The exercise of the right of recourse for a bill of exchange must meet both substantive and formal requirements, so that the holder can exercise the right of recourse in accordance with the law. The substantive requirements include two aspects: first, the holder of the bill of exchange must be a legal holder and the endorsement must be continuous; second, there must be objective reasons stipulated by law that may give rise to the right of recourse.
The formal requirements mean that the holder must perform the preservation procedures or actions, including the presentation of the bill of exchange, the issuance of a rejection certificate, and the notification of the reasons for rejection.
If the holder fails to perform the obligation to present the bill and issue a rejection certificate, the right of recourse will be lost. After the holder of the right of recourse is paid off for exercising the right of recourse, his bill rights will be extinguished; the holder is also obliged to deliver the bill of exchange, the rejection certificate and the receipt to the person being pursued. All the pursued persons are jointly and severally liable to the holder; after the pursued person pays off the debt, his liability is released; the pursued person obtains the bill of exchange based on the payment and enjoys the same rights as the holder, and can pursue his predecessor, but when the endorser is the holder, he has no right of recourse to his successor; when the drawer is the holder, he has no right of recourse to his predecessor; after the endorser pays off, he can cancel his own endorsement and that of his successor to prevent the bill from falling into the hands of a third party who is not in good faith and can then pursue him; the pursued person has the right to request the holder to return the bill of exchange and the certificate of refusal; when the pursued person pursues again, the bill debtor shall not use the defense between himself and the drawer or the pursued person’s predecessor to oppose the pursued person, but if the pursued person fails to perform the obligations agreed upon between him and the bill debtor, so that there is a direct creditor’s rights and debts relationship between the two, this does not apply.