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BILLS OF EXCHANGE AND PROMISSORY NOTES ACT

Act No. 1001, Jan. 20, 1962

Amended by Act No. 5009, Dec. 6, 1995

Act No. 8441, May 17, 2007

Act No. 10198, Mar. 31, 2010

PART I BILLS OF EXCHANGE
CHAPTER I ISSUE AND FORM OF BILLS OF EXCHANGE
 Article 1 (Requirements for Bills of Exchange)
A bill of exchange shall state the following:
1. The term "bill of exchange" inserted in the main body of the instrument and expressed in the language employed in drawing up the instrument;
2. An unconditional order to pay a determinate sum of money;
3. The name of a drawee;
4. The maturity;
5. The place of payment;
6. The name of a payee or a person by whose order payment is to be made;
7. The date and the place of issuance;
8. The name and seal or the signature of the drawer.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 2 (Defect in Requirements)
An instrument which fails to state matters in the subparagraphs of Article 1 shall not have the effect as a bill of exchange: Provided, That the same shall not apply in the following cases:
1. Where the maturity is not specified: Deemed to be payable at sight;
2. Where the place of payment is not specified: The place specified next to the name of the drawee shall be deemed to be the place of payment, and the place of the domicile of the drawee;
3. Where the place of issuance is not specified: The place specified next to the name of the drawer shall be deemed to be the place of issuance.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 3 (Bill Payable to Drawer’s Order, Cashier''s Bill, Bill for Account of Third Person)
(1) A bill of exchange may be drawn payable to drawer’s order.
(2) A bill of exchange may be drawn on the drawer him/herself.
(3) A bill of exchange may be drawn for account of a third person.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 4 (Stipulation of Payment at Domicile of Third Person)
A bill of exchange may be payable at the domicile of a third person regardless of whether it is in the drawee''s domicile or in another locality.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 5 (Stipulation of Interest)
(1) When a bill of exchange is payable at sight, or at a fixed period after sight, the drawer may stipulate that the sum payable shall bear interest. In cases of any other bill of exchange, such stipulation shall be deemed not agreed upon.
(2) The interest rate shall be specified in the bill. In default of such specification, the stipulation concerning interest shall be disregarded.
(3) The interest accrues from the date of the bill of exchange, unless other date is specified.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 6 (Discrepancies in Stipulated Sum Payable)
(1) When the sum payable by a bill of exchange is expressed in words and also in figures, and where any discrepancy exists between the two, the sum denoted by the words shall be the amount payable.
(2) Where the sum payable by a bill of exchange is expressed more than once in words or in figures, and where any discrepancy exists between the two, the smaller sum shall be the sum payable.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 7 (Independent Nature of Obligations of Bill)
If a bill of exchange bears any of the following names and seals or signatures, the obligation of other persons who subscribed their names and affixed their seals or signed their names thereon shall not be affected thereby:
1. The name and seal or signature of a person incapable of binding him/herself by a bill of exchange;
2. A forged name and seal or signature;
3. The name and seal or signature of a fictitious person;
4. A name and seal or signature which cannot bind the person who subscribed his/her name and affixed his/her seal or signed his/her name, or the person on whose behalf such name and seal or signature was subscribed or placed thereon due to other causes.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 8 (Name and Seal or Signature by Unauthorized Representative)
Whoever subscribed his/her name and affixed his/her seal or signed his/her name on a bill of exchange as representative of a person whom he/she has no authority to represent shall bear obligation by such bill. Where the person pays the amount of the bill, he/she shall have the same right as the person for whom he/she purported to act. The same shall also apply to a representative who exceeds his/her power.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 9 (Liability of Drawer)
(1) A drawer shall guarantee both acceptance and payment of a bill.
(2) The drawer may state on the bill that he/she releases him/herself from guaranteeing acceptance. Any phrase stating that he/she releases him/herself from guaranteeing payment shall be deemed not written.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 10 (Blank Bills)
If a bill of exchange which was incomplete when issued has been complemented with any details that differ from any prior agreement, the non-observance of such agreements may not be set up against the holder. However, if a holder has acquired the bill of exchange in bad faith or by gross negligence, the same shall not apply.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER II ENDORSEMENT
 Article 11 (Bill to Order)
(1) Every bill of exchange, even if not expressly drawn to order, may be transferred by means of endorsement.
(2) Where the drawer has inserted in a bill of exchange words "not to order" or any equivalent expression, the instrument can only be transferred in the form of a transfer of nominative claim and only with the effects thereof.
(3) The bill may be endorsed in favor of the following persons, and such persons may re-endorse the bill:
1. The drawee who accepted the bill;
2. The drawee who did not accept the bill;
3. The drawer of the bill;
4. Other obligors to the bill.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 12 (Requisites for Endorsement)
(1) An endorsement shall be unconditional. Any condition attached to an endorsement shall be deemed not written.
(2) A partial endorsement shall be null and void.
(3) An endorsement of "to holder" shall be equivalent to an endorsement in blank.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 13 (Form of Endorsement)
(1) An endorsement shall be written on the bill of exchange or on a slip affixed thereto, on which the endorser shall write his/her name and affix his/her seal or sign.
