Acceptance is one of the central institutions of bill-of-exchange circulation: it is through acceptance that the drawee assumes the obligation to pay the bill independently at maturity, and it is precisely the refusal to accept, or its defective formalization, that often becomes the subject of dispute. The rules connected with acceptance are strict — the form of the entry, the signature, the date and the immutability of the content each carry legal significance. Within this service we help you with the correct formalization of acceptance, the recording of a refusal to accept and the enforcement of claims against the acceptor.
In practice, disputes arise most often where the acceptance is defectively formalized, is partial or modifies the content of the bill. That is why every step connected with a bill should be taken with an exact knowledge of the requirements of the law.
Formalization of Acceptance
Acceptance is written on the bill. It is expressed by the word „accepted“ or another analogous word, which the drawee signs. The drawee's signature on the front of the bill is deemed to be an acceptance — that is, even a signature left without the word is sufficient for an acceptance to exist, provided it is on the face of the bill and is not the signature of another person.
The rule on dating also matters: where a bill is payable at a fixed period after presentation or must be presented for acceptance within a prescribed period, the date of acceptance is the day on which the entry was actually made, unless the holder of the bill requests that the date of presentation be recorded. If the date is not indicated, the holder is obliged, in order to preserve his rights against the indorser and the issuer of the bill, to certify this defect by a timely protest. Omitting the protest may in this case become the reason for the loss of rights.
The Unconditionality of Acceptance and Partial Acceptance
Acceptance is unconditional. The drawee may, however, accept a part of the amount of the bill: such partial acceptance is permitted by the law, and the holder then faces the question whether to accept it. This decision may have subsequent legal consequences and must therefore be taken deliberately.
Any other change introduced into the content of the bill by means of the acceptance is deemed to be a refusal to pay. In all cases the acceptor bears responsibility according to the content of his acceptance — what is written in the acceptance is exactly the obligation for which the acceptor answers.
The Effects of Acceptance and the Acceptor's Liability
By accepting, the drawee becomes obliged to pay the bill as soon as maturity arrives. This obligation is independent, and it is precisely this that distinguishes the acceptor from the other participants in the bill. In case of non-payment, an action may be brought directly against the acceptor on the basis of the accepted bill, and the amounts provided for by this law may also be claimed. The claim against the acceptor is the strongest claim deriving from the bill, because his obligation is imposed by the bill itself.
Crossing Out of Acceptance
If the drawee crosses out or deletes the entry concerning acceptance, he is deemed to have refused acceptance of the bill. The position is different where the drawee notifies the holder of the bill, or other persons who have signed the bill, of the acceptance in writing: in that case he undertakes towards them an obligation in accordance with the terms, that is the content, of the acceptance. Crossing out and written notification thus produce different consequences, and ignorance of this difference may prove costly.
Acceptance by an Intervener
The law also provides for acceptance by an intervenor. An intervenor may accept the bill in all cases where the holder of a bill subject to acceptance has the right to bring a regress action before the maturity of the bill. Where the bill indicates an intervenor who may, if necessary, accept the bill or pay it at the place of payment, the holder may, before maturity, exercise the right of regress against the person indicated by the intervenor and against the persons who signed that indication, provided the holder presented the bill to the intervenor and the latter's refusal of acceptance has been formalized in a protest protocol.
In other cases the holder may refuse to accept the intervenor's acceptance; but if he agrees to it, he loses the right of regress which he enjoys before maturity against the person on whose behalf the acceptance was made and against the indorser who signed. The intervenor records the acceptance by an entry on the bill and his signature, indicating the person to whom the amount must be paid; in the absence of such indication the bill is deemed accepted for the account of the issuer.
The intervening acceptor incurs the obligation of an intervenor towards the holder of the bill and towards subsequent indorsers who signed after him. At the same time, although the bill has been accepted by the intervenor, the person for whose account the bill was accepted, and the prior indorsers of the holder who pay the amount provided for by the law, may demand the return of the bill against a protest act and a written confirmation of payment.
Acceptance Where Several Copies Exist
Where a bill is issued in several copies and one of them has been sent for acceptance, the sender is obliged to indicate in the other copies the person holding that copy, and the latter must hand it over to the lawful holder of the other copy. If he refuses to do so, the holder of the bill may exercise the right of regress, but must prove by a protest act that the copy sent for acceptance was not returned to him despite his request and that the other copy could not have been accepted or paid.
How We Help
Our team works on bill-of-exchange matters and assists you in the following situations:
- drafting the acceptance entry and verifying an existing entry;
- assessing the decision connected with accepting a partial acceptance;
- organizing the recording of a refusal to accept by a protest protocol;
- preparing claims against the acceptor or the intervening acceptor;
- planning regress actions and representing you in court.
A single mistake in acceptance — an undated entry, an added condition or a signature placed in the wrong position — changes the entire legal outcome. If a bill is in your circulation or you intend to issue one, contact us: we will examine the document and explain every step so that your rights are protected from the outset.