Payment refers to the act of the payee paying the bill when the holder presents the bill to the payee. When making payment, the payee must do the following.
(1) Legitimate payment to the bill owner. Legitimate payment means that the payee must make payment in good faith, that is, he must not know the defects of the holder’s rights, and at the same time, he must verify the continuity of the endorsement. Payment that meets these two conditions is called legitimate payment, and the payee can be exempted from the debt.
(2) Payment on the due date. After the holder makes a payment reminder to the payee within the prescribed period, the payee shall pay the bill in accordance with the law or agreement. The payee does not assume the obligation to pay before the prescribed period and has the right to refuse to do so. This does not constitute a refusal to pay, so the holder shall not exercise the right of recourse, and the holder also has the right to refuse to receive the bill before the due date. If both parties are willing to pay before the due date, the law does not prohibit this. If the payee pays the bill in advance, he shall bear all the consequences arising therefrom.
(3) Payment after the due date. Post-dated payment refers to payment that can only be made after the payment reminder period has passed or the protest certificate has been made. The effectiveness of post-dated payment varies depending on whether the payee accepts the bill of exchange, and is specifically divided into the following two situations.
① Post-dated payment by the acceptor. After the bill of exchange is accepted by the payee, the payee (acceptor) becomes the principal debtor of the bill of exchange. Except for the exemption of liability due to the complete expiration of the statute of limitations, the payee (acceptor) shall bear the absolute payment responsibility, which is not affected by the expiration of the reminder period. Therefore, the effectiveness of the acceptor’s post-dated payment is the same as the payment due. Before the expiration of the statute of limitations, the acceptor may be requested to pay at any time. The acceptor may request the holder to accept the bill payment or deposit the bill payment according to law to exempt his liability. For the holder, if the payment is made after the due date, the holder will lose the right of recourse against the previous holder, but his right to request payment still exists. According to Article 17 of my country’s “Bills of Exchange Law”, the statute of limitations of the holder’s rights against the drawer and the acceptor is 2 years from the due date of the bill; for bills of exchange and promissory notes payable on sight, it is 2 years from the date of issue.
② The payee’s post-dated payment of an unaccepted bill of exchange. For an unaccepted bill of exchange, the holder has only the right of recourse but no right to request payment. However, the exercise of the right of recourse is subject to the obligation to preserve the rights on the bill of exchange. If the holder does not present the bill for payment or preserve the rights on the bill of exchange within the prescribed period, he will lose the right of recourse against his predecessor, and the payee will not be obliged to pay him.
(4) Payment in full. Article 54 of my country’s Bills of Exchange Law stipulates that the payee must pay in full on the day the holder presents the bill for payment. Therefore, the payee’s payment should be the full amount, and partial payment is not allowed. However, the Geneva Uniform Bills of Exchange Law and the bills of exchange laws of most countries or regions stipulate that the payee can pay the face amount in full or in part, and the holder may not refuse partial payment, otherwise he will lose the right of recourse for that part of the payment.
(5) Deposit of bill amount and cancellation of bill. Deposit means that when the holder does not make a payment reminder for commercial payment and settlement within the prescribed period, the bill debtor can submit the corresponding bill amount to the relevant institution for safekeeping. After the deposit, the bill debtor is deemed to have fulfilled the obligation of the payee. This is a system and international practice to protect debtors. After the payee pays, the holder should be required to write “paid” on the bill and sign to take back the bill. At this time, the bill will be cancelled (discharged), and the responsibilities of the payee and all debtors will be eliminated.