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Limitation of liability on a bill of exchange

Financial Law

Antonio Flores Vila

10th of October 1999

Q. Can the drawer of a bill of exchange in Spain limit his liability with regards to payment, similarly to the British system?

Anonymous

    A. Interesting question. I am aware that the UK Bills of Exchage Act 1882, the drawer may limit his liability on the bill. Otherwise, he will be ultimately liable if drawee dishonours, being obliged to compensate holder or any indorser compelled to pay.

    In the Civil system, inclusive of Spain, the drawer cannot limit his liability. In fact, he is jointly liable together with acceptor or drawee and indorsers.

    In the UK, the drawee is primarily liable to payment, the indorser is secondly liable and the drawer is ultimately liable to payment upon dishonour. Notwithstanding this, the Drawer and Indorser may sign without recourse, as opposed to the Spanish system, where only indorser may sign without recourse.

    The United Nations Convenntion on International on International Bills of Exchange and International Promissory Notes , 1988 (UNCITRAL Convention) stipulates that the drawer may exclude his own liabilty for acceptance or for payment by an express stipulation in the Bill. Such stipulation will only be effective where another party is or becomes liable on the bill.




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