(2) The endorsement may leave the beneficiary unspecified or may consist simply of the name and seal or signature of the endorser (endorsement in blank). In the latter case, the endorsement shall be invalid, if the name and seal or signature of the endorser is not written on the back of the bill of exchange or on the slip attached thereto.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 14 (Effect of Endorsement Transferring All Rights)
(1) An endorsement shall transfer all the rights arising out of a bill of exchange.
(2) If the endorsement is in blank, the holder may perform the following activities:
1. Filling in the blank either with his/her name or with the name of other person;
2. Re-endorsing the bill in blank or by specifying other person;
3. Transferring the bill to a third person by delivery without filling in the blank and endorsing it.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 15 (Effect of Endorsement Guaranteeing Acceptance and Payment)
(1) In the absence of any contrary stipulation, the endorser shall guarantee acceptance and payment.
(2) The endorser may prohibit any further endorsement. In such cases, he/she shall give no guarantee to persons to whom the bill is subsequently endorsed.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 16 (Effect of Endorsement Establishing Title and Bona Fide Acquisition)
(1) The possessor of a bill of exchange shall be deemed to be the lawful holder if he/she establishes his/her title to the bill through an uninterrupted series of endorsements. The same shall also apply where the last endorsement is in blank. With regard to a series of endorsements, cancelled endorsements shall be deemed unwritten. Where an endorsement in blank is followed by another endorsement, the person who signed this last endorsement shall be deemed to have acquired the bill by the endorsement in blank.
(2) Where a person has been dispossessed of a bill of exchange for any reason, the holder who establishes his/her right thereto pursuant to paragraph (1) shall not be bound to return the bill. However, in cases where the holder has acquired the bill in bad faith or by gross negligence, the same shall not apply.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 17 (Restriction against Personal Defenses)
No person sued on a bill of exchange shall set up against the holder any defence founded on his/her personal relations with the drawer or with previous holders. However, in cases where the holder has acquired the bill when he/she was aware that it would harm the debtor, the same shall not apply.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 18 (Endorsement for Collection)
(1) Where an endorsement includes any of the following phrases, the holder may exercise all rights arising out of the bill of exchange. However, the holder can only endorse it for procuration:
1. For recovery;
2. For collection;
3. For procuration;
4. Other phrase simply stating a mandate is granted.
(2) In cases under paragraph (1), the parties liable on the bill of exchange may set up against the holder only defences which could be set up against the endorser.
(3) The mandate granted by an endorsement for procuration shall not terminate by reason of the death of the party giving the mandate or by reason of his/her becoming legally incapable.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 19 (Endorsement for Pledge)
(1) Where an endorsement includes any of the following phrases, a holder may exercise all rights arising out of the bill. However, the endorsement by him/her shall have the effect only as an endorsement for procuration:
1. For security;
2. For pledge;
3. Other phrases stating the establishment of a pledge.
(2) In cases under paragraph (1), the parties liable on the bill shall not set up against the holder defences founded on their personal relations with the endorser. However, in cases where the holder has acquired the bill when he/she was aware that it would harm the debtor, the same shall not apply.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 20 (Endorsement after Maturity)
(1) An endorsement after maturity shall have the same effect as an endorsement before maturity. Nevertheless, an endorsement after protest for non-payment or after expiration of the time limit for drawing up the protest, shall operate only as a transfer of nominative claim.
(2) An endorsement without the date shall be deemed to have been placed on the bill before the expiration of the period for drawing up the protest.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER III ACCEPTANCE
 Article 21 (Freedom of Presentment for Acceptance)
Until maturity, a bill of exchange may be presented to the drawee for acceptance at his/her domicile, either by the holder or by a person who is merely in possession of the bill.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 22 (Stipulation or Prohibition of Presentment for Acceptance)
(1) In any bill of exchange, the drawer may stipulate that it shall be presented for acceptance with or without fixing a period for presentment.
(2) The drawer may stipulate in the bill that presentment of the bill for acceptance shall be prohibited. However, in the case of a bill payable at the address of a third party or in a locality other than that of the domicile of the drawee, or in the case of a bill payable at a fixed period after sight, the same shall not apply.
(3) The drawer may stipulate that presentment of the bill for acceptance shall be prohibited before a stated date.
(4) Each endorser may stipulate that the bill shall be presented for acceptance, with or without prescribing a period for presentment. However, in cases where the drawer has prohibited presentment for acceptance, the same shall not apply.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 23 (Period for Presentment of Bill Payable at Fixed Period after Sight)
(1) A bill of exchange payable at a fixed period after sight shall be presented for acceptance within one year of such date.
(2) The drawer may reduce or extend the period under paragraph (1).
(3) Periods mentioned in paragraphs (1) and (2) may be abridged by endorsers.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 24 (Grace Period)
(1) A drawee may request the bill to be presented to him/her for a second time on the day after the first presentment. Interested parties may claim that the second presentation of the bill in compliance with such request did not take place only when the request is specified in the protest.
(2) No holder shall be obliged to surrender to the drawee a bill presented for acceptance.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 25 (Form of Acceptance)
(1) An acceptance shall be written on the bill of exchange. It shall be expressed by the word "accepted" or other equivalent words, and the drawee shall prescribe his/her name and affix his/her seal or sign his/her name thereon. The name and seal, or signature of the drawee simply stipulated on the face of the bill shall be deemed an acceptance.
