Credit titles
INTRODUCTION
Credit titles are a species within the genre of documents, so it can be said that every credit title is a document, but not every document is a credit title. In credit titles, the document is a necessary and sufficient condition to attribute the right. The doctrine knows with the name of incorporation, the relationship existing in the credits between the law and the document. The right consigned in the title is autonomous, which means that each of the holders of the document has their own right, independent of the previous holders. Credit titles are intended to circulate, so this must be an element of utmost importance.
The credit operations that this law regulates are acts of commerce.
Credit titles are mercantile things. Their issuance, issuance, endorsement, endorsement or acceptance and the other operations that are consigned in them, are acts of commerce. The rights and obligations derived from the acts or contracts that have given rise to the issuance or transmission of credit titles, or have been practiced with them, are governed by the rules listed in article 2, when they cannot be exercised or complied with. separately from the title, and by the law that corresponds to the civil or commercial nature of such acts or contracts, in other cases.
The acts and operations referred to in the previous article are governed:
I.- By the provisions of the Commercial Code, and other special relative laws; failing that.
II.- By general commercial legislation, failing that.
III.- For banking and commercial uses and, failing these.
IV.- By common law, declaring itself applicable throughout the republic, for the purposes of this law, the civil code of the federal district.
PRINCIPLES COMMON TO CREDIT SECURITIES (characteristics)
There are several elements that make up the concept of credit titles:
1. Credit titles are documents
2. It is the necessary document to exercise the right.
3. The right consigned in the credit title is literal, a right that is defined by what is written in the document.
4. In the credit titles the document is a necessary and sufficient condition to attribute the right. The German authors have used the term incorporated, to explain the characteristic element of the credit instruments that we have already seen when saying that the credit instrument is the necessary document. This word "incorporation", arises the intimate relationship that exists between the title and the right.
5. If the title is the necessary document, and as a consequence of the incorporation, it follows that the co-published title is a means of legitimation. The holder of a title must legally hold it.
6. Another element is considered that of autonomy.
7. Abstraction, means that the obligation of the title from the beginning, is not directed to a specific person, but to any holder, in order to facilitate the circulation of the document.
8. Intimately related to the previous element is that of the circulation to which we refer when interpreting the opposite sensu.
For the documents to be considered credit titles, they must have the following characteristics:
LITERALITY: This characteristic refers to the fact that the right that the document represents must be exercised by the beneficiary as it is written in the title, literally, and consequently the obligor must comply with the terms written in the document.
AUTONOMY: It should be understood by autonomy that the right will be exercised regardless of any condition that tries to modify or limit it, in such a way that the obligated party must fulfill his obligation without presenting conditions to do so.
INCORPORATION: It means that the right that the document represents is incorporated into it, that is, closely linked to the title, without the right separate from the document, in such a way that in order to exercise the right, it is necessary to be in possession of the Title.
CIRCULATION: This characteristic of credit instruments is the easiest to understand, as it consists in the fact that this class of documents circulate, being transmitted from one person to another through the endorsement or by means of the material delivery of the document only if it is a "bearer ”.
THE CREDIT SECURITIES CONSIDERED UNDER 3 ASPECTS
AS ACTS OF TRADE: The issuance, issuance, endorsement, endorsement or acceptance of titles of credit, and the other operations that are consigned in them, are acts of commerce.
Considering acts of trade, checks, bills of exchange, securities and other titles to the order or to the bearer. In these cases, the commercial classification of the act is strictly objective, regardless of the character of the person who performs it. Thus, such an act of commerce will be the issuance of a check, if it is made by a merchant, as if it is made by someone who does not have that character.
AS COMMERCIAL THINGS: The titles of credit are commercial things.
AS DOCUMENTS: The law and the doctrine consider that the credits are documents, but they are of a special nature. There are evidential, constitutive documents (which are indispensable for the birth of the right.), Necessary documents (to exercise the right that they contain).
