Thailand Law Library

by Thailand Lawyer

Chapter 2: Bills of Exchange

Part 6: Recourse for Non-acceptance or Non-payment

The holder may exercise his right of recourse against the indorsers, the drawer and the other persons liable under the bill.

1. At maturity, if payment has not been made
2. Even before maturity,
1. When acceptance has been refused;
2. When the drawee, whether he has accepted or not, has become bankrupt, or has suspended payment, even if the suspension is not authenticated by a judgment; or where execution has been levied against his goods without result;
3. When the drawer of a bill which need not be accepted has become bankrupt.

Default of acceptance or payment must be evidenced by a formal document, called protest.

Protest for non-payment must be made either on the day when the bill is payable or on one of the three following days.

Protest for non-acceptance must be made within the limit of time fixed for presentment for acceptance or within the three following days.

Protest for non-acceptance dispenses with presentment for payment and protest for non-payment.

In the cases provided for by Section 959 b) (2), the holder cannot exercise his right of recourse until after presentment of the bill to the drawee for payment, and after the protest has been drawn up.

In the cases provided for by Section 959 b) (3), the production of the judgment pronouncing the bankruptcy of the drawer, suffices to enable the holder to exercise his right of recourse.

A protest shall be made by a district officer (Nai Amphoe) or his deputy or by an attorney having a license for that purpose.

The Minister of Justice is empowered to issue regulations for carrying out the provisions of this Code concerning the issue of the license and the making of the protest as well as for fixing costs and fees in connection therewith.

The protest must, in addition to the name, title and signature of the person making it, contain an exact copy of the bill with all indorsements and specify:

1. The name or trade name of the person for whom and against whom the bill is protested.
2. The cause or reason for protesting the bill, the demand made, and the answer given if any, or the fact that the drawee or acceptor could not be found.
3. If there is an acceptance or payment for honour the nature of the intervention and the name or trade name of the acceptor or payer for honour and of the person for whose honour intervention is made.
4. The place and date of protest.

The protest shall be delivered to the person at whose request it is made. The person making the protest shall forthwith give notice thereof to the person against whom it is made, if his domicile is known, either by registered letter or by having it delivered at such domicile; if his domicile is not known, by posting a copy of the protest in a conspicuous place in the office of the district officer (Nai Amphoe) of his last residence.

The holder must give notice of non-acceptance or non-payment to his immediate indorser, and to the drawer, within four days following the day of protest, or the day of presentment in case where there is a stipulation protest not necessary."

Every indorser must within two days, give notice to his immediate indorser of the notice which he has received, mentioning the names and addresses of those who have given the previous notices and so on through the series until the drawer is reached. The limit of time mentioned above runs from the receipt of the preceding notice.

Where an indorser either has not specified his address, or has specified it in an illegible manner, it is sufficient that notice should be given to the preceding indorser.

A person who must give notice, may give it in any form whatever, even by the simple return of the bill of exchange. He must prove that he has given it within the prescribed limit of time.

He shall be deemed to have given it within the prescribed limit of time, if a registered letter giving the notice has been posted within the aforesaid time.

A person who does not give notice within the limit of time mentioned above, does not lose his right of recourse. He is liable for any injury caused by his negligence, but the compensation shall not exceed the amount of the bill of exchange.

The drawer or an indorser may, by a stipulation "protest not necessary", "without protest", or any other equivalent expression, allow the holder the dispense with a protest for non-acceptance or non-payment, in order to exercise his right of recourse.

This stipulation does not release the holder from presenting the bill within the prescribed time, nor from giving notice of dishonor to a preceding indorser or the drawer. The burden of proving the non-observance of the limits of time lies on the person who seeks to set them up against the holder.

When this stipulation is inserted by the drawer, it takes effect as regards all parties who have signed the bill. If, in spite of this stipulation, the holder has the protest drawn up, he must bear the expenses thereof. When the stipulation is inserted by an indorser, the expenses of protest, if it has been drawn up, can be recovered from all the other parties who signed the bill.