(2) Where a bill is payable at a fixed period after sight, or when it must be presented for acceptance within a certain deadline in accordance with a particular stipulation, an acceptance shall be dated as of the day when the acceptance is given, unless the holder requires it shall be dated as of the day of presentment. If it is undated, the holder, in order to preserve his/her right of recourse against the endorsers and the drawer, shall authenticate the omission by a protest drawn up within an appropriate time.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 26 (Conditional Acceptance)
(1) An acceptance shall be unconditional, but the drawee may partially accept the sum payable.
(2) A bill of exchange accepted following other modifications are made shall be deemed a refusal to accept. Nevertheless, the acceptor shall be bound according to the terms of his/her acceptance.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 27 (Indication of Payment at Address of Third Party)
(1) Where the drawer of a bill has indicated a place of payment, other than the domicile of the drawee, without specifying a third party at whose address payment shall be made, the drawee may name such third party at the time of acceptance. In default of this indication, the acceptor shall be deemed to have undertaken to pay the bill in person at the place of payment.
(2) If a bill is payable at the domicile of the drawee, the drawee may, in his/her acceptance, indicate an address in the same place where payment is to be made.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 28 (Effect of Acceptance)
(1) A drawee shall undertake to pay the bill of exchange at its maturity by acceptance.
(2) In default of payment, the holder shall have a direct right of recourse created from a bill of exchange against the acceptor for the amount subject to recover under Articles 48 and 49. Where a holder is the drawer, the same shall also apply.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 29 (Cancellation of Acceptance)
(1) Where a drawee who has written his/her acceptance on a bill of exchange has cancelled such indication before restoring the bill, an acceptance shall be deemed to be refused. A cancellation shall be deemed to have taken place before the bill was restored.
(2) Notwithstanding paragraph (1), if a drawee has notified an acceptance in writing to a holder or to any party who has prescribed his/her name and affixed his/her seal or signed his/her name on the bill, he/she shall be liable to such parties according to the terms of his/her acceptance.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER IV "AVALS"
 Article 30 (Availability of "Aval")
(1) Payment of a bill of exchange may be guaranteed by an "aval"as to the whole or part of its amount.
(2) A guarantee under paragraph (1) may be given by a third person. The same shall also apply to a person who has prescribed his/her name and affixed his/her seal or signed his/her name on the bill.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 31 (Methods of Aval)
(1) An aval shall be given either on the bill itself or on an "allonge" attached thereto.
(2) A guarantee shall be expressed by the words "good as aval" or by any other equivalent formula, and the giver of an "aval" shall prescribe his/her name and affix his/her seal or sign his/her name on the bill.
(3) An aval shall be deemed to be constituted by the mere name and seal or signature of the giver of the aval placed on the face of the bill. However, in cases of the name and seal or signature of the drawee or of the drawer, the same shall not apply.
(4) An aval shall specify for whose account it is given. In default of this, it shall be deemed to be given for the drawer.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 32 (Effect of Aval)
(1) The giver of an aval shall be bound in the same manner as a person for whom he/she has become guarantor.
(2) An aval shall be valid even when the liability which the giver has guaranteed becomes null and void for any reason, other than defects in the method.
(3) When the giver of an aval pays a bill of exchange, the rights arising out of the bill of exchange against the person guaranteed and against those liable to the latter on the bill of exchange.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER V MATURITY
 Article 33 (Kinds of Maturities)
(1) A bill of exchange may be drawn payable:
1. At sight;
2. At a fixed period after sight;
3. At a fixed period after date;
4. At a fixed date.
(2) Bills of exchange payable at maturities or by installment other than those prescribed in paragraph (1) shall be null and void.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 34 (Maturity of Bill Payable at Sight)
(1) A bill of exchange at sight shall be payable on presentment. It shall be presented for payment within a year of its date. The drawer may reduce or extend this period, which may be reduced by the endorsers.
(2) The drawer may prescribe that a bill of exchange payable at sight shall not be presented for payment before a stated date. In such cases, the period for presentment shall begin from the said date.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 35 (Maturity of Bill Payable at Fixed Period after Sight)
(1) The maturity of a bill of exchange payable at a fixed period after sight shall be determined either by the date of acceptance or by the date provided for in the protest.
(2) Where the date of acceptance is not specified and the protest is not prepared, an acceptance shall be deemed, so far as regards the acceptor, to have been given on the last day of the period for presentment for acceptance.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 36 (Determination of Maturity Date and Computation of Period)
(1) Where a bill of exchange is payable one or more months after date or after sight, the bill shall mature on the corresponding date of the month when payment shall be made. If there is no such corresponding date, the bill shall mature on the last day of that month.
(2) When a bill of exchange is drawn at one or more months and a half after date or sight, entire months shall first be calculated.
(3) If the maturity is fixed at the commencement, in the middle or at the end of the month, this shall be deemed the first, fifteenth or last day of the month.
(4) The expressions "eight days" or "fifteen days" shall not indicate one or two weeks, but a period of eight or fifteen full days.
(5) The expression "half-month" shall mean a period of fifteen full days.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 37 (Calendar as Basis of Determining Maturity)
(1) When a bill of exchange is payable on a fixed day in a place where the calendar is different from the calendar in the place of issue, the date of maturity shall be deemed to be fixed according to the calendar of the place of payment.
