Ordinance No. 17/1999/PL-UBTVQH10 on Promissory Notes

ORDINANCE

Bill of Exchange

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To promote production and business activities, facilitate trade circulation; expand banking credit activities, create additional payment tools for the economy; ensure convenient and effective implementation of national monetary policy; protect the interests of the State; rights and legitimate interests of organizations and individuals participating in bill of exchange relations;

Pursuant to Article 91 of the Constitution of the Socialist Republic of Vietnam in 1992;

Pursuant to the Commercial Law;

Pursuant to the Law on the State Bank of Vietnam and the Law on Credit Institutions;

This Ordinance stipulates on bills of exchange.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Ordinance regulates bill of exchange relations arising from commercial activities related to banking credit operations in the issuance, acceptance, transfer, guarantee, payment, recovery, litigation, and pledge of bills of exchange within the Socialist Republic of Vietnam.

Article 2. Subjects entitled to issue

The drawer and issuer specified in this Ordinance must be enterprises, including state-owned enterprises, limited liability companies, joint-stock companies, partnerships, private enterprises, foreign-invested enterprises, enterprises of political organizations, socio-political organizations, and cooperatives.

Credit institutions are not drawers or issuers.

Article 3. Explanation of Terms

In this Ordinance, the following terms shall be understood as follows:

1. "Bill of Exchange" is a negotiable instrument recording an unconditional order to pay or an unconditional promise to pay a certain amount of money at a specified time. A bill of exchange includes a promissory note and a draft.

2. "Promissory Note" is a negotiable instrument issued by the drawer, ordering the drawee to unconditionally pay a certain amount of money upon demand or at a future specified date for the benefit of the beneficiary.

3. "Draft" is a negotiable instrument issued by the issuer, promising to unconditionally pay a certain amount of money upon demand or at a future specified date for the benefit of the beneficiary.

4. "Drawer" is the person who issues and signs the promissory note.

5. "Drawee" is the person responsible for paying the amount stated on the promissory note.

6. "Beneficiary" is the person named on the bill of exchange and entitled to receive the amount stated on the bill of exchange or any other person who has transferred the bill of exchange in accordance with the provisions of this Ordinance.

7. "Issuer" is the person who issues and signs the draft.

8. "Related Party" includes the drawer, drawee, issuer, transferee, pledgee, and guarantor.

9. "Issuance" is the act of issuing, signing, and transferring the first bill of exchange from the drawer or issuer to the beneficiary.

10. "Transfer" is the act of the beneficiary transferring the bill of exchange to the transferee in exchange for money or to settle a debt.

11. "Acceptance" is the commitment of the drawee to pay part or all of the amount stated on the promissory note upon maturity through signing acceptance on the promissory note in accordance with the provisions of this Ordinance.

12. "Signature" is the handwritten signature of the person authorized to sign the bill of exchange accompanied by a stamp, if applicable.

13. "Bill of Exchange Relations" are relationships between the beneficiary and related parties and among related parties in the issuance, acceptance, transfer, guarantee, payment, recovery, litigation, and pledge of bills of exchange.

14. "Foreign Element Bill of Exchange Relations" are bill of exchange relations involving foreigners or foreign legal entities participating as drawers, drawees, issuers, transferees, recipients, guarantors, or beneficiaries.

Article 4. Application of international treaties and international trade customs in foreign commercial bills transactions

1. In cases where an international treaty to which the Socialist Republic of Vietnam is a party provides differently from this Ordinance, the parties involved in the commercial bill relationship shall apply the provisions of that international treaty.

2. International trade customs may be applied to foreign-related commercial bill relationships if such customs do not contravene Vietnamese law.

3. Where a commercial bill is issued in Vietnam but accepted, transferred, guaranteed, or paid in another country, the bill must be drawn up and issued according to the provisions of this Ordinance.

