APPENDIX C. PAPERS OF THE BRITISH DELEGATION.

I. REPLY TO THE QUESTIONNAIRE.

No. 10.]

Sir Edward Grey to Baron Gericke.

FOREIGN OFFICE, March 22, 1910. SIR: With reference to the memorandum which M. van der Goes was good enough to communicate to me on the 15th October last respecting the proposed international conference on the laws relating to bills of exchange, and which was accompanied by a Questionnaire, designed to elicit the views of the several States represented at the conference, on the various points which might arise for discussion, I now have the honor to transmit to you a memorandum in response thereto.

You will have learned from my note of the 5th July, 1909, that in the opinion of His Majesty's Government valuable results would be more likely to ensue from the labors of the conference if it devoted itself in the first place to ascertaining the various points on which the laws of the countries represented were already in agreement and those on which they differed, so as to pave the way for the subsequent adjustment of those differences. For the same reason His Majesty's Government feel that the greatest assistance they can now give to the work of the delegates will be to give their answers to the Questionnaire in the shape of a succinct statement of the law and practice in force in this country on each point. The accompanying memorandum has accordingly been framed on that basis; annexed to it will be found a copy of the code in which the law in this country on bills of exchange was embodied in 1882.

Should it be the desire of the Netherlands Government to circulate the inclosed memorandum to the other Governments participating in the conference, I have the honor to request that the reasons given in the present note for limitation of its scope may be circulated at the same time.

I have, etc.,

E. GREY.

[Inclosure in No. 10.]

MEMORANDUM OF HIS BRITANNIC MAJESTY'S GOVERNMENT, IN RESPONSE TO THE QUESTIONNAIRE OF THE NETHERLANDS GOVERNMENT, INDICATING THE RULES NOW IN FORCE IN THE UNITED KINGDOM.

Question 1. From the point of view of the United Kingdom it is difficult to discuss the law of bills of exchange apart from the law relating to checks, because a check is a bill of exchange with certain peculiar incidents of its own. A check is defined by the bills of exchange act as a "bill of exchange drawn on a banker payable on demand."

The code then specifies certain rules which are applicable only to checks, but subject to those rules the ordinary law relating to bills of exchange applies to checks. (Bill of exchange act, sec. 73.)

Question 2. Having regard to the form of acts of Parliament in the United Kingdom, and to the fact that there is no line of demarkation between mercantile law and the ordinary common law, it would be impracticable to assent to any model law; only uniformity of principle could be aimed at.

Question 3. It would be convenient if the various commercial nations could agree on settling conflicts of laws on uniform principles, but it is difficult to confine such settlements to a single subject such as bills of exchange.

Question 4 (a). The law of the United Kingdom on bills of exchange does not require a bill of exchange to state on its face that it is a bill of exchange, and with the exception of bills of exchange drawn in a set, the word “exchange " does not appear in practice.

It is an essential principle of the law that the substance and not the form of an instrument should be considered. (Cf. sec. 3 of bills of exchange act, which enumerates the essentials of a bill.)

Question 4 (b). A bill of exchange need not specify the value given, or that any value has been given therefor, the reason being that the law raises a presumption of value. (Bills of exchange act, sec. 3, subsec. 4.)

Question 4 (c). The rule of distantia loci dees not prevail in the United Kingdom, and, indeed, is expressly negatived by the provision that a bill need not specify the place where it is drawn or the place where it is payable. exchange act, sec. 3, subsec. 4.)

Question 5 (a). A bill of exchange may be drawn payable to (Bills of exchange act, sec. 3, subsec. 1.)

(Bills of "bearer."

Question 5 (b). A bill of exchange may be drawn payable to the order of the drawer, and it may even be drawn payable to the order of the drawee. (Bills of exchange act, sec. 5, subsec. 1.)

Question 5 (c). A bill of exchange may be, and very often is, drawn for the account of a third party. (Cf. bills of exchange act, sec. 68, subsec. 1, as to payment for the honor of such party.)

Question 5 (d). A bill of exchange may indicate a referee or referees in case of need ("besoin "). (Bills of exchange act, sec. 15.)

Question 5 (e). It is in the option of the holder to resort to a referee in case of need or not, as he thinks fit, and it is immaterial whether the referee has been indicated by the drawer or by an indorser. (Bills of exchange act, sec. 15.)

