Understanding Endorsements and Acceptance of Bills of Exchange

Endorsements on Bills of Exchange

An endorsement refers to the transfer of rights using the expression "pay to" or a similar endorsement.

Types of Endorsements

Plenary Endorsement: Conveys all rights of the bill. It has three effects:

1. Transfer of Ownership: Transfers ownership of the bill.
2. Legitimating Effect: Legitimizes the bearer's possession if it results from a regular chain of endorsements.
3. Collateral Effect: The endorser guarantees acceptance and payment. Subsequent endorsees may limit this by:

• Using the clause "not my responsibility," waiving responsibility to their endorsee and everyone else.
• Using the clause "not to order" or "endorse," guaranteeing acceptance and payment only to their endorsee, but not to later endorsees.

Endorsement Limited to "Collection in Committee": The endorser does not convey ownership but gives it to their endorsee as a simple agent to charge or bring actions on their behalf (Art. 21).

"As Security": The letter is delivered, and the endorsee acquires a pledge on the credit exchange. Clauses used include "value in pledge" or "value guarantee" (Art. 22).

Acceptance of Bills of Exchange

Article 50 of the Exchange Act states: Acceptance must be pure and simple without any maturity conditions. However, it may be limited in the amount to be accepted (Partial Acceptance). The bill must be accepted by the drawee or their agent. If there are multiple drawees, acceptance can be made by any of them; however, actions could be initiated for non-acceptance if some do not agree.

Situations Regarding Presentation for Acceptance

• Voluntary: The holder of the bill freely decides whether or not to seek acceptance.
• Mandatory: Presentation is mandatory when this obligation has been established by the drawer or an endorser.
• Forbidden: Presentation for approval is prohibited if established by the drawer or an endorser.

Timing of Presentation

The bill can be presented for acceptance from the date of the warrant until maturity. For bills issued from within sight, the deadline is one year from the date of deliverance.

Form of Acceptance

Article 29 of the Exchange Act states: Acceptance should be completed on the bill of exchange itself using the word "accept" or an equivalent signature. If the book signing appeared set on the front of the letter, it is understood to be an acceptance.

Effects of Acceptance