4. Where a commercial bill is issued in another country but accepted, transferred, guaranteed, or paid in Vietnam, the rights and obligations of the parties related to the bill shall be governed as follows:

a) The validity of acceptance, transfer, and guarantee of the bill shall be determined according to Vietnamese law;

b) The due date for payment of the bill shall be determined according to Vietnamese law;

c) The rights and obligations of the beneficiary related to presenting drafts for acceptance or recourse due to non-acceptance or non-payment of the bill shall be determined according to Vietnamese law.

Article 5. Determination of the term of the commercial bill

1. The payment term of the commercial bill, the recourse period, and the statute of limitations for litigation arising from commercial bill relationships include holidays and weekends; if the last day of the term falls on a holiday or weekend, it shall be extended to the next working day.

2. The payment term of the commercial bill under this Ordinance is short-term, except in special cases prescribed by the State Bank of Vietnam. The specific payment term of the commercial bill is determined by the beneficiary and the drawer or issuer.

Article 6. Payment amount on the commercial bill

1. The payment amount on the commercial bill must be written in figures and in words. The amount written in words must match the amount written in figures. If there is a discrepancy between the amount written in figures and the amount written in words, the smaller amount shall prevail.

2. The payment amount on the commercial bill must be denominated in Vietnamese dong, except when payable in foreign currency as provided by laws on foreign exchange management. If the commercial bill is payable in foreign currency contrary to the laws on foreign exchange management, the amount on the bill shall be paid in Vietnamese dong at the exchange rate published by the State Bank of Vietnam at the time of payment.

Article 7. Form of the commercial bill, language on the commercial bill

1. The commercial bill must be drawn up on a pre-printed form of the State Bank of Vietnam. The commercial bill must be drawn up in Vietnamese. In cases involving foreign elements, the commercial bill must be drawn up in both Vietnamese and English.

2. The use of electronic information forms in commercial bill relationships shall be carried out in accordance with regulations of the Government.

Article 8. Loss of Promissory Note

1. When a promissory note is lost or damaged, the beneficiary must immediately notify the drawee, drawer, or issuer. The beneficiary must clearly inform which situation led to the loss of the promissory note or the cause of its damage, and bear responsibility for the truthfulness of such notification.

2. The beneficiary has the right to request the drawer or issuer to issue an additional copy of the promissory note as a replacement after notifying about the loss or damage of the promissory note.

3. Once the beneficiary has notified about the loss or damage of the promissory note according to Clause 1 of this Article, that promissory note shall be void.

Article 9. State Management Content on Promissory Notes

The state management content on promissory notes includes:

1. Issuing and organizing the implementation of legal documents on promissory notes;

2. Propagating and disseminating laws on promissory notes;

3. Supervising, inspecting, auditing, and handling violations of laws on promissory notes;

4. Organizing printing, providing, and preserving samples of promissory notes;

5. Signing and participating in international agreements on promissory notes.

Article 10. State Management Agencies on Promissory Notes

1. The Government uniformly manages state affairs concerning promissory notes.

2. The State Bank of Vietnam is responsible before the Government for implementing state management over promissory notes.

3. Ministries, ministerial-level agencies, and government agencies within their respective tasks and authorities have the responsibility to manage state affairs concerning promissory notes according to the division of labor by the Government.

4. Provincial People's Committees and municipal people's committees under the central government within their respective tasks and authorities have the responsibility to manage state affairs concerning promissory notes at the local level according to the delegation by the Government.

Chapter II

TYPES OF PROMISSORY NOTES

Section 1: BILL OF EXCHANGE

Article 11. Contents of Bill of Exchange

1. A bill of exchange must contain all of the following contents:

a) The term "Bill of Exchange" must be recorded on the front of the bill of exchange;

b) An unconditional order to pay a certain amount of money;

c) The payment due date of the bill of exchange;

d) The place of payment of the bill of exchange;

đ) The name and address of the drawee;

e) The name and address of the beneficiary;

g) The place and date of issuance;

h) The name, address, and signature of the drawer.