(2) When a bill of exchange drawn between two places having different calendars is payable at a fixed period after date, the day of issue shall be calculated according to the corresponding day of the calendar in the place of payment, and the maturity shall be fixed accordingly.
(3) The period for presenting bills of exchange shall be calculated in accordance with paragraph (2).
(4) Paragraphs (1) through (3) shall not apply, if a stipulation in the bill of exchange or even the simple terms of the instrument indicate an intention, to adopt different rules.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER VI PAYMENT
 Article 38 (Necessity of Presentment for Payment)
(1) The holder of a bill of exchange payable on a fixed day or at a fixed period after date or after sight shall present the bill for payment either on the day on which it is payable or on one of the two business days which follow.
(2) The presentment of a bill of exchange at a clearing-house shall be as effective as the presentment for payment.
(3) Presentment for payment prescribed by paragraph (2) is considered finished, when a financial institution commissioned to collect a bill of exchange from the holder (hereafter referred to as "financial institution for presentment" in this Chapter) electronically prepares items to be filled out on the bill of exchange through an information processing system in the form of electronic information, and such information is transferred to a clearing-house and then entered into the information processing system of such clearing-house.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 39 (Giving Bill, Partial Payment)
(1) When a drawee pays a bill of exchange, he/she may request the holder to issue him/her a receipt stating evidence of receipt on the bill.
(2) No holder may refuse partial payment.
(3) In case of partial payment, the drawee may request the holder to issue him/her a receipt after indicating the payment made on the bill.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 40 (Due Date, Liability of Drawee to Verify)
(1) The holder of a bill of exchange shall not be liable to receive payment thereof before maturity.
(2) A drawee who pays before maturity shall do so at his/her own risk and peril.
(3) A drawee who pays at maturity shall be validly discharged, unless he/she is guilty of fraud or gross negligence. In such cases, the drawee shall be bound to verify the regularity of the series of endorsements, but not the names and seals or signatures of the endorsers.
(4) In cases of presentment for payment pursuant to Article 38 (3), a drawee or a financial institution commissioned to pay a bill of exchange from a drawee may commission a financial institution for presentment to verify the regularity of the series of endorsements under the latter part of paragraph (3).
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 41 (Currency in which Drawee is to Pay)
(1) When a bill of exchange is drawn payable in a currency which is not that of the place of payment, the sum payable may be paid in the currency of the place of payment, according to its value on the date of maturity. If the debtor is in default, the holder may at his/her option demand the amount of the bill to be paid in the currency of the place of payment according to the rate on the day of maturity or the day of payment.
(2) The value of foreign currency shall be determined based on the practices of the place of payment. Nevertheless, the drawer may stipulate that the sum payable shall be calculated according to the conversion rate expressed in the bill.
(3) Paragraphs (1) and (2) shall not apply where the drawer has stipulated that payment shall be made in a certain specified currency (stipulation of effective payment in foreign currency).
(4) If the amount of a bill of exchange is specified in a currency having the same denomination, but a different value in the country of issue and the country of payment, reference shall be deemed to be made to the currency of the place of payment.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 42 (Deposit of Bill Amount)
When a bill of exchange is not presented for payment within the period fixed by Article 38, every debtor is authorized to deposit the amount with the competent authority at the charge, risk and peril of the holder.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER VII RECOURSE FOR NON-ACCEPTANCE OR NON-PAYMENT
 Article 43 (Substantial Requisites of Recourse)
A holder may exercise his/her right of recourse against the endorsers, the drawer and the other parties liable, if payment has not been made at maturity. The right of recourse may also be exercised even before maturity in the following cases:
1. If acceptance is refused in whole or in part;
2. If the drawee goes bankrupt regardless of acceptance, if payment on his/her part is suspended, or if execution has been levied against his/her property without result;
3. If the drawer of a non-acceptable bill goes bankrupt.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 44 (Formal Requisites of Recourse)
(1) Default of acceptance or on payment shall be evidenced by notarized certificate (protest for non-acceptance or non-payment).
(2) Protest for non-acceptance shall be made within the period for presentment for acceptance: Provided, That if a presentment takes place under Article 24 (1) on the last day of such period, the protest may nevertheless be drawn up on the next day.
(3) Protest for non-payment of a bill of exchange payable on a fixed day or at a fixed period after date or sight shall be made on one of the two business days following the day on which the bill is payable. In the case of a bill payable at sight, the protest shall be drawn in accordance with paragraph (2) which prescribes the drawing up of a protest for non-acceptance.
(4) Protest for non-acceptance shall dispense with presentment for payment and protest for non-payment.
(5) If there is a stoppage of payment on the part of the drawee, whether he/she has accepted or not, or if execution has been levied against his/her property without result, the holder shall not exercise his/her right of recourse until after presentment of the bill to the drawee for payment and after the protest has been drawn up.
(6) If the drawee, regardless of acceptance, is declared bankrupt, or in the event of the declared bankruptcy of the drawer of a non-acceptable bill, the production of the judgment declaring the bankruptcy shall suffice to enable the holder to exercise his/her right of recourse.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 45 (Notice of Non-Acceptance and of Non-Payment)
(1) A holder shall give notice of non-acceptance or non-payment to his/her endorser and to the drawer within four business days after any of the following days, and each endorser shall, within two business days following the day on which he/she receives notice, notify his/her endorser of the notice so 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. Such period shall run from the receipt of the preceding notice:
1. Date of preparation of protest;
2. In case of stipulation "retour sans frais", the day for presentment.
(2) When, in conformity with paragraph (1), notice is given to a person who has prescribed his/her name and affixed his/her seal or signed his/her name on a bill of exchange, the same notice shall be given within the same deadline to his/her avaliseur.
