Wednesday, August 26, 2020

COMMERCIAL CODE - BOOK IV NEGOTIABLE INSTRUMENTS AND BANKING TRANSACTIONS-TITLE II. COMMERCIAL INSTRUMENTS-Chapter 4. Cheques

 Chapter 4. Cheques

Section 1. Drawing and form of a cheque

Art. 827. – Requirements.
A cheque shall contain:
a.    an unconditional order to pay a sum certain in money;
b.    the name of the person who is to pay (drawee);
c.    the place of payment;
d.    the date when and the place where the cheque is drawn;
e.    the signature of the person who draws the cheque (drawer).

Art. 828. – Requirements absent.

    Where any of the requirements mentioned in Art. 827 is absent, the instrument shall not be valid as a cheque except in the cases provided in sub-art. (a) and (b) hereunder:
a.    unless otherwise expressly provided, to place mentioned under the name of the drawee shall be deemed to be, the place of payment. If several places are mentioned under the name of the drawee, the cheque shall be payable at the first place mentioned;
b.    in the absence of these statements, and of any other indication, the cheque shall be parable at the place where the drawee has his principal establishment.

Art. 829. – Specification of the drawee.

    A cheque may only be drawn on a banker or on an institution or establishment regarded by law as a banker.

Art. 830. – Previous cover.

1.    A cheque may only be issued if the drawer has funds with the drawee and ill accordance with an express or implied agreement under which the drawer has the right to dispose of these funds by cheque. The validity of the cheque shall not be affected if these provisions are not complied with.
2.    In case of refusal the drawer shall prove that the drawee held over at the time of issue of the instrument. If not, he shall guarantee it irrespective of whether the protest was made after the limits of time fixed.

 Art. 831. – Prohibition as to acceptance.

    A cheque cannot be accepted. A statement of acceptance on a cheque shall be disregarded.

Art. 832. – Certification of a cheque.

1.    Notwithstanding any provision to the contrary, cheque of which cover is available to the drawer may be drawee if the drawer so requests.
2.    The cover in respect of a certified cheque shall remain blocked in a separate account for the benefit of the holder until the expiry of the period of time for presentment provided in Art. 855.
3.    Certification is effected by the signature of the drawee on the face of the cheque.

Art. 833. – Designation of payee.

1.    A cheque may be made payable to;
a.    a specified person with or without the express clause “to order”; or
b.    a specified person with a clause “not to order” or any similar clause; or
c.    bearer.
2.    A cheque made payable to a specified person with the words “or to bearer” or any similar words shall be deemed to be a cheque to bearer.
3.    A cheque which does not specify the payee shall be deemed to be a cheque to bearer.
Art. 834. – Cheque to drawer’s order and cheque drawn on the drawer.
1.    A cheque may be drawn to the drawer’s own order.
2.    A cheque may be drawn for account of a third person.
3.    A cheque drawn by a banker on himself may not be to bearer.

Art. 835. – Provision for interest.

    A cheque may be payable at the domicile of a third party in the locality where the drawee has his domicile or in another locality provided that such third party is a banker.

Art. 837. – Discrepancy in the sum payable.

1.    Where the amount of a cheque is expressed both in words and figures and there is a discrepancy, the amount expressed in words shall be paid.
2.    Where the amount of a cheque is expressed more shall once in words or more than once in figures and there is a discrepancy, the smaller sum shall be paid.

Art. 838. – Signature of persons incapable of binding themselves.

    Where a cheque bears, signatures of persons incapable of binding themselves by a cheque, forged signatures or signatures of fictious persons, who signed the cheque or on whose behalf it was signed, the obligations of the other persons who have signed it shall he valid.

Art. 839. – Signature without power to act.

    Whosoever signs a cheque on behalf of a person for whom he has no power to act shall bind himself as a party to the cheque and, if he pays, shall have the same rights as the person for whom he purported to act. The same rule shall apply to an agent who has exceeded his powers.

Art. 840. – Responsibility of the drawer.

    The drawer guarantees payment. Any provision by which, the drawer releases himself from his guarantee shall be of no effect.

Art. 841. – Cheque incomplete at issue.