2. A bill of exchange lacking any of the contents specified in Clause 1 of this Article shall be invalid.

3. In cases where there is not enough space to write on the bill of exchange, it may have an attached supplementary sheet according to the regulations of the Government.

Article 12. Obligations of the Drawer

The drawer bears legal responsibility for issuing the bill of exchange and has the obligation to pay the amount stated on the bill of exchange if the drawee refuses to accept part or all of the amount on the bill of exchange when the bill of exchange is presented for acceptance within the due date.

Article 13. Presentation for Acceptance

1. Until the payment due date, the beneficiary may present the bill of exchange to the drawee for acceptance. The drawee shall perform the acceptance immediately upon presentation of the bill of exchange. The bill of exchange is considered refused acceptance if it is not signed for acceptance by the drawee immediately upon presentation.

2. The beneficiary must present the bill of exchange to the drawee for acceptance before transferring it or in cases where the bill of exchange is paid after the specified time period, from the day the bill of exchange is accepted.

Article 14. Form of Acceptance

1. The acceptance must be evidenced by the drawee recording on the bill of exchange the term "acceptance", the amount recorded on the bill, the date of acceptance, and their signature.

2. In the case of accepting only part of the amount recorded on the bill of exchange, the drawee must clearly record the term "acceptance", the accepted amount, the date of acceptance, and their signature.

Article 15. Commitment to Acceptance

1. The acceptance by the drawee is unconditional.

2. Upon maturity for payment, the acceptor has the obligation to pay the amount accepted as recorded on the bill of exchange.

Article 16. Obligations of the Acceptor

By accepting a bill of exchange, the acceptor shall have the following obligations:

1. To commit to paying the bill according to the contents accepted;

2. To recognize the existence of the drawer and the timely payment of the bill by the drawer to the beneficiary who has transferred the bill in accordance with the provisions of Chapter IV of this Ordinance.

Section 2:

ORDER BILL

Article 17. Contents of Order Bill

1. An order bill must contain all of the following contents:

a) The term "Order Bill" recorded on the front of the order bill;

b) An unconditional commitment to pay a certain amount;

c) The due date for payment of the order bill;

d) The place of payment of the order bill;

đ) The name and address of the payee;

e) The place and date of issuance;

g) The name, address, and signature of the issuer.

2. An order bill lacking any of the contents specified in Clause 1 of this Article shall not be valid.

3. In the case where there is insufficient space on the order bill for writing, it may have an additional attached sheet as prescribed by the Government.

Article 18. Obligations of the Issuer

The issuer of an order bill has the obligation to pay the order bill to the payee upon maturity.

Chapter III

GUARANTEE AND PLEDGE OF TRADE BILLS

Section 1: GUARANTEE OF TRADE BILLS

Article 19. Guarantee of Trade Bills

A guarantee of trade bills is the undertaking by a third party, hereinafter referred to as the guarantor, to pay the full or partial amount recorded on the trade bill if, at maturity for payment, the guaranteed party including the drawee, the issuer, or the transferee does not pay or pays inadequately the amount recorded on the trade bill.

Article 20. Forms of Guarantee

1. The guarantee of trade bills is carried out by the guarantor in one of the following forms:

a) The guarantee commitment is recorded on the trade bill;

b) The guarantee commitment is established in a separate document attached to the trade bill.

2. The guarantee commitment must be recorded on the trade bill or in a separate document by the guarantor stating "guarantee", the committed amount, the guarantor's name, address, signature, and the name of the guaranteed party.

Article 21. Rights and Obligations of the Guarantor

1. The guarantor has the obligation to pay the trade bill for the committed amount if the guaranteed party fails to fulfill their payment obligation upon maturity. The guarantee cannot be revoked except in cases where the trade bill violates the form requirements.

2. After fulfilling the guarantee obligation, the guarantor has the right to request the guaranteed party, the drawer, the acceptor, if any, to jointly fulfill the obligation to repay the amount of the guarantee already paid.

3. The guarantee of trade bills is implemented in accordance with the provisions of this Section, other provisions of the Civil Code, and related laws.

