliged to
notify forthwith his immediate endorser of the force majeure, and to
note that notification on the bill of exchange or the allonge, indicating the
place, date and signing thereunder, as well as to meet his obligations
pursuant to Article 499. (3) After termination of the force
majeure, the bearer must immediately present the bill of exchange for
acceptance or payment, and lodge a protest, if necessary. (4) If the force majeure
continues for more than thirty days after maturity, a recourse action may be
brought without need for presentation or protest. (5) For a sight bill of exchange
or a usance bill of exchange, the thirty day period shall commence from the
date on which the bearer has informed his immediate endorser. This
notification may be effected before expiration of the period for presentation.
In the case of a usance bill of exchange, the thirty day time period shall be
extended by the time period specified in the bill of exchange after
presentation. (6) Circumstances relevant to the person of the bearer, or to the person to whom he has assigned the presentation of the bill of exchange or the effecting of the protest, shall not be deemed force majeure. Section IX Brokerage Broker Article 516 (1) The drawer, the endorser or
the guarantor may appoint one person -- a broker -- who where necessary may
accept the bill of exchange or pay. (2) A broker may be any third
party and any person liable under the bill of exchange, except the drawee who
has already accepted it. (3) The broker shall be obliged to
notify within two business days the person for whom he has been operating. If
the broker fails to meet this term he shall be held liable for damages to the
amount of the sum of the bill of exchange. (4) In the cases under paragraphs 2 and 3 the bill of exchange may be accepted or paid for honour by a broker acting for some of the debtors under the bill of exchange against whom a recourse action could be brought. Acceptance Article 517 (1) Acceptance through a broker
shall be allowed in all cases where before maturity the bearer may bring his
recourse action, except where the presentation of the bill of exchange for
acceptance has been prohibited. (2) Where a person has been
indicated in the bill of exchange for the purpose of acceptance or payment in
case of necessity, the bearer may bring his recourse action before maturity
against the person who has added the address, as well as against the persons
who have signed after him, only if he has presented the bill of exchange to
the person indicated at that address, and has ascertained the rejection by
that person by means of a protest. (3) Except for the cases under paragraph 2 the bearer may refuse acceptance through a broker. If he accepts the brokerage, he shall forfeit the recourse he had before maturity against the person for whom acceptance has been effected, and against those who have signed after him. Form Article 518 The acceptance through a broker shall be noted on the bill of exchange and shall be signed by the broker. If the broker does not indicate for whom the acceptance was made, it shall be assumed to be for the drawer. Liability of the Broker Article 519 (1) A broker who has accepted the
bill of exchange shall be liable in respect of the bearer and the persons who
have signed after the person for whom the brokerage has been effected, in the
same way as him. (2) Notwithstanding the acceptance through a broker, the person for whom it has been effected, and the persons liable before him, may request from the bearer, against payment of the amount under Article 506, delivery of the bill of exchange, the protest and the receipt. Payment Article 520 (1) Payment through broker shall
be allowed where the bearer may lodge his recourse on maturity date or before
maturity. (2) The payment should be for the whole sum owed by the person for whom the brokerage has been effected, and should be done not later than on the date after expiration of the term for protest due to default on payment. Presentation and Protest Article 521 (1) If the bill of exchange has
been accepted for honour by a person with a place of residence at the place of
payment, or if a person with a place of residence at the same place has been
specified for payment in case of necessity, the bearer should present the bill
of exchange to those persons not later than on the date following the date of
expiration of the term for protest due to default on payment, and if necessary
-- to make such protest. (2) If the protest has not been made in due time, the person who has specified the address for payment in case of necessity, or for whom the bill of exchange has been accepted for honour, as well as those who have signed after him, shall be relieved of their obligation. Consequences from Refusal
of the Bearer Article 522 A bearer who refuses to accept payment through a broker shall forfeit his recourse action against those who would be relieved from their obligation due to the brokerage. Ascertainment of Payment Article 523 (1) Payment through a broker shall
be ascertained by a receipt on the bill of exchange, indicating for whom it