    If a cheque which was incomplete when issued has been completed otherwise than in accordance within the agreements entered into, the non- observance of such agreements may not be set up against the holder unless he has acquired the cheque in bad faith or, in acquiring it, tie has committed a fault.

Section 2. Negotiation

Art. 842. – Negotiability.
1.    A cheque payable to a specified person, with or without the express clause “to order,” may be transferred by means of endorsement.
2.    A cheque made payable to a specified person in which the words “not to order” or any similar words have been inserted, can only he transferred according to the form and with the effects of an ordinary assignment.
3.    A cheque may be endorsed even to the drawer or to any person liable under the cheque, who may re-endorse the cheque.

Art. 843. – Elements of endorsement.

1.    An endorsement shall be unconditional. Any condition to which it is made subject shall be of no effect.
2.    A partial endorsement or an endorsement by the drawee shall be null and void.
3.    An endorsement “to bearer” shall amount to an endorsement in blank.
4.    An endorsement to the drawee has the effect of a receipt, unless the drawee has several establishments and the endorsement is made in favour of an establishment other than on which the cheque has been drawn.

Art. 844. – Forms.

1.    An endorsement shall be written on the cheque or on a slip affixed thereto (allonge). It shall be signed by the endorser.
2.    The endorsement may leave the beneficiary unspecified or may consist simply of the signature of, the endorser (endorsement in blank). In the latter case the endorsement to be valid shall be written on the back of the cheque or on the slip attached thereto (allonge).

Art. 845. – Effects.

1.    An endorsement shall transfer all the rights arising out of a cheque in particular the rights in respect of cover as set forth in Art. 801.
2.    Where the endorsement is in blank, the holder may:
a.    fill up the blank. either with his own name or with the name of some other person; or
b.     re-endorse the cheque in blank or to some other person; or
c.    transfer the cheque to third party without filling up the blank and without endorsing it.

Art. 846. – Guarantee.

1.    Unless otherwise expressly provided, the endorser guarantees payment.
2.    He may prohibit any further endorsement; in this case he gives no guarantee to the persons to whom the cheque is subsequently endorsed.

Art. 847. – Establishment of title by the holder.

    The possessor of an endorsable cheque shall be deemed to be the lawful holder if he establishes, his title to the cheque through an uninterrupted series of endorsements, even if the last endorsement is in blank. Cancelled endorsements shall be disregarded. Where an endorsement in blank ill followed by another endorsement the person who signed this last endorsement shall be deemed to have acquired the cheque by endorsement in bank.

Art. 848. – Cheque to bearer.

    An endorsement on a cheque to bearer shall render the endorser liable in accordance with the provisions regarding the right of recourse but shall not convert the instrument into a cheque to order.

Art. 849. – Dispossession.

    Where a person has, in any manner whatsoever, been disposed of cheque (whether it is a cheque to bearer or an endorsable cheque to which the holder establishes his right in the manner mentioned in Art. 847), the holder into whose possession the cheque has come shall not surrender the cheque unless he has acquired it in bed faith or unless in acquiring it he has committed a fault.

Art. 850. – Defences.

    Persons sued on a cheque cannot set up against the holder defence  founded on their personal relations with the drawer or with previous bolder, unless the holder in acquiring the cheque has knowingly acted to the detriment of the debtor.

Art. 851. – Endorsement by attorney.

1.    Where an endorsement contains the words “value in collection,” “for collection,” “by attorney” or any other similar words implying agency t the holder may exercise all rights arising out of the cheque, but he can endorse it only in his capacity as agent.
2.    In this case the parties liable can only set up against the holder defences which could be set up against the endorser.
3.    The agency granted by power of attorney shall not terminate by reason of the death of, the principal or his becoming incapable.

Art. 852. – Endorsement after maturity or after protest.

1.    An endorsement after protest or after an equivalent declaration or after the expiration of the limit of time for presentment shall have the effect of an ordinary assignment.
2.    Unless the contrary is proved, an undated endorsement is deemed to have been placed on the cheque prior to the protest or equivalent declaration or prior, to the expiration of the limit of time referred to in sub-art. (1).

Section 3. Acceptance for Honour (Aval)

Art. 853. – General provisions applicable.

    The provisions of Art. 766-768 of this Code relating to acceptance for honour shall apply to cheques.

