Are bill of exchange and promissory note financial instruments in Vietnam? What are the contents of a bill of exchange and promissory note?
Are bill of exchange and promissory note financial instruments in Vietnam?
Bill of exchange:
Pursuant to Clause 2, Article 4 of the 2005 Law on Negotiable Instruments in Vietnam, bill of exchange means a financial instrument created by a drawer, requesting the drawee to pay unconditionally a specific sum upon demand or upon a fixed time in the future to the beneficiary.
Promissory note:
Pursuant to Clause 3, Article 4 of the 2005 Law on Negotiable Instruments in Vietnam, promissory note means a financial instrument created by an issuer, undertaking to pay unconditionally a specific sum upon demand or upon a fixed time in the future to the beneficiary.
Thus, it can be understood that the promissory note and the bill of exchange are one of the financial instruments.
Are bill of exchange and promissory note financial instruments in Vietnam? What are the contents of a bill of exchange and promissory note?
What are the contents of a bill of exchange and promissory note?
Bill of exchange:
- The contents of the bill of exchange according to Article 16 of the 2005 Law on Negotiable Instruments in Vietnam include:
+ The words "Bill of Exchange" written on the front of the bill of exchange;
+ An order for unconditional payment of a fixed sum of money;
+ The period for payment;
+ The place for payment;
+ The name of the drawee being an organization or the full name of the drawee being an individual, and the address of the drawee;
+ The name of the beneficiary being an organization or the full name of the beneficiary being an individual who is designated by the drawer or in favour of whom [the drawer] has made the request for payment of the bill of exchange to the order of the beneficiary or the request for payment of the bill of exchange to the bearer1 .
+ The place and date of signing and issuance;
+ The name of the drawer being an organization or the full name of the drawer being an individual, and the address of the drawer.
- A bill of exchange which omits any one of the contents stipulated in clause 1 of this article shall be invalid, except for the following cases:
+ Where the period for payment is not recorded on the bill of exchange, the bill of exchange shall be paid immediately upon presentation;
+ Where the place for payment is not recorded on the bill of exchange, the bill of exchange shall be paid at the address of the drawee;
+ Where the place of signing and issuance is not specified on the bill of exchange, the bill of exchange shall be deemed to have been drawn at the address of the drawer.
In addition, when the sum of money written in figures on a bill of exchange is different from the sum of money written in words, the sum of money written in words shall be valid for payment. Where the sum of money is written twice or more in words or in figures on a bill of exchange and they are different, the smallest sum of money written in words shall be valid for payment.
Where a bill of exchange does not have sufficient space for writing, it may have an additional sheet attached. The sheet shall be used for recording details of guarantee, endorsement, pledge or collection.
The person who is the first to prepare an additional sheet must attach it to the bill of exchange and sign across the edges of the additional sheet and the bill of exchange.
Promissory note:
The contents of the promissory note under Article 53 of the 2005 Law on Negotiable Instruments in Vietnam provide as follows:
- A promissory note must include the following contents:
+ The words "Promissory Note" written on the front of the promissory note;
+ An undertaking to make unconditional payment of a fixed sum of money;
+ The period for payment;
+ The place for payment;
+ The name of the beneficiary being an organization or the full name in the case of the beneficiary being an individual designated by the issuer or in whose favour [the issuer] has made the request for payment of the promissory note to the order of the beneficiary or the request for payment of the promissory note to the bearer2 .
+ The place and date of signing and issuance;
+ The name of the issuer being an organization or the full name in the case of the issuer being an individual, and the address and signature of the issuer.
- A promissory note which omits any one of the contents stipulated in clause 1 of this article shall be invalid, except for the following cases:
+ Where the place for payment is not recorded on the promissory note, the place for payment shall be the address of the issuer;
+ Where the place of signing and issue is not recorded on the promissory note, the place of signing and issuance shall be the address of the issuer.
- When the amount of money written in figures on a promissory note is different from the amount of money written in words, the amount of money written in words shall be valid for payment. Where the amount of money in a promissory note is written twice or more in words or in figures and they are different, the smallest amount of money written in words shall be valid for payment.
- Where a promissory note does not have sufficient space for writing, it may have an additional sheet attached. The sheet shall be used for recording details of a guarantee, endorsement, pledge or collection.
The person who is the first to prepare an additional sheet must attach it to the promissory note and sign across the edges of the additional sheet and the promissory note.
What are the prohibited acts for bills of exchange and promissory notes?
Pursuant to Clause 1, Article 4 of the 2005 Law on Negotiable Instruments in Vietnam stipulating that negotiable instrument means a financial instrument recording an order or undertaking to pay unconditionally a specific sum within a fixed time.
Thus, promissory notes and bill of exchange are also considered financial instruments and are one of the types of negotiable instruments.
Pursuant to Article 15 of the 2005 Law on Negotiable Instruments in Vietnam, the prohibited acts for negotiable instruments are as follows:
Acts which are prohibited
1. Forging a negotiable instrument, amending or erasing items on a negotiable instrument.
2. Deliberately assigning or accepting assignment [of a negotiable instrument], or presenting for payment a negotiable instrument which was forged, amended or the items of which were erased.
3. Signing a negotiable instrument without authorization or forging the signature on a negotiable instrument.
4. Deliberately assigning a negotiable instrument when aware that the period for payment of such negotiable instrument has expired or such negotiable instrument was dishonoured by non-acceptance or by non-payment or has been notified as lost.
5. Deliberately drawing a negotiable instrument without the ability to pay it.
6. Deliberately drawing a cheque after the right to draw cheques has been stopped.
Thus, the following acts are prohibited with respect to promissory notes and bills of exchange:
- Forging a negotiable instrument, amending or erasing items on a negotiable instrument.
- Deliberately assigning or accepting assignment [of a negotiable instrument], or presenting for payment a negotiable instrument which was forged, amended or the items of which were erased.
- Signing a negotiable instrument without authorization or forging the signature on a negotiable instrument.
- Deliberately assigning a negotiable instrument when aware that the period for payment of such negotiable instrument has expired or such negotiable instrument was dishonoured by non-acceptance or by non-payment or has been notified as lost.
- Deliberately drawing a negotiable instrument without the ability to pay it.
- Deliberately drawing a cheque after the right to draw cheques has been stopped.
Nguyễn Thị Hồng Nhung