Question 5 (f). The clause "retour sans frais" or any equivalent is recognized in England. The code provides that the drawer or any indorser may insert an express stipulation waiving, as regards himself, some or all of the holder's duties. (Bills of exchange act, sec. 15.)

In some countries the clause "retour sans frais" inures for the benefit of all subsequent indorsers. In the case of a bill so indorsed in a foreign country the like effect would probably be given to it in the United Kingdom. (Bills of exchange act, sec. 72, subsec. 2.)

Question 5 (g). The law recognizes an indorsement with the clause "sans garantie or sans recours," or any similar terms. (Bills of exchange act, sec. 16, subsec. 1.)

Question 5 (h). A bill may be drawn payable to a particular person only, and a bill may be indorsed payable to a particular person only so that he can not further indorse it. (Bills of exchange act, sec. 8, subsecs. 1 and 4.)

Question 6 (a). The act is silent as to the duty of the drawer to draw a bill in a set. It is left as a matter to be arranged beween the parties themselves. Question 6(b) and (c). No special form is prescribed, but each part of the set must be numbered and must contain a reference to the other parts. If this be not done, and the different parts get into the hands of different holders in due course, each part constitutes a separate bill and can be enforced as such. So, too, if the drawee accepts two parts of a set, and those parts get into the hands of different holders in due course, the acceptor is liable on both. (Bills of exchange act, sec. 71.)

Question 6 (d). "Copies" of bills of exchange drawn and negotiated in the United Kingdom are not customary, but if any question arose in the United Kingdom regarding a copy made abroad it would be determined in accordance with the law of the place where the copy was made. (Bills of exchange act, sec. 32, subsec. 1, and sec. 72, subsecs. 1 and 2.)

Question 7. Documentary bills are very common in certain trades in the United Kingdom, but the law does not specifically deal with them, and the parties are left to make their own arrangements with regard to them without any interference on the part of the law.

Question 8 (a). The indorser of a bill may indorse it in any form he likes to adopt. The indorsement may be absolute, conditional, or restrictive. (Bills of exchange act, secs. 32, 33, and 35.)

Ordinarily an indorsement transfers the property in the bill and guarantees its payment to the holder, but by the use of appropriate words the indorser may either exclude his liability while transferring the property or may guarantee payment of a bill in which he has no property. (Bills of exchange act, secs. 15 and 56.)

Question 8 (b). The simple signature of an indorser operates as an indorsement in blank and makes the bill payabel to bearer," giving the bearer all the rights of an indorsee under a special indorsement. (Bills of exchange act, secs. 1 and 6, and sec. 34, subsec. 1.)

Question 8 (c). The law recognizes procuration indorsements. (Bills of exchange act, sec. 25.)

Question 8 (d). A bill of exchange may be indorsed after maturity, but where a bill is indorsed after it is overdue the holder can not acquire or give a better title thereto than that of the person from whom he took it. (Bills of exchange act, sec. 36, subsecs. 1 and 2.)

Question 9. The law leaves it to the parties concerned to make their own arrangements as to the value ("provision ") to be furnished to the drawee or acceptor; if, however, the bill has been accepted, the acceptor is bound to pay a holder for value. (Bills of exchange act, sec. 28.) The general view of the law is that a bill of exchange constitutes a form of commercial currency and does not necessarily imply the payment of a mercantile debt.

Question 10 (a). Where a bill is payable after sight, or where a bill expressly stipulates that it shall be presented for acceptance, or where a bill is drawn payable elsewhere than at the residence or place of business of the drawee, it must be presented for acceptance before it can be presented for payment. In all other cases the holder is under no obligation to present for acceptance, though he would naturally do so for his own protection. If a bill does not fall within one of the above classes, it might be drawn in the form "pay without acceptance," but this is most unusual. (Bills of exchange act, sec. 39.)

Question 10 (b). A bill drawn payable at sight does not require acceptance, but a bill drawn payable after sight does require it.

Question 11 (a). The acceptance must be on the bill itself, and not on a separate document. The simple signature of the drawee on the bill amounts to an acceptance. (Bills of exchange act, sec. 7, subsec. 2.)

Question 11 (b). An acceptance may be either absolute or qualified (i. e., conditional, partial, or to pay only at a particular place), but the holder is not bound to receive the qualified acceptance, and if he elects to take it he may lose his recourse against the drawer and indorsers unless they have authorized or subsequently assent to the qualification. (Bills of exchange act, sec. 19; and note sec. 44, subsec. 2, as to partial acceptances.)