In case of inland bills, if the drawee notes on the bill of exchange the fact and date of refusal of acceptance or payment and signs such note, no protest is necessary and the holder must, within four days following the date of refusal, send notice of dishonor to the person or persons against whom he intends to take recourse.

The notice of dishonor in case of non-acceptance or non-payment must contain the date of the bill of exchange, the names or trade names of the drawer and drawee, the amount of the bill, the day of the maturity, the name or trade name and address of the holder, the date of the protest or of the refusal of acceptance or payment, and the fact that the bill was not accepted or paid.

All persons who have drawn, accepted, indorsed or guaranteed by aval a bill of exchange are jointly liable to the holder.

The holder has the right of proceeding against all these persons individually or collectively without being required to observe the order in which they have become bound.

The same right belongs, as against prior parties, to every person who has signed the bill and taken it up.

Proceedings against one of the parties liable do not prevent proceedings against others, though they may be subsequent to the person first proceeded against.

The holder may recover from the person against whom he exercises his right of recourse:

1. The amount of the unaccepted or unpaid bill of exchange with interest, if interest has been stipulated for.
2. Interest at the rate of 5 per cent per annum from the date of maturity.
3. The expenses of protest and of the notices given by the holder to his immediate indorser and the drawer, as well as other expenses.
4. A commission which, in the absence of an agreement, shall be 1/6 per cent on the principal payable by the bill, and which in no case can exceed this rate.

If the right of recourse is exercised before maturity, the amount of the bill shall be subject to a discount of 5 per cent.

A party who takes up and pays a bill of exchange can recover from the parties liable to him:

1. The entire sum which he has paid.
2. Interest on the said sum calculated at the rate of 5 per cent per annum, starting from the day when he made payment.
3. Expenses which he has incurred.
4. Commission on the principal sum of the bill of exchange fixed in conformity with Section 968 subsection 4.

Every party liable against whom a right of recourse is, or may be, exercised, can require, against payment, that the bill shall be given up to him with the protest and receipted account.

Every indorser who has taken up and paid a bill of exchange may cancel his own indorsement and those of subsequent indorsers.

A drawers, acceptor or prior indorser to whom a bill of exchange has been re-endorsed or retransferred has no right of recourse against a party to whom he was previously liable under the bill.

In case of exercise of the right of recourse after a partial acceptance, the party who pays the sum in respect of which the bill has not been accepted can require that this payment should be specified on the bill, and that a receipt be given therefor. The holder must also give him a certified copy of the bill, together with the protest, in order to allow the exercise of subsequent recourse.

After the expiration of the limits of time fixed:

1. For the presentment of a bill of exchange payable at sight or at a certain time after sight;
2. For drawing up the protest for non-acceptance or non-payment;
3. For presentment for payment in the case of a stipulation "protest not necessary"

The holder loses his rights or recourse against the indorsers, against the drawer, and against the other parties liable, with the exception of the acceptor.

In default of presentment for acceptance within the limit of time stipulated for by the drawer, the holder loses his right of recourse for non-payment, as well as for non-acceptance, unless it appears from the terms of the stipulation that the drawer meant only to release himself from the guarantee of acceptance.

If the stipulation for a limit of time for presentment is contained in an indorsement, the indorser only can avail himself of it.

When presentment of a bill of exchange or drawing up the protest within the prescribed limits of time is prevented by an unavoidable necessity these times are prolonged.

The holder is bound to give without delay notice of the case of unavoidable necessity to his immediate indorser, and to specify this notice, which he must date and sign, on the bill or on an allonge; as regards other matters, the provisions of Section 963 apply.

After the cessation of the unavoidable necessity the holder must without delay present the bill for acceptance or payment, and, if need be, have the protest drawn up.

If the unavoidable necessity continues to operate for more than thirty days after the maturity of the bill recourse may be exercised, and neither presentment nor drawing up the protest shall be necessary.

As regards bills payable at sight or at a certain time after sight, the term of thirty days begins to run from the date on which the holder has, even before the expiration of the time for presentment, given notice of the unavoidable necessity to his immediate indorser.