Savitri Era of those who adore, Om Sri Aurobindo and The Mother.

Thursday, September 06, 2007

A bill of exchange in its origin was an instrument by which a trade debt due in one place was transferred to another place

A reference to Marius' treatise on bills of exchange, published about 1670, or Beawes' Lex Mercatoria, published about 1740, shows that the law, or rather the practice, as to bills of exchange was even then fairly well defined. Comparing the practice of that time with the law as it now stands, it will be seen that it has been modified in some important respects. For the most part, where English law differs from French law, the latter is in strict accordance with the rules laid down by Beawes. The fact is that, when Beawes wrote, the law or practice of both nations on this subject was nearly uniform. But English law has gone on growing while French law has stood still.
A bill of exchange in its origin was an instrument by which a trade debt due in one place was transferred to another place. This theory French law rigidly keeps in view. In England bills have developed into a paper currency of perfect flexibility. In France a bill represents a trade transaction; in England it is merely an instrument of credit. English law affords full play to the system of accommodation paper; French law endeavours to stamp it out. A comparison of some of the main points of difference between English and French law will show how the two theories work. In England it is no longer necessary to express on a bill that value has been given for it, for the law raises a presumption to that effect. In France the nature of the consideration must be stated, and a false statement of value avoids the bill in the hands of all parties with notice. In England a bill may be drawn and payable in the same place. In France the place where a bill is drawn should be so far distant from the place where it is payable that there may be a possible rate of exchange between the two. This so called rule of distantia loci is said to be disregarded now in practice, but the code is unaltered. As French lawyers put it, a bill of exchange necessarily presupposes a contract of exchange. In England since 1765 a bill may be drawn payable to bearer, though formerly it was otherwise. In France it must be payable to order; if it were not so it is clear that the rule requiring the consideration to be truly stated would be a nullity.
In England a bill originally payable to order becomes payable to bearer when indorsed in blank. In France an indorsement in blank merely operates as a procuration. An indorsement, to operate as a negotiation, must be to order, and must state the consideration; in short, it must conform to the conditions of an original draft. In England, if a bill is dishonoured by non-acceptance, a right of action at once accrues to the holder. In France no cause of action arises unless the bill is again dishonoured at maturity; the holder in the meantime is only entitled to demand security from the drawer and indorsers. In England a sharp distinction is drawn between current and overdue bills. In France no such distinction is drawn. In England no protest is required in the case of the dishonour of an inland bill, notice of dishonour being sufficient. In France every dishonoured bill must be protested. Opinions may differ whether the English or the French system is better calculated to serve sound commerce and promote a healthy commercial morality. But an argument in favour of the English system may be derived from the fact that as the various continental codes are from time to time revised and re-enacted, they tend to depart from the French model and to approximate to the English rule. The effect upon English law of its codification has yet to be proved.
A common objection to codification in England is that it deprives the law of its elastic character. But when principles are once settled common law has very little elasticity. On the other hand no code is final. Modern parliaments legislate very freely, and it is a much simpler task to alter statute law than to alter common law. Moreover, legislation is cheaper than litigation. One consequence of the codification of the English law relating to bills is clear gain. Nearly all the British colonies have adopted the act, and where countries are so closely connected as England and her colonies, it is an obvious advantage that their mercantile transactions should be governed by one and the same law expressed in the same words.

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