Question 11 (c). The drawee may cancel his acceptance unless he has delivered it to the holder or notified the holder that he has accepted it. (Bills of exchange act, 'sec. 21, subsec. 1.)

Question 12 (a). A bill of exchange is dishonored by nonacceptance when it is properly presented for acceptance and acceptance is not obtained within the customary time, or when presentment for acceptance is excused by law and the bill is not accepted. (Bills of exchange act, sec. 43.)

The "customary time" is practically 24 hours.

Question 12 (b). When a bill of exchange is dishonored by nonacceptance an immediate right of recourse against the drawer and indorsers for the full amount of the bill and expenses accrues to the holder and no presentment for payment is necessary. (Bills of exchange act. sec. 43, subsec. 2.)

Question 12 (c). When a bill is refused acceptance the holder has recourse to his ordinary legal remedies, which are the same as when a bill is dishonored by nonpayment. He may re-present the bill at maturity, but he is under no obligation to do so. (Bills of exchange act, sec. 43, subsec. 2.)

Question 13. If the acceptor of a bill fails before it matures the holder may cause it to be protested for better security, but this does not give the holder any right to demand security from the drawer and indorsers. (Bills of exchange act, sec. 51, subsec. 5.)

Question 14 (a). Where a bill of exchange has been protested for dishonor by nonacceptance or protested for better security, and is not overdue, it may be accepted for the honor of any party liable or for the honor of the person for whose account the bill is drawn. (Bills of exchange act, sec. 65, subsec. 1.)

Question 14 (b). Any person not being a party already liable on the bill may, with the consent of the holder, accept it for honor. (Bills of exchange act, sec. 65, subsec. 1.)

Question 14 (c). An acceptance for honor must be written on the bill, must indicate that it is an acceptance for honor, and must be signed by the acceptor for honor. (Bills of exchange act, sec. 65, subsec. 2.)

Question 14 (d). The acceptor for honor engages that he will on due presentation pay the bill according to the tenor of his acceptance if it is not paid by the drawee, provided that it has been duly presented for payment and protested for nonpayment and that he gets the requisite notice of these facts.

Question 15 (a). The code of the United Kingdom does not recognize the "aval" of the foreign codes. Any collateral guarantee of a bill would be dealt with according to the ordinary civil law. As a substitute for the “aval" any person who wishes to guarantee a bill may write his name on it and thereby incur the same liability as an ordinary indorser. (Bills of exchange act, sec. 56.)

Question 15 (b). If a bill of exchange drawn in a foreign country is accompanied by an "aval," it seems that effect would be given to it according to the law of the place where the “aval” is given. (Bills of exchange act, sec. 72, subsecs. 1 and 2.)

Question 16. The custom of drawing bills payable on market days ("en foire") is obsolete in the United Kingdom, but not prohibited. Bills so drawn would come under the category of "bills payable at a future date."

The law draws a distinction between bills payable at sight or on demand and bills payable at a future time. Bills payable at sight or on demand are payable on presentation. Bills payable at a future time are entitled as of right to three days of grace, with this qualification: That if the last day of grace is a statutory holiday, then the bill is payable on the succeeding business day; whilst if the last day of grace is a common law holiday (e. g., Sunday or Good Friday), the bill is payable on the preceding business day. (Bills of exchange act, sec. 14.)

The consequence is that a bill is sometimes entitled to only two days of grace, while in o...er cases it is entitled to four days of grace.

Question 17 (a). Subject to certain exceptions (“force majeure." etc.), a bill payable at sight or on demand must be presented for payment within a reasonable time, but no precise limits are prescribed. (Bills of exchange act, sec. 45, subsec. 2.)

When a bill is not payable on demand (i. e., when it is payable at a future date), it must, subject to the like provisions, be presented for payment on the day on which it falls due, allowing for days of grace. (Bills of exchange act, sec. 45, subsec. 1.)

Presentment for payment must be made at a reasonable hour, which, in the case of business houses, means the ordinary business hours. (Bills of exchange act, sec. 45, subsec. 3.)

Question 17 (b). The holder of a bill can not be compelled to receive payment before maturity. (Bills of exchange act, sec. 59, subsec. 1.)

Question 17 (c). Payment before maturity only dsicharges the instrument as between the particular parties (bills of exchange act, sec. 59, subsec. 1), and operates as a purchase of the bill by the payer.