has been paid, and if there is no such indication it shall be assumed that
payment has been effected for the drawer. (2) The bill of exchange and the protest shall be delivered to the broker who has paid. Rights of the Broker Article 524 (1) The broker who has paid shall
acquire the rights under the bill of exchange against the person for whom he
has paid, and against the persons liable to him under the bill of exchange. He
may not endorse the bill of exchange. (2) The persons who have signed
the bill of exchange after the person for whom it has been paid, shall be
relieved of their obligation. (3) Where several persons have offered payment through a broker, priority should be given to the broker whose payment would relieve the highest number of debtors under the bill of exchange. The person who has paid contrary to the preceding sentence, being of knowledge of the circumstances, shall forfeit his recourse action against the persons who would have been relieved. Section X Set of copies and Transcripts Issue of Equivalent Copies Article 525 (1) The bill of exchange may be
issued in several equivalent copies. They should be numbered in the text, and
where this has not been done each copy shall be considered a separate bill of
exchange. (2) Where it has not been stated in the bill of exchange that it has been issued in one copy, each bearer may request the issue of more copies on his own account, up to the drawer. The endorsers must reproduce their endorsements on the new copies. Payment under One of the
Copies Article 526 (1) The payment under one of the
copies shall relieve all liable persons even without special provision
therefor. However, the drawee shall be liable under all accepted copies which
have not been returned to him. (2) An endorser who has transferred the copies to different persons, as well as the subsequent endorsers, shall be liable under all copies signed by them, if they have not been returned to them. Forwarding of a Copy for
Acceptance Article 527 (1) A person who has forwarded one
of the copies for acceptance must indicate in the remaining copies the name of
the person who holds the forwarded copy. This person shall be obliged to
deliver it to the bearer of another copy who has established himself as such. (2) Should delivery be rejected,
the bearer may bring his recourse action, ascertaining by protest that: 1. the copy forwarded for
acceptance has not been delivered to him upon request; 2. the acceptance or payment could not have been effected on the basis of another copy. Transcripts Article 528 (1) All bearers of a bill of
exchange shall be entitled to make transcripts. (2) A transcript should reproduce
exactly the original with the endorsements and all other notes thereon, and to
indicate the end of the transcript. (3) A guarantee may be given on a transcript and it may be endorsed. A transcript shall have effect against persons who have put their signatures on the bill of exchange before the transcript, only if presented together with the original. Original and Transcripts Article 529 (1) A transcript shall indicate
the holder of the original, who shall be obliged to deliver it to the bearer
of the transcript who has established himself as such. (2) Should the holder refuse to
deliver the original, the bearer may exercise his recourse rights against the
endorsers and the guarantors under the transcript, after ascertaining by
protest that the original has not been delivered to him. (3) If the original contains the provision "valid hereafter shall be only endorsements on the transcript" after the last endorsement before making of the transcript, or a phrase of equivalent meaning, any endorsement written thereafter on the original shall be invalid. Section XI Amendments Effect of Amendments Article 530 In case of amendments to the text of the bill of exchange, the persons who have signed after the amendments shall be liable under the provisions of the text amended, and those who have signed before the amendments shall be liable pursuant to the initial text. Section XII Limitation of Actions Limitation time Periods Article 531 (1) Actions against the drawee
under the bill of exchange shall expire by limitation after three years
following maturity. (2) Actions of the bearer against
the endorsers and against the drawer shall expire by limitation after one year
from the date of the duly made protest or from maturity, provided the bill of
exchange contains the provision "sans frais". (3) Actions of the endorsers Among themselves and against the drawer shall expire by limitation after six months from the date on which the endorser has paid the bill of exchange, or from the date on which an action was brought against him. Interruption of Limitation Article 532 The limitation shall be interrupted only with respect of the person against whom an act has been carried out. Prohibition for Extension
of Time Periods Article 533 The time periods established under this Law for obligations under bills of exchange may not be extended. Section XIII Unmerited Gain Action on Grounds of