Section 2: PLEDGING OF TRADE ACCEPTANCES

Article 22. Right to Pledge Trade Acceptances

The beneficiary has the right to pledge trade acceptances in accordance with the provisions of this Section, other provisions of the Civil Code, and related laws.

Article 23. Transfer of Trade Acceptances for Pledge

The pledgor must record the phrase "transferred for pledge," the name and address of the pledgor, sign on the trade acceptance, and transfer the trade acceptance to the pledgee.

Article 24. Disposal of Pledged Trade Acceptances

When the pledgor fulfills all obligations guaranteed fully and on time, the pledgee must return the trade acceptance to the pledgor and record on the back of the trade acceptance the phrase "pledge terminated." In case the pledgor fails to fulfill all obligations guaranteed fully and on time, the pledgee becomes the beneficiary of the trade acceptance and is entitled to payment according to the guaranteed obligations.

Article 25. Notarization

The pledge document of trade acceptances does not require certification by a State Notary or authentication by the People's Committee at the appropriate level.

Chapter IV

TRANSFER OF TRADE ACCEPTANCES AND RIGHTS OF THE BENEFICIARY

Article 26. Transfer

1. The draft can be transferred between enterprises;

2. A trade acceptance is transferred when the beneficiary signs on the back of the trade acceptance and transfers it to the transferee. From the moment the transfer of the trade acceptance is completed, the transferee becomes the beneficiary of the trade acceptance.

3. A trade acceptance may not be transferred if the phrase "non-transferable" is recorded on the trade acceptance.

4. A trade acceptance may be discounted or rediscounted in accordance with the regulations of the State Bank of Vietnam.

Article 27. Conditions for the Validity of Transfer

1. The transfer of a trade acceptance is valid when the following conditions are met:

a) The entire amount stated on the trade acceptance is transferred. The partial transfer of the amount stated on the trade acceptance is invalid;

b) The transferor may not add any condition other than the transfer content stipulated in Article 29 of this Ordinance on the trade acceptance;

c) It is accepted in full by the drawer for a bill of exchange.

2. An overdue trade acceptance may not be transferred.

Article 28. Restrictions on Transfer

1. The transferor shall be liable for the non-payment of a trade acceptance that has been transferred, except in the cases provided for in Clause 2 of this Article.

2. The transferor may prevent further transfer of the trade acceptance by recording the phrase "non-transferable" on the trade acceptance. In this case, the transferor shall not be liable for further transfer of the trade acceptance.

Article 29. Form of Endorsement for Transfer

The endorsement for transfer must be recorded on the back of the trade acceptance or on an attached slip and must include the full name, address of the transferee, date of transfer, and signature of the transferor.

Article 30. Beneficiary

The beneficiary is deemed legitimate when the following conditions are met:

1. The trade acceptance has not exceeded its payment due date and there is no notice of prior rejection of the trade acceptance, if any;

2. Holding the trade acceptance is lawful;

3. There is no notice of any restriction on the rights of the previous transferee beneficiary.

Article 31. Rights of the Beneficiary

1. The beneficiary holds the bill of exchange without being affected by any restrictions on the rights of previous parties.

2. The beneficiary has the following rights:

a) To demand payment of the bill of exchange from the relevant parties when it becomes due;

b) To transfer the bill of exchange in accordance with the provisions of this Chapter;

c) To pledge the bill of exchange;

d) To claim and initiate litigation regarding the bill of exchange.

3. A person who pays the bill of exchange to the beneficiary as stipulated in Article 30 of this Ordinance upon maturity shall be deemed to have fulfilled their payment obligation.

4. The subsequent beneficiary of the bill of exchange shall have the rights specified in Clause 1 and Clause 2 of this Article.

Article 32. Foreign Beneficiary

A bill of exchange issued or transferred to a foreign beneficiary who does not reside in Vietnam or a foreign legal entity not permitted to operate in Vietnam must obtain prior approval from the State Bank of Vietnam.