Section 4. Presentment and payment

Art. 854. – Maturity.

    A cheque is payable eight.

Art. 855. – Presentment for payment.

    A cheque shall be presented for payment within six months of the date thereof, regardless of when the cheque was issued.

Art. 856. – Difference in calendars.
Where a cheque is drawn in one place and is payable in another having a different calendar, the day of issue shall be construed as being the equivalent day of the calendar of the place of payment.

Art. 857. – Stopping payment of cheque.

    The stopping of the payment of a cheque by the drawer is sufficient authority for a bank to refuse payment.

Art. 858. – Death of drawer after issue of a cheque.

    Neither the death of the drawer norms incapacity taking place after the issue of the cheque shall have any effect as regards the cheque.

Art. 859. – Receipts. Partial payment.

1.    The drawee who pays a cheque may require that it be given to him receipted by the holder.
2.    The holder may not refuse partial payment.
3.    Where the cover is less than the amount of the cheque, the holder may require payment up to the amount of the cover.
4.    In case of partial payment, the drawee may require that the partial payment be mentioned on the cheque and a receipt given to him.
5.    Partial payments on the amount of a cheque shall discharge he drawer and endorsers.
6.    The holder shall pro test the cheque for the remainder.

Art. 860. – Verification of endorsements.

    The drawee who pays an endorsable cheque shall not be hound to verify the signature of the endorsers and shall only verify the signature of  the drawer and of the last endorsee.

Art. 861. – Discharge of the drawee.

    A drawee who in the absence of objection pay a cheque in good faith and  in accordance with normal business practice shall be deemed to be validly
discharged.

Art. 862. – Payment in a foreign currency.

1.    Where a cheque is drawn payable in a currency which is not that of the place of payment, the sum payable may, within the limit of time for the presentment of the cheque, be paid in the currency of the place of payment according to its value on the date of payment. Where payment has not been made on presentment, the holder may demand that payment of the amount of the cheque in the currency of the place of payment be made according to the rate on the day of presentment or day of payment.
2.    The drawer may provide that the sum payable shall be calculated according to a rate expressed in the cheque.
3.    The provisions of sub-art. (I) and (2) shall not apply, where the drawer has provided that payment shall he made in a specified currency (stipulation for effective payment in a foreign currency).
4.    Where the amount of the cheque is specified in a currency having the same denomination but a different value in the country of issue and the country of payment, reference shall he deemed to be made to the currency of the place of payment.


Section 5. Crossed cheques and cheques payable in account

Art. 863. – Crossed cheque. Definition.
1.    The drawer or holder of a cheque may cross it to cause the effects set out in Art. 864.
2.    A crossing is effected by two parallel lines drawn on the face of the cheque. The crossing may be general or special.
3.    The crossing is general if it consists of the two lines only or if between the lines the term “banker” or some equivalent term is inserted; it is special if the name of a banker is written between the lines.
4.    A general crossing may be converted into a special crossing, but a special crossing may not be converted into a general crossing.
5.    The obliteration either of a crossing or of the name of the banker shall be regarded as not having taken place.

Art. 864. – Effects.

1.    A cheque which is crossed generally can be paid by the drawee only to a banker or to a customer of the drawee.
2.    A cheque which is crossed specially can be paid by, the drawer only to the named banker or, where the latter is the drawee, to a customer of the drawee. The named banker may have the cheque collected by another banker.
3.    A banker may not acquire a, crossed cheque except from one of his customers or from another banker. He may not collect it for the account of other persons than t1he foregoing.
4.    A cheque bearing contradictory or irreconcilable special crossing may not be paid.

Art. 865. – Crossed cheque bearing the words “not negotiable.”

1.    A crossed cheque may bear the words “not negotiable.”
2.    Where a person takes a crossed cheque which bears on it the words “not negotiable” he shall not have and shall not be capable of giving a better title to the cheque than that which the person from whom he took it had.

Art. 866. – Liability of the banker.

1.    A banker who does not comply with the provisions of Articles 864 and 865 shall be liable for the resulting damage up to the amount of the cheque.
2.    Where a banker pays a cheque in good faith and without negligence he shall not be liable where the crossing has been altered, struck out or modified contrary to law. He shall be deemed to have made payment to the true owner of the cheque.
3.    A banker who receives payment of a crossed cheque for a customer’s account in a good faith and without negligence he shall not be liable where it is shown that the customer has no right to the instrument or that his right is subject to a disability.
4.    The crediting in advance of a customer’s account with the amount of a crossed cheque shall not deprive the banker from enjoying the provisions of this Article.

