Bills of Exchange's Rules In Saudi Arabia - Essay Example

 Bills of Exchange's Rules In Saudi Arabia Introduction Bill of exchange refers to a negotiable instrument that has express instructions to a third party to effect payment of a given sum of money to a third party at a given date in the future. The project paper illuminates the rules of payments for bills of exchange within Saudi Arabia. Saudi Arabia has several critical laws that guide the various instructions regarding bill of exchange. Bills of Exchange’s Rules in Saudi Arabia It is worth noting that there exist several rules that guide the transactions involving Bills of Exchange in Saudi Arabia. The first law is referred to as the Commercial Court Law, which is popularly referred to as Commercial Court Law. The other law is referred to as Commercial Court Law while the other is the Negotiable Instrument Law. It is worth noting that majority of the provision inherent in these regulations are heavily inspired by sharia laws. The commercial law has a defines critical elements that a document must contain in order to qualify as a bill of exchange. According to Article 1 of the commercial paper law, a bill of exchange must have the word bill written on the face value of the document. The other critical element that must be present in the document, according to Commercial Papers Law is an unconditional order that requires payment of a specific amount. Middle East Economic Digest Conferences (2004) says that the document should also contain the name of drawer and the drawee. More importantly, it is critical that there is also place and date creating the bill of payment. Finally, the drawer must also append his/her signature to the bill to make it valid. Article 2 of the Commercial Papers law further reiterates that when any of the elements in Article are missing then the document seizes to be a bill. The Commercial Papers Law is very comprehensive in that it leaves no hitch that fraudster can capitalize on. Fraudsters are very smart, and they are always on the lookout for gaps that they can use to defraud unsuspecting people. Article 5 of the law is very effective in blocking out potential fraudsters from conducting fraud on transactions involving the bill of exchange. This article expressly states that whenever there is a discrepancy between the amount written in words and the amount written in figures, the amount written in word prevails. The justification of such a move is that amounts written in words are not easy to alter as compared to that mount written in word 12 (Middle East Economic Digest Conferences, 2004). On the other hand, if it so happens that the amount is written several times in word and in letters, then the least amount of money is always considered in the transactions involving the bill of exchange. According to Saudi Arabia laws, one is considered a minor when one is below the ages of 18 years. A minor in general is not allowed to perform any forms of instruction. The simple reason is that they have not attained the legal age that will allow them to engage in transactions. Owing to this fact, article 7 explicitly provides that the minor cannot sign the bill of payment. In addition, as such any bill of right that has been signed by a minor is always invalid. However, it is critical to take note that there exists one exception to the provision of article 7 of Commercial Papers Law. The exception is that when one signs a bill in a foreign country that does not expressly bar minors from conducting transaction then such a bill becomes enforceable. Commercial Papers Law offers a very interesting provision concerning endorsement of bill of payment. In fact, Article 12 of the act puts this concept into perspective. The article allows the bill to be circulated through endorsement even in cases when it is indicated in its face value that it is drawn for an order. The Article allows the endorsement of the bill to effect payment to a binding party. The other factor that is taken into consideration is the issue of endorsement of the bill to all parties as well as allowing the bill to be endorsed for the drawee regardless of whether such a bill is approved or otherwise. Article 12 is very potent in that it allows the bill to be used to effect transactions through endorsement. The success and the popularity of bill of exchange in effecting commercial transactions are largely attributable to Article 12 (Middle East Economic Digest Conferences, 2004). Article 13 continues to make bill of payment even more convenient for making commercial transactions. This is in the sense that it expressly states that endorsements in the bill of exchange must not contain any condition. Hence, if any party attaches conditions to endorsement, then such an endorsement is invalid. Article 14 through to Article 18 is still pegged on making bills of payment suitable for transactions. The ownership of the bill is vested on the person holding the bill hence such a person is regarded as the legitimate bill holder. Commercial Papers Law is crucial in making the bills of payment convenient and accessible in that it sets rules through article provisions concerning conditions for acceptance of the bill. For instance, Article 21 expressly states that the holder of the bill is allowed to submit the bill of payment to the drawee provided such submission is consistent with the due date of submission and within the respective domicile. In a bid to ensure that the acceptance is explicit and cannot be altered maliciously, accepted bill must be supported on the body of the documented with the word “accepted." Moreover, the drawee must append his signature to the document to validate an acceptance. It is important to take note that in some instances, conditions arose, which necessitate protest of payment. There are several instances when the protest of payment is valid. One such condition is when the drawer is bankrupt, or an event has occurred which ha rendered them irreversible. In any case, that unaccepted bill gets lost; the copies can be used to demand payment if the surety has been provided on the issue (Middle East Economic Digest Conferences, 2004). This move is meant to ensure that people are not inconvenienced every time they effect transactions. Article 54 trough to article 57 make provisions for payment assentation. There exists a special form referred to as “Non-Acceptance Protest.” The form should be presented to the party charged with such transactions. Conclusion Saudi Arabia’s Commercial Papers Laws and other relevant regulations that dwell on bills of exchange are comprehensive and ensure convenience in effecting transactions using bill of exchange. There exist several potent provisions that promote bill transaction through ensuring that it is reliable and that all loopholes that people can capitalize on to conduct fraud are sealed. References Middle East Economic Digest Conferences (2004). Law & business in Saudi Arabia: Adapting to change rules. London: MEED House. Read More