Vietnam: How to handle lost and damaged negotiable instruments?

Vietnam: How to handle lost and damaged negotiable instruments? (Internet image)

1. What is negotiable instrument?

Negotiable instrument means a valuable paper recording an order or undertaking to pay unconditionally a specific sum within a fixed time.

- Bill of exchange means a valuable paper 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 means a valuable paper created by an issuer, undertaking to pay unconditionally a specific sum upon demand or upon a fixed time in the future to the beneficiary.

- Cheque means a valuable paper created by a drawer, ordering the payer being a bank or an organization providing payment services, which is licensed by the State Bank of Vietnam, to pay a fixed sum from its account to the beneficiary.

(Article 4 of the Law on negotiable instruments 2005)

2. Loss of negotiable instrument in Vietnam

- Where a negotiable instrument is lost, the beneficiary must immediately notify in writing the drawee, the drawer or the issuer.

The beneficiary must notify clearly the circumstances in which the negotiable instrument was lost and shall be responsible before the law for the truthfulness of such notice.

The beneficiary may notify the loss of the negotiable instrument by telephone and other direct methods if so agreed by the parties.

Where the person who is not the beneficiary loses a negotiable instrument, he or she must immediately notify the beneficiary.

- Where a negotiable instrument is lost prior to its maturity for payment, the beneficiary shall be entitled to request the drawer or issuer to re-issue a substitute negotiable instrument with the same contents as the lost negotiable instrument after the beneficiary has notified the loss of the negotiable instrument and made a written undertaking to make payment on behalf of the drawee or issuer if the negotiable instrument which has been notified as lost is presented by a lawful beneficiary for payment.

- Upon receipt of notice of loss of a negotiable instrument in accordance with clause 1 of this article, the issuer and the drawee shall not be allowed to pay such negotiable instrument.

The check and control of negotiable instruments which have been notified as lost shall be subject to regulations of the State Bank of Vietnam.

- Where a lost negotiable instrument is misused for payment before the drawee or the issuer receives notice of loss of the negotiable instrument, the drawee or issuer shall be relieved from his or her responsibility if he or she has conducted properly the check and control and paid the negotiable instrument in accordance with the provisions of Law on negotiable instruments 2005.

- The drawee or issuer shall be obliged to compensate the beneficiary for damage and loss if the drawee or issuer paid the negotiable instrument after receipt of notice of loss of the negotiable instrument.

(Article 13 of the Law on negotiable instruments 2005)

3. Damaged negotiable instruments in Vietnam

- When a negotiable instrument is damaged, the beneficiary shall be entitled to request the drawer or issuer to re-issue a substitute negotiable instrument with the same contents.

- The drawer or issuer shall be obliged to re-issue a negotiable instrument after receipt of the damaged negotiable instrument if such negotiable instrument has not fallen due and contains all information or there is evidence to prove that the bearer of the damaged negotiable instrument is the lawful beneficiary of the negotiable instrument.

(Article 14 of the Law on negotiable instruments 2005)

Diem My

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