Art. 867. – Cheque payable in account.

1.    The drawer or the holder of a cheque may prohibit its payment in cash by writing transversally across the face of the cheque the words “payable in account” or any similar words.
2.    In such a case the cheque can only be settled by the drawee by means of book-entry (credit in account, transfer from one account to another, set off or clearing-house settlement). Settlement by book-entry shall amount to payment.
3.    The deletion of the words “payable in account” shall be of no effect.
4.    The drawee who does not observe the foregoing provisions shall be liable for resulting damage as provided in Art. 866.

Section 6. Recourse for non-payment

Art. 868. – Rights of the holder.
The holder may exercise, his right of recourse against the endorsers, the drawer and the other parties liable where the cheque on presentment in due time is not paid and the refusal to pay is evidenced:
a.    by a formal instrument (protest); or
b.    by a declaration by the drawee dated and written on the cheque and specifying the day of presentment; or
c.    by a dated declaration made by a financial institution approved by the Government stating that the cheque has been presented in due time and has not been paid.

Art. 869. – Protest. Periods of time.

1.    The protest or equivalent declaration shall he made before the expiration of the limit of time for presentment.
2.    Where the cheque is presented on the last day of the limit of, time, the protest may be drawn up or the equivalent dec1aration made on the first working day following.

Art. 870. – Notice.

1.    The holder shall give notice of non-payment to his endorser and to the drawer within the four working days following the day on which the protest is drawn up or the equivalent declaration is made or, in the case of a provision “retour sans frais,” the day of presentment.
2.    The public officer who has drawn up the protest shall inform in writing without delay the persons bound by the cheque whose addresses are specified on the cheque or known to the public officer drawing up the protest, or specified by the persons having demanded the protest. The expenses arising out of such notice shall be added to the costs of 1Ihe protest.
3.    Every endorser shall, within the two working days following the day on which he receives, inform ms endorser of the notice which he has received, mentioning the names and addresses of those who have given the previous notices and so on through the series until the drawer is reached.  The periods mentioned above shall run from the receipt of the proceeding notice.
4.    Where in accordance with the provisions of sub-art. (3) notice is given to a person w1ho has signed a cheque, the same notice Shall be given, within the same limit of time to his acceptor for honour.
5.    Where an endorser has not specified his address or has specified it in an illegible manner, it is sufficient if notice is given to the endorser preceding him.
6.    The person who is required to give notice may give it in any form whatsoever, even by simply; returning, the cheque.
7.    He shall show that he has given notice within the limit of time prescribed. This time-limit shall be regarded as having been observed if a letter giving the notice has been posted within the said time.
8.    A person who does not give notice within the said limit of time prescribed above does not forfeit his rights. He shall be liable for the damage, if any, caused by his negligence, but the amount of his liability mall not exceed the amount of the cheqe.

Art. 871. – Provision “sans protet.”

1.    The drawer, an endorser or an acceptor for honour may, by the words “retour sans frais,” “sans protet” Oil’ any other similar words written on the instrument and signed, release the, holder from having a protest drawn up or an equivalent declaration made in order to exercise his right of recourse.
2.    These words shall not release the holder from presenting the cheque within the prescribed limit of time or from giving the requisite words written by the drawer, the holder has the protest drawn up or equivalent declaration made, he shall bear the expenses thereof.
3.    Where these words are written by the drawer, they shall be effective against all persons who have signed the cheque; where they are written by an endorser or acceptor for honour, they shall be effective against such endorser or acceptor for honour. Where in spite of the word written by the drawer, the holder has the protest drawn up or equivalent declaration made, he shall bear the expenses thereof.
4.    Where the ‘Words are written by an endorser or acceptor for honour, the costs of the protest or equivalent declaration may be recovered from all the persons ,who have signed the cheque.

Art. 872. – Joint guarantee of persons bound by cheque.