The representation to grant or subscribe credit titles is conferred:
I.- By power of attorney duly registered in the commercial register.
II.- By simple written declaration addressed to the third party with whom the representative will have to contract.
In the case of section I, the representation will be understood to be conferred with respect to any person and in that of section ii only with respect to the person to whom the written statement has been addressed.
In both cases, the representation will have no more limits than those expressly set by the represented party in the respective instrument or statement.
CLASSIFICATION OF CREDIT SECURITIES
Classification of Puente y Calvo Graduates, establish the following groups:
FOR THEIR CONTENT: Credit titles can be of three types depending on their content:
1. Titles that give the right to a sum of money.
2. Titles that give rights to various movable things of money.
3. Social titles (they attribute to their holder the quality of partner).
BY THE PERSON OF THE ISSUER: When the issuer of a credit title is a legal entity of Public Law, we speak of public debt securities. If the issuer is an individual or legal entity under Private Law, they are called private debt securities.
BY THE FORM OF THEIR ISSUANCE: They are classified into titles that are issued singularly and titles that are issued in series or mass.
1. Singular: Pagare, Bill of Exchange, Check.
2. Series: Shares, Obligations, Public Debt Bonds.
BY THE FORM OF THEIR CIRCULATION: The law classifies them from this point of view as:
1. Bearer Titles
2. Nominative titles
Actually the categories are three:
1. Bearer Titles.
2. Registered Titles (Non-Negotiable).
3. Titles to order
TITLES TO THE CARRIER
Bearer titles are those that are not issued in favor of a specific person, whether or not they contain the “bearer” clause. Bearer titles, it has been accurately stated, are anonymous titles. The credit titles may be, according to their form of circulation, nominative or bearer.
TRANSMISSION
The bearer title is the most suitable for circulation, its property is transmitted by the mere fact of its delivery, these are transmitted by simple tradition. The simple possession of the document is enough to legitimize the holder as the creditor of the right incorporated in the title. It is also pointed out that titles of this type are those that have the most similarity to money.
The law says that bearer titles can only be vindicated when their possession is lost due to theft or loss and they are only obliged to repay them or to return the sums received for their collection, or transmission, those who have found or stolen them and the people who have found them. acquire, knowing or having to know the vicious causes of the possession of the person who transferred them.
Bearer titles are passed on by simple tradition.
The subscription of a bearer title obliges whoever makes it or covers it to anyone who comes forward, even if the title has entered circulation against the will of the subscriber, or after their death or disability occurs.
Bearer titles that contain the obligation to pay some sum of money, may not be put into circulation except in the cases expressly established by law, and in contravention of the provisions of the law.
NOMINATIVE TITLES
Registered titles are issued in favor of a person whose name is recorded in the text of the same document. These titles are also called direct.
They are nominative if the name of the beneficiary is written.
Registered titles are those issued in favor of a person whose name is recorded in the text of the same document. In the case of registered titles that have coupons attached, they are considered to be registered coupons, when they are identified and linked by their number, series and other data with the corresponding title, the economic rights granted by the title to which they are attached.
CLASSIFICATION
NOMINATIVE TITLES TO THE ORDER: Also called Negotiable Securities. In these titles, the right can be exercised by the person in whose favor the title is issued or by the person who she orders by virtue of an endorsement.
NOMINATIVE SECURITIES NOT TO ORDER: Non-Negotiable Securities are also named. These titles are those that have the clauses “No to Order” or “Non-Negotiable” inserted in their text, and only the person designated in the document can exercise the right, if that person wants to transmit the title, they can only do so in the form and with the effects of an ordinary assignment. In the assignment, unlike the endorsement, the assignee is subject to the personal exceptions that the obligee could oppose to the assignor before the assignment.
REGISTER OR TRANSMISSION
1. Registered titles to the order are transmitted by endorsement.
2. Non-negotiable by assignment.
But in both cases the title itself needs to be delivered, since to exercise the right it is necessary to be in possession of the title.