Question 17 (d). A bill of exchange must purport to be payable in legal currency and the holder is entitled to demand payment in legal currency (ef. bills of exchange act, sec. 3, subsec. 1), but when the time of payment arrives there is nothing in law to prevent the holder receiving satisfaction of the bill in any form which he likes to accept.

Where a bill drawn abroad, but payable in the United Kingdom. is expressed to be payable in a foreign currency, the amount must, in the absence of some express stipulation on the face of the bill, be calculated in English money according to the current rate of exchange for sight drafts. (Bills of exchange act, sec. 72, subsec. 4.)

Question 17 (e). The holder of a bill is not bound to accept part payment, but, if he likes to take it, the bill is discharged pro tanto, and he can proceed against the parties liable thereon for the balance.

Question 18 (a). When a bill has been protested for nonpayment, any person may intervene and pay it for the honor of any party liable thereon or for the honor of the person for whose account the bill is drawn. (Bills of exchange act, sec. 68, subsec. 1.)

Question 18 (b). Payment for honor must be attested by a notarial act of honor, which may be appended to the protest or form an extension of it, and this must be founded on a declaration by the payer declaring his intention to pay the bill for honor and for whose honor he pays it. (Bills of exchange act,

sec. 68, subsecs. 3 and 4.)

Question 18 (c). Where a bill has been paid for honor, all parties susequent to the party for whose honor it is paid are discharged, and the payer for honor succeeds to the rights and duties of the holder as regards the party for whose honor he pays and all parties liable to that party. (Bills of exchange act, sec. 68, subsec. 5.)

Question 19 (a). As regards the acceptor no formalities are required. The holder may sue him at once if he does not pay. (Bills of exchange act, sec. 52, subsec. 3, and sec. 54, subsec. 1.)

As regards the drawer and indorser, a distinction is drawn between inland and foreign bills. An inland bill need not be protested. A foreign bill must be protested; it must be "noted for protest on the day of dishonor, but the protest may be extended at any subsequent time. Whether the bill be inland or foreign, notice of dishonor must be given to the drawer and indorsers.

In the absence of special circumstances ("force majeure," etc.), where the person giving and the person to receive notice reside in the same place, the notice must be given or sent off in time to reach the latter on the day after the dishonor of the bill, and where the person giving and the person to receive notice reside in different places the notice must be sent off on the day after the dishonor of the bill, if there be a post at a convenient hour on that day, and if there be no post on that day, then by the next post thereafter. (Bills of exchange act, sec. 49, subsec. 12.)

Question 20. The object of the rules regulating the right of recourse is twofold: (1) To give official notice to the drawer and indorsers that the bill has been dishonored and (2) to enable them to take prompt steps to protect themselves from the consequences of such dishonor.

Question 21. The holder may either give notice to his immediate indorser, trusting to him to pass it on to prior indorsers and the drawer, or he may himself give notice to all prior parties. He need not observe the order in which the various indorsers appear on the bill, but may claim on any one of them that he chooses. (Bills of exchange act, sec. 49, subsec. 3.)

Question 22. When a bill of exchange is dishonored, no distinction is drawn between the drawer and indorsers. All are entitled to the same notice of dishonor, and are alike discharged if such notice is not given. (Bills of exchange act, sec. 48.)

Question 23. When a bill has been lost the holder has two remedies: (1) He may apply to the drawer to give him another bill, but the drawer is entitled to demand security in case the lost bill should turn up in the hands of another person; (2) under an order of the court, and on giving the proper indemnity, he may bring an action on the lost bill just as if it had not been lost. of exchange act, secs. 69 and 70.)

(Bills

Question 24. The procedure by "amortissement" is not known in the United Kingdom.

Question 25. Although the law provides a procedure under which the person who was the holder of a lost bill can obtain a fresh bill from the drawer, it provides no machinery for obtaining the signatures of the acceptor and indorsers. Question 26. If there be any material omission in a bill of exchange (as, for instance, in the date or sum payable, or in the name of the holder), the holder of the bill has prima facie authority to fill up the omission, and even if it be wrongly or fraudulently filled up, it is enforceable according to its tenor as filled up if it gets into the hands of a holder in due course. (Bills of exchange act, sec. 20.)

Question 27. The law of the United Kingdom does not recognize the rule of distantia loci, so that a false statement of the place where the bill is drawn ("supposition de lieu") would be immaterial, nor does it require any statement of the value received, so a false statement of value received ("supposition de valeur ") would also be immaterial.