Q: Can a company refuse a bills of exchange as payment?
I know that the bills of exchange is a legal instrument and that the bill that is sent for payment is also a bill of exchange as per the Bill of Exchange Act. What is the responsible of a company that has received a bill of exchange for payment? If the company does not present the bill of exchange to the drawee, the bank, does this discharge the drawer, the client, from paying? What happens when the due date has matured an the company still process it for payment?
Thank you for your time.
A:
A company that receives a bill of exchange as payment has certain responsibilities and obligations under the Bills of Exchange Act. Here's a breakdown of the key points:
1. Acceptance of the bill: When a company receives a bill of exchange, it is not obligated to accept it as payment. The company can choose to refuse the bill, but it must do so within a reasonable timeframe and notify the drawer (the client) of the refusal.
2. Presenting the bill for payment: If the company decides to accept the bill of exchange, it must present the bill to the drawee (the bank) for payment on or before the due date. Failure to present the bill on time may discharge the drawer and any endorsers from their liability to pay the bill.
3. Non-payment by the drawee: If the drawee (the bank) refuses to pay the bill when it is presented, the company must notify the drawer and any endorsers of the non-payment. This notice is known as a "notice of dishonor" and must be given within a reasonable time after the refusal.
4. Liability of the drawer: If the company presents the bill to the drawee on time and the drawee refuses to pay, the drawer remains liable for the payment. The company can then seek payment directly from the drawer.
5. Late presentation of the bill: If the company fails to present the bill to the drawee on or before the due date, it may lose its right to claim payment from the drawer and any endorsers. However, if the delay in presentation is excused (e.g., due to circumstances beyond the company's control), the drawer and endorsers may remain liable.
In summary, a company is not obligated to accept a bill of exchange as payment, but if it does, it must present the bill to the drawee on time. If the drawee refuses to pay, the company must notify the drawer and any endorsers, and the drawer remains liable for payment. Late presentation of the bill may discharge the drawer and endorsers from liability, unless the delay is excused.
It's important to note that bills of exchange are complex legal instruments, and the specific rights and obligations of the parties involved may vary depending on the circumstances and the terms of the bill. If you have further questions or concerns, it's advisable to seek the advice of a legal professional who specializes in this area of law.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