Unmerited Gain Article 534 (1) Where the bearer of a bill of
exchange, a promissory note or a cheque forfeits the right to an action under
them due to expiration by limitation or non-performance of the necessary acts
for retaining the rights thereunder, he may claim from the drawer or the
drawee the sum which they have gained to his detriment. (2) The action under paragraph 1 shall expire by limitation after three years. This term shall commence from the date of forfeiture of the actions under the bill of exchange, the promissory note or the cheque. CHAPTER THIRTY ONE PROMISSORY NOTE Contents Article 535 A promissory note shall contain: 1. the title "promissory
note" in the text of the document in the language in which the document
has been written; 2. unconditional promise for
payment of a certain sum of money; 3. maturity; 4. place of payment; 5. name of the person to whom or
to whose order the sum must be paid; 6. date and place of issue; 7. signature of the drawer. Incomplete Contents Article 536 (1) A document which does not
contain some of the requisites listed under Article 535, shall not be
promissory note, except for the cases specified under paragraphs 2, 3 and 4. (2) A promissory note in which no
maturity date has been indicated shall be considered payable upon
presentation. (3) The place of issue shall be
assumed to be the place of payment and place of residence of the drawer,
unless otherwise agreed. (4) A promissory note in which no place of issue has been indicated, shall be assumed issued at the place indicated next to the name of the drawer. Reference to the
provisions on the bill of exchange Article 537 The provisions on the bill of exchange shall apply mutatis mutandis, inasmuch as compatible to its nature, to the promissory note. Obligations of the drawer Article 538 (1) The drawer of a promissory
note shall be liable in the same way as the drawee of the bill of exchange. (2) A promissory note payable within a certain time period following the presentation, must be presented to the drawer pursuant to the terms under Article 477. The drawer shall certify on the document its presentation, write the date and put his signature. The time period after the presentation shall commence from the date certified by the drawer on the note. The refusal of the drawer to certify the presentation or to write the date shall be ascertained by protest pursuant to Article 496, the date of which shall be considered the beginning of the time period after presentation. CHAPTER THIRTY TWO CHEQUE
Section I Issue and form Contents Article 539 A cheque shall contain: 1. the title "cheque" in
the text of the document in the language in which the document has been
written; 2. unconditional order for payment
of a certain sum of money; 3. name of the person, who should
pay (drawee); 4. date and place of issue; 5. place of payment; 6. signature of the drawer. Incomplete contents Article 540 (1) A document which does not
contain some of the requisites indicated under Article 539, shall not be a
cheque, except in the cases, specified in paragraphs 2, 3 and 4. (2) A cheque in which no place of
payment has been indicated, shall be considered payable at the place indicated
next to the name of the drawee. Where there are several places indicated, the
cheque shall be payable only at the first place indicated. (3) If no other place has been
indicated, a cheque shall be paid at the place of domicile of the drawee. (4) A cheque in which the place of issue has not been indicated, shall be considered issued at the place indicated next to the name of the drawer. Issue Article 541 (1) A cheque payable in the
Republic of Bulgaria may be issued only against a bank. (2) The drawer of the cheque must
have coverage with the drawee. (3) The drawee shall be obliged to
pay the cheque to the amount of coverage, if he has explicit or tacit
agreement with the drawer. (4) A cheque shall be valid even where the provisions of paragraphs 2 and 3 have not been complied to. Invalidity of acceptance Article 542 A cheque shall not be subject to acceptance. A note of acceptance on the cheque shall be invalid. Types of cheques Article 543 (1) A cheque may be issued: 1. to a certain person with or
without explicit provision "to order"; 2. to a certain person with
provision "not to order" or another equivalent provision; 3. to bearer. (2) A cheque in favour of a
certain person with provision "or to bearer" or another phrase of
equivalent meaning, shall have the same effect as a cheque to bearer. (3) A cheque in which the name of the person in whose favour it has been issued is not indicated, shall be deemed a cheque to bearer. Cheque to the order of the
drawer or against the drawer Article 544 (1) A cheque may be issued to the
drawer or to his order. (2) A cheque may not be drawn on the drawer, except where issued between different branches of a merchant. Inapplicability of
interest Article 545 A provision for interest included in a cheque shall be invalid. Cheque payable with a