Chapter V

PAYMENT OF THE BILL OF EXCHANGE

Article 33. Determination of Payment Term

1. The drawer or issuer of the bill of exchange shall determine the payment term according to one of the following terms:

a) On presentation;

b) After a certain period from the date of acceptance;

c) After a certain period from the date of issuance;

d) On a specific date.

2. A bill of exchange bearing multiple payment terms or a term different from those specified in Clause 1 of this Article shall be invalid.

Article 34. Presentation for Payment

1. The bill of exchange shall be presented for payment in accordance with the following provisions:

a) The presentation must be made at the place indicated on the bill of exchange and on the due date of the bill of exchange or within two days thereafter;

b) A bill of exchange with a payment term as specified in point a, Clause 1 of Article 33 of this Ordinance must be presented for payment within ninety days from the date of issuance.

2. The beneficiary may present the bill of exchange for payment later than the date indicated on the bill of exchange if the delay is due to objective obstacles beyond the control of the beneficiary and not due to the beneficiary's fault. The duration of such objective obstacles shall not be counted towards the payment term.

3. When the bill of exchange has been fully paid, the beneficiary must hand over the bill of exchange and any attached slip, if any, to the payer.

Article 35. Completion of Bill of Exchange Payment

The payment of the bill of exchange shall be deemed completed in the following cases:

1. The drawer, drawee, or issuer pays the bill of exchange to the beneficiary on time;

2. The acceptor becomes the beneficiary of the bill of exchange on the due date or thereafter;

3. The issuer becomes the beneficiary of the bill of exchange on the due date or thereafter;

4. The beneficiary cancels the bill of exchange.

Article 36. Early Payment

If the drawee or issuer pays the bill of exchange before its due date at the request of the beneficiary, they shall bear all losses arising from the early payment.

Article 37. Collection through Bank

1. The beneficiary may transfer the bill to a bank for collection of the amount stated on the bill. This collection must be noted on the bill with the phrase "transfer for collection," the name of the collecting bank, and the date of the transfer for collection.

2. The collecting bank is entitled to charge fees as prescribed by the State Bank of Vietnam. The collecting bank must present the bill for payment to the drawee as stipulated in Article 34 of this Ordinance; if the collecting bank fails to present the bill for payment leading to non-payment of the bill, the bank shall pay the bill to the beneficiary.

3. The State Bank of Vietnam shall specify the procedures for bill collection through banks.

Chapter VI

CLAIMS AND SUITS REGARDING BILLS

Section 1: CLAIMS DUE TO NON-ACCEPTANCE OR NON-PAYMENT OF THE BILL

Article 38. Right to Claim

The payee has the right to claim against the following parties:

1. The drawer, guarantor in the case of a draft being refused acceptance in part or in full as provided for in Clause 1, Article 13 of this Ordinance;

2. The issuer or the endorser, the guarantor when the trade acceptance reaches its maturity date but is not paid according to the content of the trade acceptance;

3. The drawer, endorser, guarantor in the case where the drawee is declared bankrupt or dissolved, including drafts that have been accepted or not yet accepted;

4. The drawer, endorser, guarantor in the case where the drawer is declared bankrupt or dissolved, if the draft has not been accepted;

5. The issuer, endorser, guarantor in the case where the issuer is declared bankrupt or dissolved.

Article 39. Notice of Refusal

In the event that the bill is refused acceptance or payment, the beneficiary must notify in writing the drawer and endorser about such refusal.

Article 40. Time Limit for Notice

1. The beneficiary must notify about the refusal of acceptance or payment of the bill within four days from the date of refusal.

2. Within two days from the date of receipt of the notice, each endorser must notify in writing the previous endorser about the refusal of the bill, accompanied by the name and address of the person who notified previously. This notification shall continue until the drawer or issuer receives notice of the refusal of acceptance or payment of the bill.

3. During the time limit for notice specified in Clauses 1 and 2 of this Article, if there occurs an objective obstacle beyond the control of the notifier and not due to their fault, the period during which the objective obstacle occurs shall not be counted towards the time limit for notice.

