The uses of bills of exchange include issue, presentation, acceptance, and payment. If a bill of exchange needs to be transferred, it is usually transferred by endorsement. When a bill of exchange is dishonored, it also involves making a protest certificate and exercising legal rights such as recourse.
(1) Issue.
Issue refers to the act of the drawee filling in the payee, payment amount, payment date and place, and payee on the bill of exchange, and handing it over to the payee after signing. When issuing a bill of exchange, there are usually three ways to write the payee.
① Restrictive heading. For example, “Pay xx Co. only” or “Pay xx Co. not negoriable”. Bills of exchange with this heading cannot be circulated or transferred, and only xx Co. can collect the payment.
② Indicative heading. For example, “Pay xx Co. or order, Pay to the order of xx Co.”, this kind of bill of exchange can be transferred to a third party through endorsement in addition to xx Co. paying the bill.
③ Payee or bearer. For example, “Pay to bearer” or “Pay to holder” (Pay Holder), this kind of bill of exchange does not need to be endorsed by the holder and can be transferred by simply delivering the bill.
According to the provisions of my country’s “Bills of Exchange Law” that the name of the payee must be recorded, any bill of exchange issued with the bearer or bearer as the payee is invalid. In foreign-related bills, the bearer or bearer as the payee is generally not used.
(2) Presentation.
Presentation refers to the act of the holder submitting the bill of exchange to the payee for acceptance or payment. When the payee sees the bill of exchange, it is called sight. Presentation can be divided into two types:
① Payment presentation. The act of the holder submitting the bill of exchange to the payee and requesting payment.
② Presentation for acceptance. If it is a time draft, the holder submits the draft to the payee, and the payee goes through the acceptance procedures after seeing the draft and pays at maturity.
The presentation for acceptance of time drafts and the presentation for payment of sight drafts should be carried out within the statutory period, and the bills of exchange laws of various countries have different provisions on this. According to the provisions of my country’s “Bills of Exchange Law”, sight drafts and bills payable at a fixed date or at a fixed time after issuance should be presented to the payee for acceptance one month after the date of issue; bills payable on a fixed date or at a fixed time after issue should be presented to the payee before the due date; the presentation period for payment of accepted time drafts is within 10 days from the due date.
(3) Acceptance.
Acceptance refers to the act of the payee expressing his or her responsibility to pay the time draft at maturity. The payee writes the word “acceptance” on the bill of exchange, indicates the acceptance date, and signs it and returns it to the holder. The payee becomes the acceptor when he or she accepts the bill. The acceptor is responsible for paying the bill of exchange when it matures. Article 44 of my country’s Bills of Exchange Law stipulates that after the payee accepts the bill of exchange, he shall bear the responsibility of paying the bill when it matures. Therefore, once the bill of exchange is accepted, the payee becomes the acceptor of the bill of exchange (Acceptor) and the principal debtor of the bill of exchange, and the drawer becomes the secondary debtor (or secondary debtor) of the bill of exchange.
(4) Payment.
For a sight bill of exchange, the payee shall pay when the holder presents the bill of exchange: for a sight bill of exchange, the payee shall pay on the maturity date of the bill of exchange after acceptance. After payment, all debts on the bill of exchange shall be terminated.