There are cases in which, in addition to the delivery of the title and the endorsement or assignment, depending on the case, the title must be registered in a registry of the issuer. In these cases, the transmission of the title must be noted in the registry, since the issuer is not obliged to recognize as legitimate holder but who appears as such, both in the document and in the registry and no act on the title takes effect against the issuer or against third parties if it is not registered in the registry and in the title. In this case of the shares of corporations; its transfer must be registered in the register of shares of the company.
FORMS OF TRANSMISSION OF CREDIT SECURITIES
ENDORSEMENT
One of the characteristics of credit instruments is that they are intended to circulate. For a registered title or order to circulate it is necessary to endorse it so that it can be transmitted from one person to another.
The endorsement is the means of transmitting the registered titles or to the order.
It can be defined as the means of transmitting the titles to the order, who transmits the title is called the endorser, who acquires it as endorser.
Registered titles will be transferable by endorsement and delivery of the title itself, without prejudice to the fact that they may be transmitted by any other legal means.
The transmission of the nominative title by ordinary assignment or by any other legal means other than the endorsement, subrogates the acquirer in all the rights that the title confers; but it is subject to all the personal exceptions that the obligor could have opposed to the author of the transmission prior to this. The acquirer has the right to demand delivery of the title.
Credit titles can be transmitted by receipt of their value issued in the same document, or on a sheet attached to it, in favor of a person responsible for them, whose name must be stated on the receipt. Transmission by receipt produces the effects of an endorsement without liability.
Endorsements and receipt annotations on a credit title that are legitimately tested or canceled have no value whatsoever. The owner of a credit title can test endorsements and receipts after the acquisition; but never the ones before her
PEOPLE INVOLVED IN THE ENDORSEMENT
ENDORSER: It is the person who transmits the title to another person.
ENDORSEMENT: It is the person to whom the document is transmitted.
ENDORSEMENT CLASSES
PROPERTY ENDORSEMENT: The property endorsement is the most widely used and is the one that transmits the ownership of the title and all the rights that the document represents. As in all types of endorsement, the material delivery of the title or document is necessary for the operation to be completed.
ENDORSEMENT IN PROCUREMENT OR COLLECTION: The endorsement in Procurement or Collection contains the clauses "in procurement" or "to collection" and another equivalent. This kind of endorsement does not transfer ownership of the title, it only empowers the endorsee to present the document for acceptance, or to manage or process its collection extrajudicially or through the courts if necessary.
This type of endorsement is used when the beneficiary has not been able to collect a document, so he endorses it in proxy to the order of a licensee so that he can take charge of its extrajudicial collection or through the courts through a lawsuit against the debtor.
ENDORSEMENT IN GUARANTEE OR IN Pledge: The endorsement with the clauses "in guarantee", "in pledge" or other equivalent, does not transmit ownership of the title, it only attributes to the endorsee all the rights and obligations of a pledgee regarding the endorsed title and of all the rights represented by the same document.
DATA THAT THE ENDORSEMENT MUST CONTAIN
The following data will be those that an endorsement must contain, whatever the type of endorsement in question:
1. Name of the endorsee.
2. Class of endorsement.
3. Place and date of the endorsement.
4. Name and signature of the endorser or of the person who signs the endorsement in his name.
Of all the above data, the signature of the endorser is essential, because without it, the endorsement will have no validity, whatever the type of endorsement in question.
If the type of endorsement in question is not mentioned, it will be understood that the endorsement was made on property.
If in the endorsement the name of the endorsee is omitted, once the title is endorsed it remains "to the bearer", since by not mentioning the name of the new beneficiary, this may be the one who carries it.
The endorsement must be recorded in the title itself, generally on the back, or on a sheet that is attached to it.