Article 41. Liability of Related Parties

1. The drawer, issuer, endorser shall be liable to the beneficiary for the entire amount stated on the bill.

2. The drawee of a draft, guarantor of a bill shall be liable to the beneficiary for the amount they have committed to accept or guarantee.

3. The related parties shall jointly and severally be liable to the beneficiary as provided for in Clauses 1 and 2 of this Article.

Article 42. Acceptance of Recourse

The transferor, drawer, or issuer who receives notice that the bill of exchange has been dishonored for acceptance or payment shall be responsible to respond in writing to the beneficiary. A transferor who has paid the beneficiary may pursue recourse against the drawer or issuer.

Article 43. Amounts Payable

The beneficiary has the right to demand payment of the following amounts:

1. The amount not accepted or not paid;

2. Collection costs and other reasonable expenses related thereto, if any;

3. Interest on the overdue amount from the due date of the bill of exchange at the default interest rate prescribed by the State Bank of Vietnam.

Section 2: LAWSUIT REGARDING BILLS OF EXCHANGE

Article 44. Right to Sue

1. After ten days from the date of sending notice of dishonor for acceptance or payment, if the full amount is not received, the beneficiary has the right to sue the relevant parties before the court, except for the pledgee. The lawsuit file must include the complaint and the dishonored bill of exchange.

2. If the beneficiary does not present the bill of exchange for payment within the time limit stipulated in Article 34 of this Ordinance or does not send notice of dishonor for acceptance or payment within the time limit stipulated in Article 40 of this Ordinance, they lose the right to sue the relevant parties, except for the drawer, issuer, and acceptor.

3. Suing one party does not prevent suing another party.

Article 45. Right to Sue of Relevant Parties

The relevant party being sued under Clause 1 of Article 44 of this Ordinance has the right to sue the transferor who transferred to them, the drawer, issuer, or guarantor for the amount specified in Article 43 of this Ordinance, from the date of completing the obligation to pay the bill of exchange.

Article 46. Jurisdiction of the Court

1. Courts at all levels have jurisdiction to resolve disputes related to bill of exchange relationships.

2. Procedures for resolving disputes regarding bills of exchange are carried out in accordance with the provisions of the law on procedures for economic cases.

Article 47. Statute of Limitations for Suit

1. The beneficiary has the right to sue the drawer, issuer, guarantor, transferor, or acceptor for the amount specified in Article 43 of this Ordinance within two years from the date of dishonor for acceptance or non-payment or insufficient payment.

2. The relevant party being sued under Clause 1 of Article 44 of this Ordinance has the right to sue the drawer, issuer, transferor who transferred to them, guarantor, or acceptor for the amount specified in Article 43 of this Ordinance within two years from the date of completing the obligation to pay.

3. In case the beneficiary does not present the bill of exchange for payment within the time limit stipulated in Article 34 of this Ordinance or does not send notice of dishonor for acceptance or payment within the time limit stipulated in Article 40 of this Ordinance, they only have the right to sue the acceptor, issuer, or drawer within two years from the date of issuance of the bill of exchange.

4. Within the statute of limitations stipulated in Clauses 1, 2, and 3 of this Article, if there is an objective obstacle outside the control of the plaintiff and not due to their fault, the period during which the objective obstacle occurs will not be counted towards the statute of limitations.

Chapter VII

HANDLING VIOLATIONS

Article 48. Handling Violations

Any person violating the provisions of this Ordinance shall be subject to administrative penalties or criminal liability depending on the nature and degree of violation; if causing damage, they must compensate according to the provisions of the law.

Chapter VIII

IMPLEMENTING PROVISIONS

Article 49. Effectiveness of the Ordinance

This Ordinance takes effect from July 1, 2000.

Article 50. Implementation Guidance of the Ordinance.

The Government shall provide detailed regulations and guidance for the implementation of this Ordinance.