(3) Where an endorser either fails to specify his/her address or specifies it in an illegible manner, it shall be sufficient that notice should be given to the immediately preceding endorser.
(4) A person obliged to give notice may give it in any form whatsoever. Notice may also be given simply by returning the bill of exchange.
(5) A person obliged to give notice shall prove that he/she has given notice within the time allowed. This deadline shall be regarded as having been observed if a letter giving the notice has been posted within such deadline.
(6) Even a person who fails to give notice within the deadline mentioned in paragraph (5) shall not forfeit his/her right of recourse. However, such person shall be responsible for the damages, if any, caused by his/her negligence, but the damages shall not exceed the amount of the bill of exchange.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 46 (Release from Drawing up Protest)
(1) The drawer, an endorser or a person guaranteeing payment by aval may release the holder from making a protest of non-acceptance or non-payment for exercising his/her right of recourse by writing any of the following expressions on the instrument and by prescribing his/her name and affixing his/her seal or signing his/her name thereon:
1. Retour sans frais;
2. Sans protet:
3. Other expressions equivalent to subparagraphs (1) and (2).
(2) The stipulation under the subparagraphs of the preceding paragraph shall not release the holder from presenting the bill within the statutory period, or from giving notice. The burden of proving the non-observance of the statutory period shall lie on the person who seeks to set it up against the holder.
(3) If the stipulation under paragraph (1) is written by the drawer, it shall be operative in respect of all obligors to the bill; if it is written by an endorser or avaliseur, it shall be operative only in respect of such endorser or avaliseur. If the holder has the protest drawn up in spite of the stipulation written by the drawer, the holder shall bear the expenses thereof; and if the stipulation is written by an endorser or avaliseur, the costs incurred in the protest may be recovered from all obligors to the bill.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 47 (Joint Liabilities of Obligors)
(1) All drawers, accepters, endorsers or guarantors by aval of a bill of exchange shall be jointly and severally liable to the holder.
(2) The holder shall have the right of proceeding against all obligors under paragraph (1), individually, collectively, or entirely, without being required to observe the order in which they have become bound.
(3) The same rights as those of the holder under paragraph (2) shall be possessed by any person under the bill who has assumed and paid it.
(4) Proceedings against one of the obligors shall not prevent proceedings against the others. The same shall also apply in the case of a person subsequent to the party first proceeded against.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 48 (Amount of Recourse by Holder)
(1) A holder may recover from the person against whom he/she exercises his/her right of recourse:
1. If the amount of the unaccepted or unpaid bill of exchange with interest is stipulated, such interest;
2. Interest at an annual rate of six percent from the date of maturity;
3. The expenses of making the protest and of giving notices as well as other expenses.
(2) If a right of recourse is exercised before maturity, the amount of the bill shall be subject to a discount. This discount shall be calculated according to the official rate of discount (bank-rate) ruling on the date when recourse is exercised at the place of domicile of the holder.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 49 (Amount of Recourse by Party)
A party who assumes and pays a bill of exchange may recover from the parties liable to him/her:
1. The entire sum which he/she has paid;
2. Interest on the said sum calculated at an annual rate of six percent, starting from the day when he/she made payment;
3. Any expenses which he/she has incurred.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 50 (Right of Party Liable for Recourse)
(1) Every party liable against whom a right of recourse is exercised, may require against payment, that the bill shall be yielded to him/her with the protest and a receipt account evidencing the distribution of such bill.
(2) Every endorser who has assumed and paid a bill of exchange may cancel his/her own endorsement and those of subsequent endorsers.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 51 (Recourse after Partial Acceptance)
In cases of the 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 may require that this payment be specified on the bill and that he/she be given a receipt therefor. The holder shall also issue him/her a certified copy of the bill, with the protest, in order to enable subsequent recourse to be exercised.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 52 (Recourse by Redraft)
(1) Every person having the right of recourse may, in the absence of agreement to the contrary, reimburse him/her by means of a fresh bill (hereinafter referred to as "redraft") to be drawn at sight on one of the parties liable to him/her and payable at the domicile of that party.
(2) The redraft shall include, in addition to the sums mentioned in Articles 48 and 49, brokerage cost and the stamp tax on the redraft.
(3) If the redraft is drawn by the holder, the sum payable shall be fixed according to the rate for a sight bill drawn at the place where the original bill was payable upon the party liable at the place of his/her domicile. If the redraft is drawn by an endorser, the sum payable shall be fixed according to the rate for a sight bill drawn at the place where the drawer of the redraft is domiciled upon the place of the domicile of the party liable.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 53 (Loss of Right of Recourse)
(1) A holder shall lose his/her right of recourse against the endorsers, the drawer and the other parties liable to him/her after expiration of the following periods. However, the same shall not apply with regard to the acceptor:
1. The period for the presentment of a bill of exchange drawn at sight or at a fixed period after sight;
2. The period for drawing up the protest for non-acceptance or non-payment;
3. The period for presentment for payment in cases of a stipulation "reptour sans frais."
(2) In default of presentment for acceptance within the period stipulated by the drawer, the holder shall lose his/her right of recourse for non-payment, as well as for non-acceptance. However, if it appears from the terms of the stipulation that the drawer only intended to release the drawer from the guarantee of acceptance, the same shall not apply.