BILL OF EXCHANGE
The bill of exchange is a title of credit that contains the unconditional order that a person called the drawer gives to another drawn call, to pay a sum of money to a third party called the beneficiary, at a specified time and place.
A bill of exchange drawn on one or more months, date or sight, expires on the day corresponding to its granting or presentation of the month in which the payment must be made, if this does not have a day corresponding to that of granting or presentation, the bill will expire on the last month.
The bill of exchange cannot be drawn on the order of the same drawer.
The drawer may indicate for payment the domicile or residence of a third party in the same place of the domiciled drawn, or in another place. If the bill does not contain an indication that the payment will be made by the drawee himself at the domicile or residence of the third party designated therein, it will be understood that the payment will be made by the latter, who in that case will have a simple domiciliary character.
FORM OF EXPEDITION.
At sight and then it must be paid upon presentation within the six months following its date.
At a certain time, in which case it expires after the days set as of its presentation (15 days later).
On a fixed day, bills of exchange whose maturity is not indicated in the document, those that have different maturities than the four listed, and those that expire subsequently, are understood to be payable on demand for the total amount they express.
LIABILITY OF THE TURNER.
The law establishes that the drawer is responsible for the acceptance and payment of the bill and any clause that exempts him from this responsibility is considered unwritten.
The bill of exchange can be drawn:
I.- At sight.
II.- At a certain time in view.
III.- At a certain time date.
IV.- A fixed day.
Bills of exchange with other types of maturities, or with successive maturities, will always be understood to be payable on demand for the total amount they express. The bill of exchange whose expiration date is not indicated in the document will also be considered payable on demand.
OF ACCEPTANCE.
Acceptance is the act by which the drawee agrees to pay the bill of exchange drawn at his expense, once the drawee accepts, takes the name of acceptor and becomes the principal obligated to pay the title.
When several places for acceptance are indicated in the bill, it will be understood that the holder can present it in any of them.
The bills payable at a certain time seen, must be presented for acceptance within the six months that follow their date. Any of the obligated parties may reduce this term, thus recording it in the bill, in the same way, the drawer may also extend it, and prohibit the presentation of the bill before the specified date.
The presentation of bills drawn on a fixed day or on a certain period of date will be optional, unless the drawer has made it compulsory with an indication of a specific period for the presentation, expressly stating that circumstance in the bill. The drawer can also prohibit the presentation before a certain time, consigning it.
Acceptance of a bill of exchange requires the acceptor to pay it at maturity, even when the drawee had gone bankrupt before acceptance.
ACCEPTANCE BY INTERVENTION
The bill of exchange not accepted by the drawee may be by intervention, after the respective protest.
The holder is obliged to accept the acceptance through the intervention of the persons referred to in article 92.
It is optional to admit or refuse the acceptance by the intervention of the drawee that I do not accept, of any other person bound by the same letter, or of a third party.
If the person who accepts by intervention does not designate the person in whose favor he does so, it will be understood that he intervenes for the drawer, even when the recommendation has been made by an endorser.
Acceptance by intervention extinguishes the exchange action for lack of acceptance, against the person in whose favor it is made, and against subsequent endorsers and their guarantors.
The acceptor by intervention is bound in favor of the holder, and of the signatories subsequent to the one for whom it intervenes.
The acceptor by intervention must give immediate notice of his intervention to the person for whom it was made.
USE OF THE LETTER OF EXCHANGE
The bill of exchange, although it is a payment order, in which three people intervene, as indicated in the definition, currently has a slightly different use than it was originally used, in such a way, which in today's commercial operations is used to guarantee the fulfillment of an obligation, that is, the payment of a loan.