third party Article 546 A cheque may be payable with a third party at the domicile of the drawee or at another place only if the third party is a bank. Liability of the drawer Article 547 The drawer shall be liable for payment of the cheque. Any provision relieving him from liability shall be invalid. Section II Endorsement Requirements to the
endorsement Article 548 The provisions on endorsement of
bills of exchange shall apply to the cheque, with the following exceptions: 1. the endorsement of the drawee
shall be invalid; 2. the endorsement in favour of the drawee shall only have the effect of a receipt, except where the endorsement has been made between different branches of a merchant. Endorsement on a cheque to
bearer Article 549 The endorsement on a cheque to bearer shall make the endorser liable pursuant to the rules for recourse. Such an endorsement shall not transform the cheque into a cheque to order. Prohibition for guarantee
by the drawee Article 550 The drawee may not be guarantor on a cheque. Section III Payment Payment on demand Article 551 (1) A cheque shall be payable
always on demand. Any provision to the contrary shall be invalid. (2) A cheque presented for payment before the date indicated as date of issue, shall be payable on the date of presentation. Term for presentation Article 552 A cheque must be presented for payment within eight days following the date of its issue. Withdrawal Article 553 (1) A cheque may be withdrawn by
the drawer after expiration of the term for presentation. (2) Where a cheque has not been withdrawn, the drawee may pay it after the expiration of the term for presentation as well. Death or legal disability
of the drawer Article 554 The death or legal disability of the drawer occurring after the issue, shall not affect the effect of the cheque. Section IV Crossed cheque and cheque directed to account Crossed cheque Article 555 (1) The drawer and the bearer of a
cheque may cross it with the effect described in Article 556. (2) The crossing shall be done
with two parallel lines on the face. (3) The crossing may be general or
special. The crossing shall be general where it does not contain any provision
between the two lines, or contains the provision "bank" or another
phrase of equivalent meaning. The crossing shall be special if the name of a
bank is written between the two lines. (4) A general crossing may be transformed into special, but a special crossing may not be transformed into general. Effect of a crossed cheque Article 556 (1) A cheque with general crossing
may be paid only to a bank or to a customer of the drawee. (2) A cheque with special crossing
may be paid only to the bank indicated or should that bank be the drawee -- to
its customer. The bank indicated may assign the receiving of the sum under the
cheque to another bank. (3) A cheque may have only one
special crossing. Two special crossing are allowed only where one of them is
for payment through a clearing house. A cheque which is not in compliance with
this provision, may not be paid. (4) A drawee who violates the requirements of paragraphs 1, 2 and 3 shall be liable for damages to the amount of the sum under the cheque. Cheque directed to an
account Article 557 (1) The drawer and the bearer of a
cheque may prohibit its payment in cash by writing on the face of the cheque
the provision "account payee" or another phrase of equivalent
meaning. (2) In the case under paragraph
(1) the payment can be effected only to an account. In the case where the
account has been indicated as well, the drawee may transfer the sum only to
the indicated account. The indication of the account may be done by the drawer
and by any holder of the cheque who has established his identity as such. (3) The crossing out of the
provision "account payee" shall be null and void. (4) A drawee who has paid in violation of paragraphs 1, 2 and 3 shall be liable for damages to the amount of the sum under the cheque. Section V Recourse due to default on payment Grounds Article 558 The bearer may bring his recourse
actions against the endorsers, the drawer and the other liable persons, where
the refusal to pay has been ascertained by: 1. protest; 2. declaration of the drawee
written on the cheque with indication of the date of presentation; 3. dated declaration of the clearing house that the cheque has been presented in due time and has not been paid. Term for protest Article 559 (1) The protest must be made
before expiration of the term for presentation. (2) If presentation is made on the last date of the term, the protest must be done on the next business day. Section VI Set of copies Issue of equivalent copies Article 560 In addition to the cheques to bearer, each cheque issued in one country and payable in another may be issued in several equivalent copies. Where a cheque has been issued in several copies, they should be numbered in the text itself, and where this has not been done each copy shall be considered a separate cheque. Section VII Limitation Limitation periods Article 561 (1) Recourse actions of the bearer
against the endorsers, the drawer and the guarantors on the cheque shall
expire by limitation after six months from the date of presentation or from