(3) If a period for presentment is specified in an endorsement, the endorser alone may avail him/her of it.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 54 (Extension of Period by Vis Major)
(1) If it is difficult to present a bill of exchange or draw up a protest within the statutory period due to an insurmountable obstacle (referring to legal prohibition by Acts and subordinate statutes or other cases of vis major: hereinafter referred to as "vis major"), the period shall be extended.
(2) The holder shall be bound to give notice, without delay, of the case of vis major to his/her endorser and to specify this notice on the bill or on an allonge and shall date and write his/her name or affix his/her seal or put his/her signature on it. With regard to other matters, Article 45 shall apply mutatis mutandis.
(3) Where vis major has terminated, the holder shall, without delay, present the bill of exchange for acceptance or payment and, if necessary, have the protest drawn up.
(4) If vis major continues to operate beyond 30 days after maturity, recourse may be exercised, and neither the presentment nor the preparation of a protest shall be necessary.
(5) In the case of a bill of exchange drawn at sight or at a fixed period after sight, the period of 30 days under paragraph (4) shall run from the date on which the holder, even before the expiration of the time for presentment, has given notice of vis major to his/her endorser. In the case of a bill of exchange drawn at a certain time after sight, the period of 30 days under paragraph (4) shall be added to the period after sight specified in the bill of exchange.
(6) Facts purely personal to the holder or to the person mandated to present the bill or make the protest shall not be deemed to constitute cases of vis major.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER VIII INTERVENTION FOR HONOR
SECTION 1 Common Provisions
 Article 55 (Relevant Parties to Intervention and Notice)
(1) A drawer, endorser or avaliseur may specify in the bill a referee in case of need.
(2) A bill of exchange may, in accordance with the provisions of this Chapter, be accepted or paid by a person who intervenes for the honor of any debtor against whom a right of recourse exists.
(3) The person intervening may be a third party, a drawee, or even a party already liable on the bill of exchange: Provided, That an acceptor shall not be the person intervening.
(4) The person intervening shall be bound to give, within two business days, notice of his/her intervention to the party for whose honor he/she has intervened. If the person intervening fails to do so within such period, he/she shall be responsible for the damage, if any, incurred due to his/her negligence within the amount of the bill of exchange.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
SECTION 2 Acceptance by Intervention
 Article 56 (Requisites of Acceptance by Intervention)
(1) There may be acceptance by intervention in all cases where the holder has a right of recourse before maturity on a bill the presentment of which for acceptance is not prohibited.
(2) When the bill of exchange indicates a referee in case of need at the place of payment, the holder may not exercise his/her right of recourse before maturity against the person naming such referee in case of need and against subsequent signatories, unless he/she evidences the fact by protest that he/she has presented the bill of exchange to the referee in case of need, but an acceptance is refused by the latter.
(3) In cases of intervention other than those specified in paragraph (2), the holder may refuse an acceptance by intervention. Nevertheless, if the holder allows an acceptance by intervention, he/she shall lose the right of recourse before maturity against the person on whose behalf such acceptance was given and against subsequent signatories.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 57 (Methods of Acceptance by Intervention)
Acceptance by intervention shall be specified on the bill of exchange on which the intervening party shall prescribe his/her name and affix his/her seal or sign his/her name. In such cases, the bill of exchange shall indicate the person for whose honor it has been issued and, in default of such indication, the acceptance shall be deemed to have been given for the honor of the drawer.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 58 (Effect of Acceptance by Intervention)
(1) The acceptor for intervention shall be liable to the holder and to the endorsers subsequent to the party for whose honor he/she intervened, in the same manner as such party.
(2) Notwithstanding acceptance by intervention, the party for whose honor it has been given and the parties liable to him/her may require the holder, in exchange for payment of the sum mentioned in Article 48, to deliver the bill. Where the protest and a receipt exist, those parties may also require them to be delivered.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
SECTION 3 Payment by Intervention
 Article 59 (Requisites of Payment by Intervention)
(1) Payment by intervention may take place in all cases where, either at maturity or before maturity, the holder has a right of recourse on the bill.
(2) Payment shall be made for the whole amount payable by the party for whose honor it is to be made.
(3) Payment shall be made not later than the day following the last day allowed for drawing up the protest for non-payment.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 60 (Necessity for Presentment for Payment by Intervention)
(1) If a bill of exchange has been accepted by intervening parties who are domiciled at the place of payment, or if persons domiciled therein have been named as referee in case of need, the holder shall present the bill to all these persons and, if necessary, have them draw up a protest for non-payment not later than the day following the last day allowed for drawing up the protest.
(2) If the protest is not prepared within the time specified in paragraph (1), the party who has named the referee in case of need, or for whose account the bill has been accepted, and the subsequent endorsers shall be discharged from their liability on the bill.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 61 (Effect of Refusal of Payment by Intervention)
A holder who refuses payment by intervention shall lose his/her right of recourse against any persons who would have been discharged from liability on the bill thereby.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 62 (Methods of Payment by Intervention)
(1) Payment by intervention shall be authenticated by a receipt specified on the bill of exchange indicating the person for whose honor payment has been made, and, in default of such indication, payment shall be deemed to have been made for the honor of the drawer.
