Vietnam: 06 things you should know about negotiable instruments

Vietnam: 06 things you should know about negotiable instruments (Internet image)

1. What is a negotiable instrument?

Clause 1, Article 4 of the Law on negotiable instruments 2005 stipulates negotiable instruments as follows:

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

2. Negotiable instruments in which the payment sum is written in a foreign currency

Article 9 of the Law on negotiable instruments 2005 stipulates the negotiable instruments in which the payment sum is written in a foreign currency as follows:

- The payment sum in a negotiable instrument may be written in a foreign currency in accordance with the provisions of the law on foreign exchange control.

- Negotiable instruments in which the payment sum is written in a foreign currency in accordance with the provision of clause 1 of this article may be paid in foreign currency when the last beneficiary is permitted to receive foreign currency in accordance with the provisions of the law on foreign exchange control.

- With respect to negotiable instruments in which the payment sum is written in a foreign currency but the last beneficiary is not permitted to receive foreign currency in accordance with the provisions of the law on foreign exchange control, the sum in the negotiable instrument shall be paid in Vietnamese Dong at the exchange rate published by the State Bank of Vietnam on the date of payment or at the rate for foreign currency trading published by the paying bank on the date of payment in the case where the bank makes the payment.

3. anguage in negotiable instruments in Vietnam

In Article 10 of the Law on negotiable instruments 2005, the Language in negotiable instruments is as follows:

Negotiable instruments must be created in the Vietnamese language, except for negotiable instrument relationships involving foreign elements in which case the negotiable instruments may be created in a foreign language as agreed by the parties.

4. Loss of negotiable instruments in Vietnam

Article 13 of the Law on negotiable instruments 2005 stipulates the loss of negotiable instruments as follows:

- 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 this Law.

- 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.

5. Damaged negotiable instruments in Vietnam

Article 14 of the Law on negotiable instruments 2005 stipulates the damaged negotiable instruments as follows:

- 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.

6. Prohibited acts regarding negotiable instruments in Vietnam

In Article 15 of the Law on negotiable instruments 2005, the prohibited acts include:

- 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.

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