the date of expiration of the term for presentation. (2) Recourse actions of the endorser against all persons liable before him shall expire by limitation after six months from the date on which he has paid the cheque, or from the date where a claim has been lodged against him. Section VIII Special provision Reference Article 562 The provisions on the bill of exchange shall apply, inasmuch as compatible to its nature, to the cheque. CHAPTER THIRTY THREE APPLICABLE LAW ON BILL OF EXCHANGE, PROMISSORY NOTE AND CHEQUE Capacity Article 563 (1) The capacity of a person to
undertake obligations under a bill of exchange, a promissory note or a cheque,
shall be determined by its national law. Where this law declares the law of
another country to be applicable law, the law of that country shall apply. (2) A person who does not possess the capacity referred to in paragraph 1, shall be considered liable if his signature has been put in a country the law of which recognizes him as capable person. Form and contents Article 564 (1) The form and contents of a
bill of exchange, a promissory note and a cheque shall be determined pursuant
to the law of the place of their signature. For a cheque the observance of the
form and contents pursuant to the law of the place of payment shall be
sufficient. (2) Where a bill of exchange, a promissory note or a cheque are not valid, but are in compliance with the law of the country where a subsequent obligation has been undertaken, they shall be valid. Obligation Article 565 (1) The obligation of the drawee
under a bill of exchange and of the drawer of a promissory note shall be
determined by the law of the place of payment. (2) The obligation of the other persons who have signed shall be determined by the law of the place where the signatures have been put. Time periods for bringing
recourse actions Article 566 The time periods for recourse for persons who have signed shall be determined by the law of the place of issue of the document. Acquisition of receivable
by the bearer Article 567 The law of the place of issue of a bill of exchange or a promissory note shall determine whether the bearer acquires the receivable in view of which they have been issued. Partial acceptance Article 568 The right of the drawee to effect partial acceptance of a bill of exchange or a promissory note and the obligation of the bearer to accept partial payment shall be determined by the law of the place of payment. Protest Article 569 The form and terms for protest, as well as of other acts necessary for the exercise or retaining of rights under a bill of exchange, a promissory note and a cheque, shall be determined by the law of the place where the respective acts must be undertaken. Loss and theft Article 570 The acts that must be undertaken in the case of loss or theft of a bill of exchange, a promissory note or a cheque, shall be determined by the law of the place of payment. Payer of a cheque Article 571 Persons on whom a cheque may be drawn shall be determined by the law of the place of payment. Where pursuant to that law a cheque is not valid in view of the capacity of the person on whom it has been drawn, the obligations ensuing from signatures put in other countries, the laws of which contain such provisions, shall be valid. Application of the law of
the place of payment Article 572 Determined pursuant to the law of
the place of payment of a cheque shall be: 1. whether it should be issued to
presentation, or it could also be within a certain term after presentation, as
well as what shall be the consequences of presentation on a later date; 2. time limit for presentation; 3. the possibility a cheque to be
accepted, confirmed or advised, as well as the effect of such notes; 4. the possibility a cheque to be
crossed or with provision "account payee" or another phrase of
equivalent meaning, and the consequences thereof; 5. the right of the drawer to cancel a cheque or to object to its payment. CHAPTER THIRTY FOUR DEPOSIT IN PUBLIC WAREHOUSE Definition Article 573 Under a contract for deposit in a public warehouse the depositary accepts goods, in return for consideration, with an obligation to keep and return them to the depositor or the person authorized to receive them. Form Article 574 (1) A contract for deposit in a
public warehouse shall be concluded in writing and shall be entered in
warehouse register. (2) The depositary shall keep a warehouse register where he shall enter the contract. An entry shall be made pursuant to a procedure specified in Regulation to be approved by the Minister of Justice. Obligations of the
depositary Article 575 (1) A depositary shall be obliged
to provide access of the depositor to the goods during the working hours of
the warehouse, in order to inspect them, to take samples from them and, with
the permission of the depositary, to undertake acts for the maintenance,
packing, sorting, separating of the goods and other similar acts. (2) The depositary may combine
fungibles deposited in the warehouse with other of the same type and quality,
unless otherwise agreed. (3) Where obvious transformations
