The effectiveness and procedures of bill of exchange acceptance and its comparative analysis with certified checks
Effectiveness of bill acceptance
Once the bill is accepted by the payee, it becomes effective as acceptance. According to common practice and the negotiable instruments laws of various countries, the acceptor is responsible for payment when due, even if there is no financial relationship between the acceptor and the drawer. In other words, the acceptor may not contest the holder’s demand for payment on any grounds. In addition, when other debtors of the bill (such as the drawer, endorser, guarantor, etc.) are recourse or take the initiative to pay off the debt of the bill and obtain the bill, they can exercise the right of recourse against the acceptor. However, when the holder fails to present payment on time, his right of recourse against the endorser, guarantor, etc. is also lost, but the holder still has the right to assert rights against the acceptor.
Procedures for bill acceptance
The process of bill acceptance is divided into three main steps: prompting for acceptance, accepting or refusing to accept, and returning the bill. The act of the holder presenting the bill to the drawee before its maturity date and requesting the payer to indicate on the bill that he is willing to pay the amount of the bill on the maturity date is called presentment for acceptance. This process has two purposes: to show the drawee that the holder actually possesses the bill and that the other party is indeed the payee recorded on the bill; and to request the drawee’s commitment to pay the amount of the bill on the maturity date. Subsequently, the payer should also make a decision to accept or refuse to accept within the specified time. If it is decided to accept the bill, the payee must write down the words of acceptance on the front of the bill and sign and seal it. When the payer accepts and returns the bill, the acceptance procedure of the bill is completed, the acceptance becomes effective, and the acceptor will be the principal debtor of the bill and assume the unconditional obligation to pay the amount of the bill.
Effectiveness of certified checks
Similar to the acceptance of a bill of exchange, a check also has certain validity once certified. The first is the effect on the payee: after the payee has certified the check, he shall bear absolute responsibility for the payment of the check. Even if the validity period of the payment expires, the payee shall still be responsible for the payment; the payee shall not make any payment beyond the deposit amount or the amount stipulated in the letter of credit. The amount must be guaranteed, otherwise you may be fined. The second is the effect on the drawer: once the check is guaranteed for payment, the drawer is exempted from liability. Even if the guarantee payer does not pay, the holder usually cannot exercise recourse against the drawer; the drawer cannot revoke the payment. With entrustment, even if the drawer goes bankrupt, the effectiveness of the guaranteed payment will not be affected. Thirdly, the effect on the indorser: after the payee guarantees payment on the check, the indorser is usually exempted from its liability. Even if the guaranteeer fails to pay, he cannot exercise recourse against the indorser. The last is the effect on the holder: if the holder fails to present the payment within the payment period, he still has the right to request payment; if the certified check is lost, the holder shall be responsible for it and shall not make a stop payment notice, but may pass The public notice and reminder procedure is resolved.
It can be seen from the above comparison that although draft acceptance and check guarantee both aim to ensure the safety and reliability of bills, they target different objects. The former mainly involves bills of exchange, while the latter targets checks. There are also differences in the specific operating procedures and effectiveness of the two, but they play an important role in improving transaction efficiency and reducing risks.