Negotiable Instruments Law of the People's Republic of China
Negotiable Instruments Law of the People's Republic of China
Negotiable Instruments Law of the People's Republic of China
Order of the President [1995] No.49
May 10, 1995
The Negotiable Instruments Law of the People's Republic of China which has been adopted at the 13rd meeting of the Standing Committee of the Eighth National People's Congress on May 10, 1995 is promulgated now, and shall enter into force as of January 1, 1996.
Contents
Chapter I General Provisions
Chapter II Bills of Exchange
Section 1 Issue
Section 2 Endorsement
Section 3 Acceptance
Section 4 Guaranty
Section 5 Payment
Section 6 Right of Recourse
Chapter III Promissory Notes
Chapter IV Cheques
Chapter V The Applicable Laws Pertaining Negotiable Instruments in Cases Involving Foreign Elements
Chapter VI Legal Responsibility
Chapter VII Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is formulated for the purpose of standardizing actions concerning negotiable instruments, protecting the legal rights of parties using negotiable instruments, maintaining economic order in society and promoting the development of the socialist market economy.
Article 2 This Law applies to all transactions concerning negotiable instruments within the territory of the People's Republic of China.
The term "negotiable instrument" as used in this Law denotes "bill of exchange", "promissory note" and "cheque".
Article 3 Activities concerning instruments shall abide by the laws and administrative regulations and shall not harm public interests.
Article 4 When creating an instrument, the issuing party shall endorse it according to statutory conditions and bear liability for the instrument according to the items specified therein.
When exercising his rights with regard to an instrument, the bearer shall endorse the instrument and present it according to statutory procedures.
Other debtors endorsing the instrument shall bear liability for the instrument according to the items specified therein.
The instrument right as referred to in this Law denotes the right of the bearer to claim the specified amount in payment from the debtor including the right to claim for payment and the right of recourse.
Liability for negotiable instruments as referred to in this Law denotes the obligation of the debtor to pay the sum specified in the instrument to the bearer.
Article 5 A party to an instrument may authorize an agent to endorse the instrument but must specify the principal-agent relationship on the instrument.
A person without power of agency who endorses an instrument in the capacity of agent shall bear liability for the instrument; an agent who goes beyond the limits of his power of agency shall undertake liability for the part of the instrument overstepping the limits of his powers.
Article 6 The endorsement of an instrument by a person with no capacity for civil conduct or with limited capacity for civil conduct is invalid, but this does not influence the validity of other endorsements of the instrument.
Article 7 The endorsement of an instrument shall be by signature, seal or both signature and seal.
The endorsement of an instrument by a legal person or other organization which makes use of instruments shall be the official seal of the legal person or organization accompanied by the endorsement of its legal representative or its authorized agent.
The signature on an instrument must be the name of the party concerned.
Article 8 The sum of money on an instrument shall be specified in both Chinese characters and Arabic numerals; the two figures must be the same, if the two figures are not the same, the instrument shall be null and void.
Article 9 Items specified in an instrument must conform to the provisions of this Law.
The sum, date and payee recorded in an instrument must not be altered. Instruments which have been altered are invalid.
Other items in an instrument may be altered by the person who originally wrote them, as proof alterations must be endorsed by the aforementioned.
Article 10 The issue, acquisition and transfer of an instrument shall be made in good faith and shall constitute a real transaction and reflect the credit-debit relationship.
An instrument can only be acquired in consideration of payment, the corresponding value of which must be agreed by the two parties to the instrument.
Article 11 Acquisition of an instrument through taxation, inheritance or legacy which may be realized in accordance with law without payment, shall not be subject to being in consideration of payment. However, the bearers' rights on the instrument shall not exceed those of prior parties.
Prior parties refers to other debtors of an instrument who endorsed it prior to its endorsement by a specific signatory or bearer.
Article 12 In cases where an instrument was acquired through fraudulence, theft or coercion, or in cases where the bearer acquired an instrument through malice while he knew well that the aforementioned circumstances existed, the bearer shall not enjoy the instrument right.
In cases where the bearer through gross negligence acquires an instrument which does not comply with the provisions of this Law, then the bearer shall not enjoy the instrument right.
Article 13 A debtor of an instrument shall not oppose the bearer on the basis of a dispute between the issuer and the debtor himself or between the any prior parties to the bearer and the debtor himself. However the exception is in cases where the bearer acquired the instrument with the foreknowledge that such opposition existed.
A debtor of an instrument may oppose a bearer who had a direct credit-debit relationship with him and did not perform the stipulated obligation.
Opposition as referred to in this Law denotes the act whereby the debtor of an instrument refuses to carry out his obligations to the creditor in accordance with the provisions of this Law.
Article 14 Items specified in an instrument must be genuine and cannot be forged or altered. Those who forge or alter the endorsement or other items in an instrument shall bear legal responsibility.
Endorsements on an instrument which have been forged or altered shall have no impact on the other genuine endorsements thereon.
Where other items in the instrument have been altered, persons who endorsed the instrument before it was altered shall be liable for the items originally specified in the instrument, persons who signed after it was altered shall be liable for the items specified after the instrument was altered. In cases where it cannot be determined whether the instrument was endorsed before or after it was altered, it shall be treated as an instrument which was endorsed before being altered.
Article 15 Where an instrument has been lost, the person who has lost the instrument may promptly notify the payer of the instrument to suspend payment, except in cases where the payer is not specified in the instrument or when the payer or his agent cannot be identified.
The payer shall temporarily cancel payment when he receives notification of the loss of the instrument.
The person losing the instrument shall in accordance with the law apply to the people's court for the publication of a public notice asserting his claim or he can bring an action in the people's court within three days of notifying the payee to suspend payment or after the loss of the instrument.
Article 16 The procedure by which the bearer of the instrument exercises his rights or preserves his rights against the debtor shall be carried out in the business premises of the party concerned during business hours or at their place of residence if no business premises exist.
Article 17 Rights to an instrument shall cease to be valid if not exercised within the following time limits:
1. The rights of the bearer of the instrument over the issuer and the acceptor of the instrument cease to be valid two years after the date of maturity of the instrument. Bills or notes payable on sight become invalid two years after the date of issue;
2. The rights of the bearer of a cheque over the issuer cease to be valid six months after the date of issue;
3. The bearer's right of recourse over prior parties ceases to be valid six months after the date of non-acceptance or non-payment;
4. The bearer's right of re-recourse over prior parties ceases to be valid three months after the date of settlement or the commencement of a lawsuit.
The date of issue and the date of maturity of an instrument shall be set in accordance with the law by the parties to the instrument.
Article 18 A bearer who has lost his rights on instrument because of the expiration of his rights or because the items recorded in the instrument are not comprehensive may still enjoy civil rights, and may request that the payer or the acceptor refunds the amount equivalent to that part of the instrument not yet paid.
Chapter II Bills of Exchange
Section 1 Issue
Article 19 A bill of exchange is an instrument signed by the issuer, authorizing the payer to unconditionally pay a certain sum of money to the payee or the bearer when the bill is presented or at a specified time.
Bills can be classified into bankers' bills and commercial bills.
Article 20 Issue refers to the act of the issuer signing and issuing the instrument and delivering it to the payee.
Article 21 The issuer of the bill must have an authentic relationship with the payer authorizing payment and must possess reliable funds with which to pay the sum in the bill.
Bills without consideration shall not be signed or issued to defraud money from banks or other parties of an instrument.
Article 22 A bill must specify the following items:
1.
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