have occurred in the goods, which give grounds for fears that the goods may be
damaged, the depositary must immediately notify the person authorized to
receive them, and where no such person is known, the depositor. (4) The depositary shall be obliged to insure the deposited goods on behalf of and on the account of the depositor for the value declared thereby, against fire, flood and earthquake, unless they have already been insured or the depositor objects to the insurance. Upon request from the depositor the depositary shall be obliged to insure the deposited goods against other risks as well. Obligations of the
depositor Article 576 (1) Upon conclusion of the
contract the depositor shall be obliged to provide the information required
for the safekeeping of the goods. (2) The consideration shall be paid at the end of each calendar quarter or upon return of the goods, unless otherwise agreed. Warehouse warrant Article 577 (1) The depositary shall issue a
warehouse warrant upon request from the depositor. (2) The warehouse warrant shall be
issued on the basis of the warehouse register and shall comprise a goods note
and a pledge note. The two parts of the warehouse warrant shall contain: 1. indication of the public
warehouse and the sequence number under the warehouse register; 2. name and address of the
depositor; 3. type and quantity of goods and
whether they may be mixed with other goods; 4. time period for keeping the
goods; 5. statement by the depositary
that he shall deliver the goods as agreed; 6. acts to be undertaken by the
depositary for preservation of the goods; 7. information whether the goods
are insured, with whom, for what sum insured, against what risks and for what
premium; 8. amount of remuneration due and
unpaid expenses prior to the issue of the warrant; 9. amount of ullage, except where
the goods have been accepted by numbers; 10. place and date of issue of the
warrant; 11. signatures of the depositor
and the depositary. (3) The depositor, as well as any
legitimate holder of the warehouse warrant, ascertained by a continuous
sequence of the endorsements, shall be entitled to request the issuing of
warehouse warrants for separate parts of the goods in return for the warehouse
warrant for the total. Such warehouse warrants shall have the date of the
initial warehouse warrant. (4) The depositary may refuse to issue warehouse warrant on the grounds of good reasons or if the depositor is in default on payment of due remunerations and expenses. Transfer of warehouse
warrant Article 578 (1) The warehouse warrant may be
transferred by dated endorsement on the back of the goods note and the pledge
note. (2) The rules of Articles 466 -
470 and of Article 474 shall also apply to the warehouse warrant. (3) An endorsement on the pledge
note only shall constitute a right of pledge on the goods deposited in favour
of the endorsee. The first endorsement should contain the amount of the loan
secured, the interest and maturity, as well as the name and address of the
creditor. The pledge may be counterposed against the endorsers of the goods
note and shall be entered in the warehouse register. The first endorsee shall
be obliged to request those data to be entered in the goods note and in the
warehouse register. (4) The transfer of only the goods
note or only the pledge note shall be effected by dated endorsement on the
respective part of the warehouse warrant. (5) The legitimate holder only of the goods note, ascertained by the continuous sequence of endorsements, shall be entitled to receive the deposited goods even before maturity of the loan secured by pledge of the goods. In such case he shall be obliged to pay to the depositary the amount of the loan with interest as of the date of payment, to an amount specified in the warehouse register. Where the interest has been prepaid, it shall be deducted for the period from the date of payment to maturity. Presentation of the pledge
note Article 579 The holder of the pledge note who is established through the continuous sequence of endorsements shall present it upon maturity to the debtor for payment, or where the debtor is not known, to the depositor. The note shall be presented for payment at the public warehouse. In such cases the provisions of Articles 505 and 507 shall apply. Protest, compulsory
execution and indemnification Article 580 (1) The default on payment of the
amount under the note shall be ascertained by protest against the debtor under
the pledge note, and where he is not known, against the depositor. In such
case Articles 496 and 498 shall apply mutatis mutandis. (2) If his claim is not satisfied
from the sale of the goods, the creditor under the pledge note may direct the
execution against the debtor, the endorsers and the persons who have endorsed
the goods note after establishment of the pledge, who shall be liable jointly
and severally. (3) (Amended SG 70/1998) Where the
creditor under the pledge note fails to make the protest within the specified
time period, or if he fails to sell the goods within twenty days from the date
of protest, he shall forfeit the recourse action against the endorsers under