1.    All the persons liable on a cheque shall be jointly, and severally liable to the holder.
2.    The holder may sue all these persons individually or collectively without being compelled to observe the order in which they have become bound.
3.    Any person signing the cheque who has taken it up and paid it has the same right.
4.    Proceedings against one of the parties liable shall be no bar to proceedings against the others, notwithstanding that such other may be subsequent to the party first proceeded against.

Art. 873. – Extent of the right of recourse.

    The holder may claim from, the party against whom he exercises his right of recourse:
a.    the unpaid amount of the cheque;
b.    interest at the legal rate as from the date of presentment;
c.    the expenses of the protest or equivalent declaration, and of the notices given and any other expenses;
d.     a commission not exceeding one third per cent.

Art. 874. – Extent of the right of recourse of a party who takes up and pays.

    A party who takes up and pays a cheque can recover from the parties liable to him:
a.    the entire sum which he has paid;
b.    interest on the said sum calculated at the legal rate, as from the day on which he made payment;
c.    any expenses which he has incurred;
d.    a commission not exceeding two per mille.

Art. 875. – Right to surrender of cheque, protest and receipt account.

1.    Every party liable against whom a right of recourse is or may be exercised may require against payment that the cheque be surrendered to him with the protest or equivalent declaration and a receipt.
2.    Every endorser who has taken up and paid a cheque may cancel his own endorsement and those of subsequent endorsers.

Art. 876. – Force majeure.

1.    Where the presentment of the cheque or the drawling up of the protest or the marking of the equivalent declaration within the prescribed limits of time is absolutely prevented by force majeure (legal prohibition by any state or other cases of force majeure), these limits of time shall be extended.
2.    The holder shall give notice without delay of the case of force majeure to his endorser and make a dated and signed declaration of this notice, on the cheque or an a slip affixed thereto (allonge); in other respects, the provisions of Art. 870 shall apply.
3.    Where force majeure has terminated the holder shall without delay present the cheque for payment and, where necessary, have a protest drawn up or an equivalent declaration made.
4.    Where force majeure continues to operate beyond fifteen days after the date on which the holder, even before the expiration of the time limit for presentment, has given notice of force majeure to his endorser, recourse may be exercised and either presentment nor a protest nor an equivalent declaration shall be necessary.
5.    Facts which are purely personal to, the holder or to the person entrusted with the presentment of, the cheque or the drawing up of the protest or the making of an equivalent declaration shall not be deemed to constitute cases of force majeure.

Section 7. Parts of a Set

Art. 877. – Right to several parts.
With the exception of bearer cheques, any cheque issued in one country and payable in another, or issued and payable in the same country may be drawn in a set of identical part. Where a cheque is in a set of parts, each     part shall be numbered in the body of the instrument, or each part shall be deemed to be a separate cheque.

Art. 878. – Relation between parts of a set.

1.    Payment made on one part operates as a discharge, notwithstanding that there is no provision that such payment shall render the other parts of no effect.
2.    An endorser who has negotiated parts of different persons and the endorsers subsequent to him shall be liable on all the parts bearing their signatures, which have not been surrendered.

Section 8. Alterations

Art. 879. – Extent of the obligations of signatories.

    In case of alteration of the text of a cheque, parties who have signed subsequent to the alteration shall be bound according to the terms of the altered text; parties who have signed before the alteration shall be bound according to the terms of the original text:

Art. 880. – Alteration of crossed cheque.

1.    In the case of a crossed cheque, any alteration of the crossing made without authorisation shall invalidate the cheque except as regards any person who has himself made or consented to the alteration, and towards later endorsers.
2.    Where the alteration is not apparent, the lawful holder may rely on the cheque as if it had not been altered and require payment as original1y provided.

Section 9. Limitation of actions

Art. 881. – Periods of time.

1.    Actions of recourse by the holder against the endorsers, the drawer and the other parties liable shall be barred after six months from the expiration of the limit of time for presentment.
2.    Actions of recourse by the different parties liable for the payment of a cheque against other such parties shall be barred after six months from the day on, which the party liable has paid the cheque or the day on which he was sued 1fIrereon.
3.    Actions by the holder of the cheque against the drawee shall be barred after three years from the expiry of the time limit for presentment.
4.      Limitation sba11 run, in the case legal proceedings, from the date of the conclusion of the last proceedings.
5.    Limitation shall not apply where judgment has been pronounced or the debt has been acknowledged by separate act.