REQUIREMENTS TO BE FILLED IN THE CHANGE LETTER
1. The mention of being a bill of exchange, inserted in the text of the document.
2. The expression of the place and the day, month and year, in which it is signed.
3. The unconditional order to the drawee to pay a specified sum of money.
4. The name and signature of the drawee.
5. The place and time or date of payment.
6. The name of the person to whom the payment is to be made, that is, the name of the beneficiary.
7. The name and signature of the drawer or of the person who subscribes to your request or on your behalf.
EXAMPLE OF LETTER OF EXCHANGE
PEOPLE WHO NOMINALLY INTERVENE IN THE BILL OF EXCHANGE
The three persons mentioned in the definition intervene, nominally, in the bill of exchange and they are:
THE GIRADOR: It is the person who turns or issues the document, giving the payment order that will have to be accepted by the drawee.
THE GIRADO: It is the one that is obliged to pay the sum of money when accepting, by means of its signature, the fulfillment of said obligation.
It is the subject with which the spinner maintains an underlying relationship, thus giving triangulation.
Its omission does not allow such triangulation to exist and the paper does not serve as a bill of exchange.
THE BENEFICIARY: It is the person who will receive the payment or whose order must be made in the event that the document is endorsed, that is, transferred to another person, who is the beneficiary, the only person who can endorse a document.
As already mentioned, it happens sometimes that only 2 people intervene in the bill of exchange; in this case, the drawer issues the document in his favor so that the acceptor or drawee can pay him. For this reason, we consider it convenient to clarify that nominally there are three, but in practice, in general there are only two people, of course, other than guarantor and endorser.
THE PAY
It is the delivery of money that the drawee makes to the legitimate holder against the delivery of the bill.
It can also be done by the endorsers in case the principal obligated (drawn) for one reason or another does not do so, since they also used the title.
It can be extrajudicial or voluntary and forced judicial.
OF THE PAYMENT FOR INTERVENTION
If the bill is not paid by the drawee, they can pay it by intervention, in the following order:
I.- the acceptor by intervention.
II.- the recommender.
III.- a third party.
The drawee that I do not accept as drawee can intervene as a third party, in preference to any other that intervenes as a third party.
The payment for intervention must be made in the act of the protest or within the following business day, and for it to have the effects provided for in this section, the notary, the broker or the political authority that raises the protest will record it in the minutes relating to this, or after it.
The person who pays for the intervention must indicate the person for whom it is done. In the absence of such an indication, it will be understood that he intervenes in favor of the acceptor and, if there is not, in favor of the drawer.
The holder is obliged to deliver to the controller the bill with proof of payment, and said controller will have an exchange action against the person for whom he paid, and against those obligated prior to this.
FORMS OF EXPIRATION APPLICABLE TO THE BILL OF EXCHANGE
The bill of exchange can be drawn by appearing as the expiration date any of the following forms:
AT SIGHT: When the bill of exchange is payable "at sight", this means that there is no term for its expiration, and therefore, it must be paid upon presentation. They are also considered payable "on demand", and for the total value that they represent as a whole, the bills with successive maturity when one of them has stopped being paid. Another case in which bills of exchange are considered payable "on demand" is when there is no indication in the document regarding their expiration date.
AT A CERTAIN TIME VIEW: If the bill of exchange is drawn "at a certain time seen", expressions such as the following will be noted in the place designated for the expiration date: "at ten days at sight", "at 30 days at sight", " a 60 days view ”or any other that indicates the agreed term. The foregoing means that the document must be paid after the specified days counted from the date of its presentation, and when the specified time has elapsed, payment must be made.
AT A CERTAIN TIME DATE: In the event that the bill of exchange is drawn "at a certain time date", the annotation must be made in the document for "30 days", "60 days", etc. it should be understood that these terms begin to be counted from the date the document is drawn.
A FIXED DAY: The most common way to draw a bill of exchange is with maturity "on a fixed day", in this case the exact date on which the document must be paid is determined, clearly noting the day, month and year of its expiration.
POWERS TO WORK ON BEHALF OF ANOTHER
The power to act in the name and on behalf of another does not include the power to oblige him exchange rate.