the pledge note, but shall retain his action against the debtor and the
endorsers of the goods note. (4) The endorser of the goods note who has paid under the pledge note shall be entitled to an action for the sum paid, the interest and the expenses, against the debtor and the preceding endorsers under the goods note, who shall be liable jointly and severally. The action against the endorsers shall expire by limitation after six months from the date of payment of the debt, and that against the debtor, after three years. Invalidation of destroyed
or lost warehouse warrant Article 581 (1) A destroyed or lost warehouse
warrant shall be invalidated pursuant to Article 456 et seq. of the
Code of Civil Procedure. (2) Following the institution of
proceedings for invalidation, the owner of the destroyed or lost warehouse
warrant may request from the depositary the issue of a duplicate copy, by
providing sufficient guarantee. Where the depositary does not agree with the
amount of the guarantee, it shall be determined by the court of first
instance. (3) Should the destroyed or lost warrant be invalidated, the guarantee deposited pursuant to paragraph 2 shall be returned. Return of deposited goods Article 582 (1) The goods deposited shall be
returned to the depositor, or where a warehouse warrant has been issued, to
the holder of the warrant who is established through the continuous sequence
of endorsements, against submission of the warrant. The return of the goods
shall be effected at the warehouse where they have been deposited, and shall
be noted down on the warehouse warrant. The warrant shall be signed by the
person receiving. (2) Where several persons have
been authorized to receive the goods and it has not been ascertained what part
of the goods should be received by whom, or where the goods are indivisible,
in the case of disagreement between the above the depositary shall be
entitled, upon expiration of the term, to sell the goods and to deposit the
amount received in a bank in their name. (3) Where fungibles have been
deposited, the holder of a goods note may receive part of them by paying to
the creditor or depositing to his account the respective part of the amount
receivable for which the pledge note was issued, together with interest and
expenses. (4) Ullage of the goods shall be deducted to the amount agreed or provided by operation of law. Right to pledge Article 583 The depositary shall be entitled to a pledge for the goods deposited in order to secure his claims. Termination Article 584 The depositary may request the depositor to take part of the goods after the expiration of the agreed term, or where no term has been agreed, three months following the deposit of the goods. Early termination Article 585 (1) Where the goods deposited are
threatened by damage or where they may damage other goods, as well as where
there are other good reasons for termination of the contract, the depositary
may terminate the contract and demand that the goods are received immediately
by the last endorsee, and where he is not known - by the depositor. (2) If the goods are not received,
the depositary shall be entitled to sell them under the procedure set forth
under Article 328, paragraph 1, item 2, after written notification to the
legitimate holder to receive them, or where he is not known, to the depositor,
and satisfy himself from the sale price for his claim under the contract for
deposit. The depositary shall deposit the difference to the account of the
creditor under the pledge note. (3) If the goods are perishable, the provision of Article 328, paragraph 1, item 3, shall apply. Limitation Article 586 (1) An action for damages against
the depositary shall expire by a one-year limitation. The limitation period
shall commence from the date of return of the deposited item. Where the
deposited item has not been returned, the limitation period shall commence
from the date on which it should have been returned, and if the item has been
destroyed -- from the date of coming of knowledge thereof. (2) Where the loss, damage, destruction or delayed return of the item have been caused intentionally by the depositary, the limitation period shall be three years. CHAPTER THIRTY FIVE LICENCE CONTRACT Definition and form Article 587 (1) (Amended, SG No. 81/1999)
Under a licence contract the owner of a right over an invention, utility
model, industrial design, mark, topology of integrated circuit or know-how,
who shall be termed licensor, shall grant for compensation, entirely or in
part, the use thereof to the licensee. (2) The licence contract shall be made out in writing. Ceding of right to
application Article 588 (Repealed, SG No. 81/1999)
Territorial coverage of
licence Article 589 It shall be assumed, unless otherwise agreed under the licence contract, that the licence has been granted for use on the territory of the Republic of Bulgaria. Registration of the
contract Article 590 The licence contract shall be entered in a register of the Patent Office. It shall be effective vis-á-vis third parties after the registration.