(2) The bill of exchange and the protest, if any, shall be given to the person paying by intervention.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 63 (Effect of Payment by Intervention)
(1) A person paying by intervention shall acquire the rights arising out of the bill of exchange against the party for whose honor he/she has made payment and against persons who are liable to the latter on the bill of exchange. Nevertheless, he/she cannot re-endorse the bill of exchange.
(2) Endorsers subsequent to the party for whose honor payment has been made shall be discharged from their liability.
(3) In case of competition for payment by intervention, the payment which effects the greater number of releases shall have preference. Any person who, with the knowledge of the facts, intervenes in a manner contrary to this rule, shall lose his/her right of recourse against those who would have been discharged.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER Ⅸ BILL IN A SET, AND COPIES
SECTION 1 Bills in Set
 Article 64 (Manner of Issuance of Set)
(1) A bill of exchange may be drawn in a set of two or more identical parts.
(2) The parts in paragraph (1) shall be numbered in the main body of the instrument itself; in default, each part shall be considered as a separate bill of exchange.
(3) Every holder of a bill which does not specify that it has been drawn as a sole bill may, at his/her own expense, require the delivery of two or more parts. In such cases, the holder shall apply to his/her immediate endorser, who is bound to assist the holder in proceeding against his/her own endorser, and so on in the series until the drawer is reached. The endorsers shall be bound to reproduce their endorsements on the new parts of the set.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 65 (Effect of Parts of Set)
(1) Payment made on one part of a set shall operate as a discharge, even if there is no stipulation that this payment annuls the effect of the other parts. Nevertheless, the drawee shall be liable on each accepted part which he/she has not recovered.
(2) An endorser who has transferred parts of a set to different persons, as well as subsequent endorsers, shall be liable on all the parts bearing their name and seal or signature which have not been restored.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 66 (Sending Part for Acceptance)
(1) A party who has sent one part for acceptance shall indicate on the other parts the name of the person in whose hands this part is to be found. The holder of the part so sent shall be bound to deliver it to the lawful holder of another part.
(2) If any holder of a part is refused to get another part, the holder cannot exercise his/her right of recourse unless he/she proves by protest the following facts:
1. That the part sent for acceptance has not been given to him/her despite his/her request;
2. That acceptance or payment could not be made with the other one part.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
SECTION 2 Copies
 Article 67 (Drawing up, Methods and Effect of Copies)
(1) Every holder of a bill of exchange shall have the right to make copies thereof.
(2) A copy shall reproduce the original accurately, with the endorsements and all other statements to be found therein, and shall specify where the copy ends.
(3) A copy may be endorsed, and guaranteed by aval, in the same manner and with the same effects as the original.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 68 (Rights of Holders of Copies)
(1) A copy shall specify the person in possession of the original instrument. The latter is bound to deliver the said instrument to the lawful holder of the copy.
(2) A holder who is refused to get the original shall not exercise his/her right of recourse against the persons who have endorsed the copy or guaranteed it by aval unless the holder proves by protest specifying that the original has not been given to him/her despite his/her request.
(3) Where the original instrument, after the last endorsement before the making of the copy, includes any of the following phrases, a subsequent endorsement on the original shall be null and void:
1. Commencing from here, an endorsement shall be valid only if made on the copy;
2. Phrases equivalent to subparagraph 1.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER Ⅹ ALTERATIONS
 Article 69 (Alterations and Liability of Person Who Acted on Bill)
In case of alteration of the text of a bill of exchange, parties who have prescribed their names and affixed their seals or signed subsequent to the alteration shall be bound according to the terms of the altered text; parties who have prescribed their names and affixed their seals or signed before the alteration shall be bound according to the terms of the original text.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER ? PRESCRIPTION
 Article 70 (Period of Prescription)
(1) All actions arising out of a bill of exchange against the acceptor shall be barred, if not taken within three years from the date of maturity.
(2) Actions by the holder against the endorsers and against the drawer shall be barred, if not taken within one year from the following dates:
1. The date of a protest drawn up within a legitimate period;
2. Where there is a stipulation retour sans frais, the date of maturity.
(3) Actions by endorsers against each other and against the drawer shall be barred, if not taken within six months from the day when the endorser assumed and paid the bill or from the day when such person was sued.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 71 (Suspension of Prescription)
Suspension of prescription shall only be effective against the person in respect of whom the cause of suspension has taken place.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
CHAPTER ? COMMON PROVISIONS
 Article 72 (Holidays, Fixed Dates, and Periods)
(1) Payment of a bill of exchange which falls due on a statutory holiday may be requested on the first business day which follows. All other proceedings relating to a bill of exchange, in particular, presentment for acceptance and protest, can only be taken on a business day.
