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CHAPT. X.
58.

cides that are

merce; the

Traders, their

and competency,

tion to keep

The question whether a transaction is or is not which late deto be classed as an act of commerce, subject to acts of Comthe rules of the lex mercatoria, with all its peculiar qualification of requirements and privileges, must be decided by legal capacity the lex loci contractus. As to the question con- and the obliga cerning the respective mode of procedure, emanat- merchant's books. ing from the lex mercatoria, the legal remedies, especially with regard to the principle of sworn evidence based on the books of the merchant concerned, the decision depends upon the lex fori. The decision of the question whether certain professions qualify the titularies as members of the mercantile community i. e. as traders, and their legal capacity and competency, is governed by the lex domicili, which decides also with regard to the local obligation of keeping proper mercantile books and their forms.

The special rules of the lex mercatoria, with Legal interest. regard to legal interests in commercial transactions are decided by the lex loci executionis.

We remarked above ($38) that the enactments of commercial and shipping legislation cover the principal ground of international transactions. We will now proceed to note the rules which govern the conditions and relations of the principal of these objects of the lex mercatoria, in the following order, viz.:

1o. Bills of exchange; 2°. Revendication in matter of commerce (stoppage in transitu). 3o. Insurance; 4°. Average; 5°. Abandonment; 6°. Shipping; 7°. Shipmasters, officers and crew; 8°. Freighting and chartering; 9°. Passengers; 10°. Bottomry; 11°. Prescription of marine contracts; 12°. Collision; 13°. Salvage, shipwreck, stranding and flotson; 14°. Bankruptcy; 15°. Surcease of payment granted to traders. The

foregoing points will be discussed in paragraphs 59-84.*

X.-Bills of Exchange.

$59. A Bill of Exchange is a document, dated from a place at which the subscriber called the drawer, charges some person called the drawee, to pay, in the same or in another place, at or after sight, or at a stipulated time, to a designated person, called the payee, or to his order, a sum of money therein expressed, with acknowledgment of value received or value in account. A bill of exchange may also be drawn: a. to the order of the drawer, b. on a certain individual and payable at the residence of a third party, c. for account of a third party. A bill of exchange may be drawn singly, or in duplicate or in triplicate etc., but any one copy of a set avails for any other of the same set or for the whole set.

"The object of all traffic in bills," says Bar, "is that the creditor shall receive a certain sum of money at a certain time, and generally at a certain place. But since the creditor may find it more profitable to receive this sum, or more correctly speaking its equivalent, at some other place or some other time, he has the privilege given him of transferring his right in the bill absolutely to some other party and getting his equivalent out of the consideration paid him. To attain these objects, (which are not identical with those of a true paper currency, although they resemble them), the obligation in a bill consists of an accurately framed undertaking to pay a particular sum; and this undertaking, in contrast with the other legal relations which

* In stating the rules of the various Continental Commercial Codes we follow the official English translation of the Netherlands Code, edited by the department of Foreign Affairs at the Hague in 1880.

arise between the holder of a bill and the debtor, is visibly expressed in a written declaration of intention, and is governed by this expression of intention alone; but, at the same time, just because the obligation of the debtor is so exactly defined, there is laid upon the holder, in order to uphold the system, and to avoid loss, a series of obligations as to the diligence which is competent to him. And lastly to insure the object of prompt payment, there is given to the holder an exceptionally summary process against the debtor and, in many systems of law, a special kind of execution against his person.

"From these principles we may deduce, with the help of the general principles which regulate the law of contracts, what territorial law is to determine the particular obligations, rights and transactions that are to be found in the law of bills." *

A bill is, in the technical phrase, said to be honoured when it is duly accepted; when it becomes payable by lapse of time, it is said to have arrived at maturity, and when acceptance or payment thereof is refused, it is said to be dishonoured. By the nature of the bill-contract, the drawer holds himself liable for the re-imbursement or re-exchange of the bill in case of its non-acceptance by the drawee, provided the holder has instituted, in due time, a formal protest against this non-acceptance or dishonouring of the bill. The time granted for this protest of non-acceptance is regulated by the lex mercatoria of the place where the bill is due, viz., the lex loci executionis.

If the bill be drawn for account of a third party, he alone is liable to the acceptor in respect

* Dr. L. VON BAR. Das Internationale Privat und Strafrecht, Translation of G. R. Gillespie, (1883), page 339,

Legal aspects of the bill of ex

change.

thereof. The drawer is held to have drawn for his own account, if it does not appear, by the tenor of the bill, or by the letter of advice, for whose account the draft was made. All who have signed, accepted or endorsed a bill of exchange, are individually answerable to the holder for the entire amount.

Bills of exchange containing fictitious names. or false indications of domicile or place of drawing or payment, are only effective as a simple acknowledgement of debt, provided the other requisites for that purpose be not wanting. Those who have been aware of such fictitiousness, cannot adduce the same in evidence against third parties who were ignorant of the fact.

The lex mercatoria of each State regulates the different legal aspects of the bill of exchange, viz., the engagement between the drawer and taker or payee of the bill, the accepting of bills of exchange and the guarantee called aval, the endorsement of bills of exchange, the engagements between the drawer and the acceptor, between the holder and the acceptor, and between the holder and the endorsers, the falling due and payment of bills of exchange, the rights and obligations of the holder in case of non-ac ceptance or non-payment of a bill and the extinction of the debt in matter of exchange. Re-exchange. Re-exchange is the redrawing, by the holder of a bill of exchange, on the drawer, or on the endorsers, for the principal of a protested bill and the charges, at the rate of exchange of the time of this redrawing. Such redrawing does not,in case of non-payment, prejudice the holder's right to sue other liable parties.

A bill of exchange being, in its simplest aspect, regarded as constituting an act of mandate between the drawer and the acceptor, whereby the

latter engages himself to pay a certain amount to the holder at its maturity, it is a generally accepted rule that, with respect to the drawer, the re-exchange is regulated by the rate of exchange of the place, where the bill ought to have been paid, on the place from which it is drawn. With regard to the endorsers, the reexchange is regulated by the rate of exchange of the place, whither it has been remitted or negociated by them on the place where the re-imbursement is effected. Where no direct rate of exchange exists between the different places, the re-exchange is regulated by that of the two places nearest the same.

with regard to

contract of

exchange.

The contract of a bill of exchange, engagements Conflict of Lars to pay on promissory notes to order, assignations the and cheques, banker's or cashier's notes and other paper payable to bearer, are contracts which, like the contracts of Civil Law, must be considered, with regard to questions of Conflict of Laws, in the following aspects, viz., the law which governs the personal capacity to contract (lex domicilii), the lex loci contractus, the lex loci solutionis and the lex fori. *

the French

Although the bill of exchange is universally The German and acknowledged to be a matter of general inter-systems. national use and utility, there exists nevertheless, as regards most of the above mentioned aspects, much diversity of legislation in the positive laws of civilized States, both in Europe and in America. These are divided into two main groups, of which one follows the French Commercial Code of 1807 and the other follows, in matters of bills of exchange and commercial papers of this class, the German lex mercatoria,

* PHILLIMORE. Comment, on Intern, Law, Vol. IV. Ch. XLII.

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