Providing use Article 591 The licensor shall be bound to ensure to the licensee peaceful and undisturbed use of the rights granted, as well as protection against claims by third parties. Information and assistance Article 592 The licensor shall be bound to provide the licensee with the information as agreed and to render assistance for use of the subject of the licence. Obligation for
confidentiality Article 593 The licensee shall be bound to keep in secret the information about an unpatented invention, utility model or know-how, which he has been granted the right to use. Licence of mark (Renamed, SG No. 81/1999) Article 594 (1) (Amended, SG No. 81/1999) In
the case of licence of a mark the licensee shall be bound to ensure the
quality of goods in compliance with the trade mark which has become known to
users before conclusion of the contract. (2) The licensee shall be bound to put the trade mark on the goods for which the licence has been granted thereto. Compensation Article 595 (1) Where the compensation has
been agreed to be in accordance with the magnitude of use of the subject of a
licence, the licensee shall be bound to inform the licensor about that
magnitude of use within the agreed time periods. (2) Compensation shall be due for the expired calendar year, unless otherwise agreed. Contract for sub-licence Article 596 (1) Under a contract for
sub-licence the licensee of an exclusive licence may grant to another person
the right to use the subject of the licence. (2) The right for granting pursuant to paragraph 1 may be excluded by the licence contract, or a provision requiring the consent of the licensor may be stipulated. The consent may be refused only on the grounds of good reasons. Rights of the licensor in
respect of a of sub-licencee Article 597 The licensor may demand from the sub-licencee the compensation which at the time of demand he owes to his licensor. Termination with advance
notice Article 598 (1) A licence contract concluded
for an unlimited term may be terminated by one of the parties with advance
notice. (2) Where the term for advance notice has not been specified in the contract, it shall be deemed to be six months, but the licensor may not terminate the contract before the expiration of the first year of its validity. Extension of the contract
by tacit agreement Article 599 Where after the expiration of the contract term the licensee continues to use the subject of licence with the knowledge of the licensor and without objections therefrom, the contract shall be deemed extended to the term provided by law for its protection. CHAPTER THIRTY SIX CONTRACT FOR COMMODITY CONTROL Definition Article 600 Under a contract for commodity control the controller shall undertake, for compensation and by use of special knowledge, to make unbiased comparison between the required and the actual state, or to establish only the state of a commodity or service. The controller shall issue a certificate for his findings. Obligations of the
controller Article 601 (1) The control should be effected
of a magnitude and manner provided by a law or in the contract, and where
nothing has been specified -- of the ordinary magnitude and manner at the
location of the subject of control. (2) Where the contract provides for keeping a sample, the controller shall be obliged to keep it at his seat for not less than six months after receipt thereof. Invalid provision Article 602 Invalid shall be a provision for obligations of the controller which could affect his impartiality. Obligations of the
principal Article 603 (1) The principal shall be obliged
to provide the controller with access to the subject of control and to render
him assistance in carrying out his duties. (2) Where the amount of compensation has not been specified, the principal shall owe the ordinary compensation. Limitation Article 604 The right to an action for claims
under a contract for commodity control shall expire by limitation after one
year.
CHAPTER THIRTY SEVEN APPLICABLE LAW Choice of applicable law
in commercial contracts Article 605 (1) Commercial contracts with
international elements shall be governed by the law of choice of the parties. (2) It shall be assumed, unless
otherwise agreed, that the parties have accepted as applicable the custom
known to them or such that should have been known to them, and which is common
in international trade and continuously observed by parties under contracts of
the same type in the respective field of trade. (3) Where at the time of choice
all elements of the contract are related to the law of one country, the
applicability of its mandatory norms shall not be affected by the law of
choice. (4) Articles 606c - 606e shall apply mutatis mutandis to the existence and the validity of choice of applicable law. Applicable law in case of
lack of choice Article 606 (1) Where the parties have not
specified an applicable law, applied shall be the law of the country on the
territory of which the party owing the typical obligation under the contract
has its main place of business. (2) Where the agreed place of
performance is other than the main place of business, applicable shall be the
law of the place of performance. Where the party has no place of business,
valid shall be the place where it permanently resides. (3) Where the subject of the contract is a right over real property, applicable shall be the law of the country where the property is located. Law applicable to
transportation of goods Article 606a A contract for transportation of
goods shall be governed by the law of the country in which is located the main
place of business of the carrier under the contract as concluded, provided one
of the following is in the same country: 1. the point of loading; or 2. the point of unloading; or 3. the main place of business of the consignor. Special provision Article 606b The provisions of Articles 606 and 606a shall not apply where it has been ascertained that the contract is more closely related to the law of another country. In such cases the law of the country with which the contract is most closely related shall apply. Validity of contract Article 606c The validity of a contract shall be governed by the law of the country that would have applied had the contract been valid. Form of contract Article 606d (1) The form of the contract shall
be deemed observed if the requirements of the law applicable thereto or of the
law at the place of conclusion have been met. (2) Where upon conclusion of the
contract the parties were on the territories of different countries, the
contract shall be valid provided the requirements for form of one of the
countries have been observed. (3) Where subject of the contract are rights over real property, the requirements for form pursuant to the law of the country on the territory of which the property is located, notwithstanding the law applicable to the contract, must also be observed. Mandatory provisions of
Bulgarian law Article 606e The provisions of this Chapter shall not apply to relationships governed by mandatory provisions of Bulgarian law. Subsidiary provision Article 606f The General Bulgarian International Private Law shall apply to matters not settled in this Chapter. |
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