(2) Where any of the proceedings specified in paragraph (1) shall be taken within a certain period of time, and if the last day of which is a legal holiday, the period shall be extended until the first business day which follows the expiration of such period, and intermediate holidays shall be counted in such period.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 73 (Non-Inclusion of Commencement Day)
No statutory or contractual period shall include the day on which the period commences.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 74 (Non-Permission of Days of Grace)
No days of grace, whether legal or judicial, shall be permitted.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
PART II PROMISSORY NOTES
 Article 75 (Requirements of Promissory Notes)
A promissory note shall include the followings:
1. The words "promissory note" inserted in the main body of the instrument and expressed in the language employed in drawing up the instrument;
2. An unconditional promise to pay a determinate sum of money;
3. The time for payment;
4. The place where it is payable;
5. The name of the person to whom or by whose order payment is to be made;
6. The date and the place of issuance;
7. The name and seal or the signature of the issuer.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 76 (Defects in Requirements)
An instrument which fails to state matters in the subparagraphs of Article 75 shall not have the effect as a promissory note. However, the same shall not apply to the following cases:
1. Where the maturity is not specified: Deemed to be payable at sight;
2. Where the place of payment is not specified: The place of issuance shall be deemed to be the place of payment and the place of the domicile of the issuer;
3. Where the place of issuance is not specified: The place specified next to the name of the issuer shall be deemed to be the place of issuance.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 77 (Mutatis Mutandis Application of Provisions on Bills of Exchange)
(1) Provisions regulating bills of exchange on the following matters shall apply mutatis mutandis to promissory notes so far as they are not inconsistent with the nature of these instruments:
1. Endorsement (Articles 11 through 20);
2. Maturity (Articles 33 through 37);
3. Payment (Articles 38 through 42);
4. Recourse in cases of non-payment (Articles 43 through 50, 52 through 54);
5. Payment by intervention (Articles 55, 59 through 63);
6. Copies (Articles 67 and 68);
7. Alterations (Article 69);
8. Prescription (Articles 70 and 71);
9. Holidays, computation of periods, and non-permission of days of grace (Articles 72 through 74).
(2) The following provisions shall also be applicable mutatis mutandis to a promissory note: provisions concerning a bill of exchange payable at the address of a third party or in a locality, other than that of the domicile of the drawee under Articles 4 and 27, stipulation for interest under Article 5, discrepancies as regards the sum payable under Article 6, the consequence of a name and seal or signature which cannot impose the liability under a bill of exchange under Article 7, the consequence of a name and seal or signature by a person who acts without authority or who exceeds his/her authority under Article 8, and provisions concerning a blank bill under Article 10.
(3) Provisions related to guarantee by aval prescribed in Articles 30 through 32 shall also be applicable mutatis mutandis to a promissory note. In cases under Article 31 (4), if the aval does not specify on whose behalf it has been given, it shall be deemed to have been given on behalf of the issuer of the promissory note.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
 Article 78 (Liability of Issuer, Special Provisions on Promissory Notes Payable at Fixed Period after Sight)
(1) The issuer of a promissory note shall be bound in the same manner as an acceptor of a bill of exchange.
(2) A promissory note payable at a fixed period after sight shall be presented for the sight of its issuer within the period prescribed in Article 23. The period after sight shall run from the date on which the issuer writes the fact that he/she has perused the note and the date of perusal on the bill, and prescribes his/her name and affixes his/her seal or signs his/her name thereon. If the issuer refuses to specify the fact of perusal and the date, such refusal shall be authenticated by a protest under Article 25. Such date shall be the first day of the period after sight.
[This Article Wholly Amended by Act No. 10198, Mar. 31, 2010]
ADDENDA
Article 79 (Claims for Reimbursement of Benefits)
Even in cases where rights arising out of a bill of exchange or promissory note have been extinguished on account of any failure to follow the requisite procedures or of extinctive prescription, the holder may claim reimbursement against the drawer, acceptor or endorser to the extent of the benefit received by such party.
Article 80 (Suspension of Prescription by Giving Notice of Action)
(1) The extinctive prescription of any claim on a bill of exchange or promissory note by an endorser against another endorser and against the drawer shall, in cases where an action has been brought against the endorser, be suspended by his/her giving notice of such action to the relevant party who is prior to him/her.
(2) The period of prescription which has been suspended in accordance with the provisions of the preceding paragraph shall begin to run anew from the time when the decision thereon has become final and conclusive.
Article 81 (Definition of Holiday)
The term "holiday" used in this Act shall comprise national holidays and public holidays, Sundays and other general holidays.
Article 82 (Bills and Notes Issued prior to Enforcement of this Act)
The old provisions shall remain applicable with regard to bills of exchange and promissory notes issued prior to the enforcement of this Act.
Article 83 (Designation of Clearinghouse)
The clearinghouse referred to in Article 38 (2) (including cases as applicable mutatis mutandis in Article 77 (1)) shall be specified by the Minister of Justice.
Article 84 (Matters as to Protest)
Matters relating to the drawing up of protests shall be prescribed by Presidential Decree. <Amended by Act No. 5009, Dec. 6, 1995>
Article 85 (Enforcement Date, Repeal of Old Act)
(1) This Act shall enter into force on January 1, 1963.
(2) The Act on Bills, effected in Korea under Article 1 of the Chosun Civil Affairs Decree, shall be effective until the time this Act becomes effective.
ADDENDUM<Act No. 5009, Dec. 6, 1995>
This Act shall enter into force on the date of its promulgation.
ADDENDUM<Act No. 8441, May 18, 2007>
This Act shall enter into force six months after its promulgation.
ADDENDUM<Act No. 10198, Mar. 31, 2010>
This Act shall enter into force on the date of its promulgation.