Thailand Law Library

by Thailand Lawyer

Chapter 2: Bills of Exchange

A bill of exchange is a written instrument by which a person, called the drawer, orders another person, called the drawee, to pay a sum of money to, or to the order of, a person, called the payee.

A bill of exchange must contain the following particulars:

1. The designation of it as a bill of exchange.
2. An unconditional order to pay a sum certain in money.
3. The name or trade name of the drawee.
4. A day of maturity.
5. The place of payment.
6. The name or trade name of the payee, or a mention that it is payable to bearer.
7. The date and place where the bill is issued.
8. The signature of the drawer.

An instrument in which any of the requirements specified in the foregoing section is wanting is invalid as a bill of exchange, except in the following cases:

1. A bill of exchange in which no time of payment is specified is deemed to be payable at sight.
2. If the place where payment is to be effected is not stated in a bill of exchange, the domicile of the drawee shall be considered to be the place of payment.
3. A bill of exchange which does not show the place at which it was drawn is considered as having been drawn at the domicile of the drawer.
4. If a bill of exchange does not mention the date on which it was drawn, any lawful holder, acting in good faith, may insert the true date.

The drawer may stipulate that the sum payable shall bear interest, in which case, unless otherwise provided, interest runs from the date of the bill.

A bill of exchange may be drawn payable to the drawer's order, it may be drawn on the drawer himself or on account of a third person.

The maturity of the bill of exchange is:

1. On a fixed day, or
2. At the end of a fixed period after the date of the bill, or
3. On demand, or at sight, or
4. At the end of a fixed period after sight.

Any person who draws or endorses a bill of exchange engages that on due presentment it shall be accepted and paid according to its tenor and that, if it be dishonored by non-acceptance or non-payment, he will pay it to the holder or to a subsequent indorser who has been compelled to pay it, provided that the requisite proceedings on non-acceptance or non-payment have been duly taken.

The drawer of a bill of exchange, and any endorser, may insert therein an express stipulation:

1. Negating or limiting his own liability to the holder;
2. Waiving as regards himself some or all of the holder's duties.

Persons sued on a bill of exchange cannot set up against the holder defenses founded on their personal relations with the drawer or with previous holders, unless the transfer has taken place in pursuance of a fraudulent understanding.

Every bill of exchange, even if not expressly drawn to order, may be transferred by means of an indorsement and delivery.

When the drawer has written on the face of a bill of exchange the words "not negotiable" or any equivalent expression, the bill can be transferred only according to the form, and with the effects of an ordinary transfer.

The bill may be indorsed to the drawee, whether he has accepted or not, or to the drawer, or to any other party to the bill. These persons may indorse the bill afresh.

A bill of exchange payable to bearer is transferred by mere delivery.

An indorsement must be written on the bill of exchange, or on an allonge. It must be signed by the indorser.

An indorsement is valid even though the beneficiary is not specified, or the indorser has done nothing more than put his signature on the back of the bill or allonge in which case it is called "indorsement in blank".

An indorsement transfers all the rights arising out of a bill of exchange.

If the indorsement is in blank, the holder may:

1. Fill up the blank, either with his own name or with the name of some other person.
2. Indorse the bill again in blank, or to some other person.
3. Transfer the bill to a third person without filling up the blank, and without indorsing

The indorsement of a bill of exchange payable to bearer operates only as a guarantee for the drawer.

An indorsement must be unconditional. Any condition to which it is made subject is deemed to be unwritten.

A partial indorsement is void.

If an indorser specifies that he forbids further indorsement, he incurs no liability to the person to whom the bill of exchange is subsequently indorsed.

If a bill of exchange is endorsed after the expiration of the time for protest for non-acceptance or non-payment, then the endorsee acquires the rights of any existing acceptance against the drawee, and the rights of recourse against those who have indorsed the bill after the expiration of such time.

If, however, the bill is already protested for non-acceptance or non-payment before the indorsement, the endorsee has only the rights of his indorser against the acceptor, the drawer, and those who have indorsed the bill up to the time of protest.

When an indorsement contains the stipulation "value in collection", "for collection", "by procuration" or any other phrase implying agency, the holder may exercise all rights flowing from the bill of exchange, but he can only indorse it in the capacity of an agent.

In this case the parties liable can only set up against the holder defenses which could be set up against the indorser.

When an indorsement contains the stipulation "value in security", "value in pledge" or any other stipulation implying a pledge, the holder may exercise all the tights flowing from the bill of exchange, but an indorsement by him only avails as an agency indorsement.

The parties liable cannot set up against the holder defenses founded on their personal relations with the indorser, unless the indorsement has taken place in pursuance of a fraudulent understanding.