Commercial Paper: Endorsement, Aval, and Debtor Liability

Understanding Commercial Endorsements

An endorsement is a commercial act (acto cambiario) by which a person transfers or assumes some of the obligations represented in a credit title (commercial paper).

Endorsement After Protest (Posthumous Endorsement)

Does an endorsement made after the protest for non-payment have the legal effect of a commercial act?

False. After the protest for non-payment, this endorsement is not considered a commercial act (acto cambiario). Instead, it functions merely as an act of civil assignment of credit.

Proper vs. Improper Endorsements

Improper Endorsements (such as an endorsement for collection or agency endorsement) do not transfer the ownership of the credit title but only transfer mere possession. If the document is in my possession, I cannot charge the debt as the owner. Instead, I transfer the document to an agent for collection. This figure is known as the agent endorsement.

Location of Signatures on Commercial Paper

• The drawee accepts the instrument.
• Any other person endorses the instrument.

The signature of acceptance is typically placed on the obverse (front) of the title, while the signature of endorsement is placed on the reverse (verse or back).

Commercial Guarantees (Aval)

Roles in the Guarantee

• Guarantor (Avalista): The person who provides the guarantee (the Aval).
• Guaranteed Party (Avalado): The person whose obligation to pay is secured by the Guarantor.

Liability of the Guarantor

The Aval (commercial guarantee) is a feature specific to the drawee, in which the guarantee is anticipated. It can be given even before the drawee has formally accepted the order.

Even if the drawee does not accept the order, the guarantor remains fully liable (required) under the title.

If the guarantor pays the debt, can they charge the drawee? Yes, they can pursue the drawee through a civil action (subrogation).

Aval vs. Surety (Fianza)

Distinguishing Commercial Guarantee (Aval) and Civil Surety (Fianza)

Both Aval and Fianza are figures where one party ensures that payment will be made by someone else. However, they differ fundamentally:

• Surety (Fianza): This is an institution of Civil Law. It is an accessory obligation, meaning it follows the principal obligation. If the principal obligation is void, the surety is also void.
• Commercial Guarantee (Aval): This is an independent act of Commercial Law. It possesses autonomy. For example, if the obligation of the drawee is void, the obligation of the guarantor (Avalista) is not necessarily void.

Passive Solidarity

Passive Solidarity is an obligation structure where the creditor may charge the entire debt from any one of the debtors (jointly and severally liable). The creditor can charge the whole debt from either party.

Unlike the accessory nature of surety, the commercial guarantor (Avalista) often has joint liability with the principal debtor, though this solidarity is usually established by contract rather than being inherent in the law itself.