The bills of exchange actions for non-acceptance and non-payment.

Bill of exchange actions are granted to the creditor when there is a breach of a bill of exchange. This default must be due to non-payment or non-acceptance of the bill of exchange. Article 49 of the Exchange and Check Law (LCCh) establishes two actions. The first is the direct action and the second is the indirect or return action. The direct action is exercised against the principal debtor. The return action may also be exercised against any of the persons who signed the exchange instrument.

What is the direct exchange action?

The direct action is exercised when there is a lack of payment or acceptance by the debtor. The Bill of Exchange and Check Law provides that the direct action is exercised against the debtor, without the need for protest. The main feature of the direct action is that it does not depend on the issuance of the protest. According to the case law of the Provincial Courts, only return actions, but not the direct action, have this material filing requirement. That is to say, the direct action can be exercised directly against the debtor without any requirement other than the bill of exchange. This action has a statute of limitation period of three years from the maturity date of the bill of exchange. This is set forth in Article 88 of the Bill of Exchange and Check Law.

What is the bill of exchange action of return?

The return action is exercised against any person who has signed the exchange instrument. Certain requirements must be met: the lack of payment or acceptance and the notarial protest must be filed. Unlike the direct action, the law establishes the lifting of the protest as a formal requirement. The purpose of this requirement is to confirm that the expired bill of exchange has not been previously accepted or paid.

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What to do in case of non-payment of the bill of exchange?

As previously mentioned, the notarial protest is an act whose purpose is to prove the lack of acceptance or the lack of payment of a bill of exchange. It is only a requirement to exercise the exchange action of return.

As its name indicates, the notarial protest is based on a notarial act. That is to say, it is carried out in the presence of a notary. It has an eminently probative character, since it reaffirms the lack of acceptance or payment. It is regulated in articles 51 and following of the Exchange and Check Law. It is an essential act to exercise the action of return. However, there is an exception: in cases of force majeure, notarial protest is not necessary.

Protest for non-acceptance must be made within the term fixed for the presentation of the acceptance or 5 days after its expiration. If the protest is for non-payment, it must be made within eight days after the due date.

The Exchange and Check Law allows the substitution of the protest by a declaration on the exchange instrument itself. This is stated in Article 51.2 of the Exchange and Check Law.  This states that the declaration on the bill of exchange itself is equivalent to the notarial protest. The declaration must be signed and dated by the creditor, denying acceptance or payment.  The same deadlines established for the notarial protest are set for the declaration. That is to say, eight days from its expiration in the declaration for non-payment. And, 5 days from its expiration in the case of the declaration for lack of acceptance.

What is a Reverse Bill of Exchange?

Article 62 of the Exchange and Check Law, provides that the creditor who exercises the action of return may reimburse himself.  This is done by means of a new bill of exchange drawn at sight on any of the obligors, this is called the “back draft”. The bill of exchange must contain the nominal amount of the unpaid bill plus the agreed interest. The main problem with a reverse bill of exchange is the lack of acceptance by the debtor.

Conclusion:

• The bill of exchange actions are granted to the creditor when the creditor is in default of a bill of exchange due to non-acceptance or non-payment.
• They have a protectionist and conservative character, with respect to the creditor’s credit.
• There are two types of bill of exchange actions, one that is exercised directly against the debtor and the other against all signatories.  This second action, the action of return, requires the notarial protest or the equivalent declaration. For which a time limit is established. The purpose of these actions is to protect the interests of the creditor and to pursue the fulfillment of the debt.

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