The protest is the most time-sensitive stage of enforcing rights under a bill of exchange: the official act certifying refusal to pay or to accept must be drawn up within the short statutory periods, and one missed day is enough to lose the claim against an entire chain of obligated persons. Legal.ge's lawyers accompany the protest procedure in full — from computing the deadlines to cascading the notices — so that your position reaches every person obligated on the bill.
What the Protest Is and Why It Is Indispensable
Refusal to pay a bill must be confirmed by an official act — a protest of refusal to accept or to pay. The protest is the document that fixes the refusal as a legal fact; once it exists, the way opens to claims against endorsers, the drawer, and avalists. Where the payer has stopped payments, or compulsory enforcement has proved futile, the holder may exercise its rights only after presenting the bill to the payer for payment and drawing up the protest. And where the payer has been declared insolvent, rights may be exercised only after presentation of the court ruling declaring the insolvency.
Protest Deadlines: Precise Computation Is a Matter of Survival
The law sets different periods for different situations. In the case of refusal to accept, the protest must be drawn up no later than the second day after the deadline for presenting the bill for acceptance. On an unpaid bill drawn payable on a specified date, or within a specified period from issuance or presentation, the protest must be drawn up within the two working days following the expiry of the payment deadline; for bills payable on presentation, the second-day rule applies. Where a protest is declared for refusal to accept, neither presentation of the bill for payment nor a protest for non-payment is required.
Presentation for Acceptance: Deadlines and Re-presentation
The holder may present the bill to the payer for acceptance before the payment deadline. The drawer may fix a deadline for presentation for acceptance; if none is fixed, a bill payable more than one year from issuance must be presented for acceptance within one year from the day of issuance. The drawer may shorten or extend this period; endorsers may only shorten it. The payer may demand re-presentation on the day following the first presentation — non-compliance may be excused only if this demand is recorded in the protest. The holder is not obliged to leave the bill with the payer presented for acceptance.
The Cascade of Notices and Its Deadlines
After the protest is declared, the holder must, within four working days, notify its immediate endorser and the drawer of the refusal to accept or to pay; where the bill bears the clause of return without expenses, this period runs from the day of presentation of the bill. Each endorser must, within two working days of receiving the notice, inform its own endorser — indicating the names and addresses of those who already sent the notice — and so on until the drawer is informed; in the case of a notice to the drawer, the same period applies to notifying his avalists. The notice may take any recorded form, including the simple return of the bill; the period is deemed observed if the document containing the information was handed to the post within the prescribed time. A person who fails to send the notice in time does not lose its rights, but bears liability for the damage caused by its negligence — and the compensation may not exceed the amount of the bill.
The Return-Without-Expenses Clause: Waiving the Protest
The drawer, an endorser or an avalist who writes on the document the words of return without expenses, not subject to protest, or other words of equivalent meaning and signs them may release the holder from the duty to have a protest drawn up for refusal to accept or non-payment. A clause by the drawer operates toward all signatories; one by an endorser or avalist only toward that person. If the holder nevertheless draws up a protest despite the drawer's clause, the resulting costs fall on the holder. Such a clause does not release the holder from the duty to present the bill and send the notices within the prescribed periods.
Protest of a Bill Accepted by an Intermediary
Where a bill has been accepted by an intermediary whose residence and place of payment coincide, or where other persons designated in the bill as substitute payers in case of need live at that same place, the holder must present the bill to all such persons and, if necessary, lodge a protest for non-payment no later than the day following the last day on which this may be done. If the protest is not lodged within that period, the intermediary payer, the person in whose name the bill was accepted, and the subsequent endorser are released from liability on the bill.
Special attention belongs to the two situations where the holder's course of action changes. First — the payer stopping payments: here claims become possible only after presenting the bill to the payer for payment and drawing up the protest. Second — a declaration of the payer's insolvency: here, instead of a protest, presentation of the court ruling is required. In both situations the interval between the moment of the decision and your reaction is critical, and it is precisely in this interval that most claims are lost in practice. Legal.ge's specialists compute each of these deadlines for your specific bill and carry out the protest procedure so that no claim is lost.