1. Endorsement.
In the international market, bills of exchange are also a negotiable instrument that can be circulated and transferred in the bill market. Endorsement is a legal procedure for transferring the rights of bills of exchange, which is the act of the holder of a bill of exchange recording relevant matters on the back of the bill of exchange and signing it, or adding the name of the transferee (endorsee) and handing the bill of exchange to the transferee. After endorsement, the right to collect the bill of exchange is transferred to the transferee. Bills of exchange can be continuously transferred through endorsement. For the transferee, all the endorsers (Endorser) before him and the original drawer are his “previous hand”; and for the transferor, all the transferees after his transfer are his “later hand”, and the former hand has the responsibility to guarantee that the bill of exchange will be accepted or paid by the latter hand.
In the international market, if the holder of a usance bill of exchange wants to obtain the bill before the payee pays, he can transfer the bill of exchange through endorsement, that is, discount the bill of exchange. Discount refers to the act of paying the balance to the holder of a long-term bill after the bill is accepted but has not yet matured, after the bank or discount company deducts the discount interest calculated at a certain discount rate from the face value.
2. Dishonour.
When the holder presents the bill for acceptance and is refused acceptance (Dishonour by non-acceptance), or when the holder presents the bill for payment and is refused payment (Dishonour by nonpayment), it is called dishonour, also known as return.
In addition to refusal to accept and refusal to pay, when the payee refuses to see the bill, dies or declares bankruptcy, so that payment is actually impossible, it is also called dishonour.
If the bill is refused acceptance when presented within a reasonable time, or refused payment when presented on the due date. The holder immediately has a right of recourse, and the holder has the right to claim the bill amount from the endorser and the drawee. According to the laws of some countries, the holder of a bill should issue a protest certificate in time in order to exercise the right of recourse. The so-called right of recourse means that when a bill of exchange is refused, the holder has the right to request his predecessor (endorser, drawer) to repay the amount and expenses of the bill of exchange. The protest certificate is a document issued by the statutory notary public (Notary Public) of the place of payment or other institutions that are legally entitled to issue certificates, such as courts, banks, associations, post offices, etc., to prove the fact of refusal to pay. It is the legal basis for the holder to pursue his “predecessor”. If the refused bill of exchange has been accepted, the drawer can sue the court based on this and ask the acceptor of the accepted bill to pay.
According to the provisions of my country’s “Bills of Exchange Law”, when the holder exercises the right of recourse, he shall provide relevant proof of refusal of acceptance or refusal of payment. It is also stipulated that if the holder’s presentation for acceptance or payment is refused, the acceptor or payer must issue a refusal certificate or a letter of reason for return. Otherwise, the civil liability arising therefrom shall be borne, and the holder may obtain other relevant certificates in accordance with the law.
In addition, in order to avoid the liability of being pursued, the drawer or endorser of the bill of exchange may add the words “Without Recourse” when issuing or endorsing. Any bill of exchange with the words “Without Recourse” added will be difficult to circulate in the market.