Administrators or managers of companies or commercial negotiations are deemed to be authorized to sign bills of exchange in their name, by virtue of their appointment. The limits of this authorization are those indicated by the respective statutes or powers.
If the drawer does not know or cannot write, another person will sign at his request, in witness of which a certified public broker, a notary or any other official who has public faith will also sign.
The drawer is responsible for the acceptance and payment of the bill; Any clause that exempts you from this responsibility will be deemed unwritten.
The ownership endorsement of a bill of exchange, obliges the endorser jointly and severally with the others responsible for the value of the bill.
The letter must be presented for acceptance in the place and address designated in it for this purpose. In the absence of indication of address or place, the presentation will be made at the domicile or residence of the drawee.
When several places for acceptance are indicated in the bill, it will be understood that the holder can present it in any of them
PROTEST
(FOR LACK OF PAYMENT OR LACK OF ACCEPTANCE)
A document must be "protested" for lack of acceptance or payment. A protest may be made due to lack of acceptance or payment of a bill of exchange or promissory note, a check may also be protested for non-payment.
Protesting a document consists of formulating a document called the Protest Act, in which it is stated that the title was presented for acceptance or payment without having been achieved.
The protest must be recorded in the same document or on an attached sheet; In addition, the notary, public broker or authority that practices it, will raise the corresponding Protest Act.
The protest is the solemn act that aims to authentically verify that the bill was presented on time and that the obligor stopped accepting or paying it in whole or in part.
In the event that the drawer does not accept the payment order contained in the bill, the beneficiary must raise the protest, and this does both for lack of acceptance and payment, and is done in order not to lose the return action and not direct, because it does not expire for lack of protest.
REQUIREMENTS OF THE PROTEST ACT
1. The literal reproduction of the document that is protested, with its acceptance, endorsement, guarantees and when it appears in it.
2. The mention that the document was presented to the obligor in a timely manner, stating whether or not who should have accepted or paid for it was present or not.
3. The reasons why the obligated party refused to accept or pay for the document.
4. The signature of the person who has been notified of the protest or with whom the diligence has been carried out. In the event that the person refuses to sign or is unable to do so, this circumstance must also be noted.
5. The annotation of the place, date and time in which the protest was made, as well as the signature of the person authorizing the diligence.
PROTEST PROVISIONS
1. The notary, public broker or authority that has made the protest, will keep the document in his possession all the day of the protest and the next, having the drawee, during all that time, the right to appear to make the payment of the document more late interest and diligence expenses.
2. The protest must be made at the domicile of the person against whom it is made and if it is not known, it shall be made at the domicile chosen by the official in charge of carrying out the diligence.
3. All the provisions that have been mentioned regarding the protest are applicable to the bill of exchange, the promissory note and the check.
DEADLINES TO PROTEST A DOCUMENT
The protest for lack of acceptance must be made within two business days following the date of its presentation, which must be done before the expiration date.
The protest for non-payment must be made within the business days following the expiration date.
In the case of documents at sight, the protest can only be made for lack of payment and never for lack of acceptance. In this case, the protest must be made on the day the document was presented or within the following two business days.
The protest must be made before the person who has not accepted or paid for the document and if they are not present, their employees, servants, family members or a neighbor will be notified of the protest.
PROTEST ACT AND PROTEST NOTICE
As has been said, the protest of a document can only be practiced through the intervention of a Notary Public or a Public Broker, or, before the Authority of the Place.
The official who performs the diligence must draw up a record of what happened and keep the protested title in his possession during the day on which the protest was made and the next. During this time, the obligor can go to the official's domicile to pay the value of the document plus the default interest and the expenses of the protest.
The Notary or Broker will send notices to the persons obliged in the document, notifying them that the title has been protested and that it will be delivered to the beneficiary so that they can proceed to collect it judicially.
It should be remembered that the protest is an act of utmost importance, since if the bill of exchange is not protested or I will pay for non-payment, the exchange action against the drawer and the endorsers cannot be exercised.
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