Art. 882. – Interruption.

1.    The period of limitation shall he interrupted by bringing of an action, by notice being given of third party action or by lodging a claim in bankruptcy.
2.    Interruption of the period of limitation shall be effective against the person in respect of whom the act interrupting such period was performed.
3.    Where the period of limitation is interrupted, a further period of the same duration shall begin to run.

Section 10. General Provisions

Art. 883. – Time limits. Holidays.
1.    The presentment or protest of a cheque may only take place on a working day.
2.    Where the last day of the limit of time prescribed by law for performing any act relating to a cheque, and particularly for presentment or for the drawing up of a protest of the making of an equivalent declaration, is a public holiday, the limit of time shall he extended until the first working day which follows the expiration of that time. Holidays which occur during the period shall be included in calculating limits of time.
3.    Days on which, under the provisions of the laws in force, no payment can he required nor any protest drawn up., shall be deemed to be public holidays.

Art. 884. – Calculation of time limits.

    Legal or contractual limits of time shall not include the day on which the period begins to run.

Art. 885. – Prohibition of days of grace.

    No day of grace may be granted.

Art. 886. – Reference to provisions relating to bills of exchange.

    The follow1ing provisions relating to bills of exchange apply to cheques in so far as they are not inconsistent with the provisions of this Chapter: Art. 781-785 and 788 (protest), Art. 798 (sequestration), Art. 799 (proceedings for unlawful enrichment), Art. 800 (reservation of casual proceedings) and Art. 801 (cover).

Chapter 5. Travellers Cheques

Art. 887. – Definition.
1.    A travellers cheque is a document handed by a banker to his client under which an amount specified in the document is payable to the payee either at a branch of 1ihe bank issuing the document’ or at any other bank in corresponding.
2.    Regulations may determine the banks authorised to issue travellers cheques.

Art. 888. – Particulars.

    No travellers cheque shall be valid unless it contains the following particulars:
1.    the words “travellers cheque;”
2.    the name and signature of the banker issuing the cheque;
3.    the name of the payee;
4.    the promise to pay a specified amount.
5.    the words “to order” or “not negotiable;”
6.    the place and date of issue;
7.    the period during which the cheque shall be valid; provided that such period shall not exceed one year.

Art. 889. – Place and conditions of payment.

1.    The place where the cheque will be paid may be specified in tae cheque or in any other document handed to the payee.
2.    The conditions on which the payee may demand payment may be specified in the cheque or in other document handed to the payee.

Art. 890. – Provisions regarding cheques not applicable.

1.    The provisions relating to cheques shall not apply to travellers cheques.
2.    Nothing in sub-art. (1) shall affect the provisions of the Penal Code relating to false or falsified cheques.

Chapter 6. Publicity of protest

Art. 891. – Duty to send list of protests.
Public officials entitled to draw up protests in respect of negotiable instruments shall every month supply the registrar of the court within whose jurisdiction they act with a list of all protests drawn up during the  preceding month in respect of bills of exchange accepted and not paid, and unpaid promissory notes or cheques.

Art. 892. – Duties of registrar.

    The registrar shall keep up to date a nominal roll for every debtor showing:
1.    the date of the protest;
2.    The name, profession and domicile of the payee or drawer;
3.    The name or firm-name, profession and domicile of the maker of a promissory note, or drawer of a cheque or acceptor of a bill of exchange;
4.    the date of maturity, if any;
5.    the value of the instrument;
6.    The result of the protest.

Art. 893. – Copies.

    After one month and within two years from the protest, any person may at his own expense require the, registrar, to deliver to him a copy of, the     roll provided in the preceding Article.

Art. 894. – Cancellation.

1.    Where the debtor deposits against receipt the instrument or the protest or a receipt showing payment of a cheque, the registrar shall, at the debtor’s expense, strike notice of protest entered in the nominal roll concerning that debtor.
2.    The registrar’s liability in respect of documents deposited shall cease after three years from the protest.

Art. 895. – Publication not permitted

    Publication in any form of lists and rolls prepared in accordance with the provisions of this Chapter is prohibited under pain of damages.

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