United Nations Convention on International Bills of Exchange - Essay Example

The convention applies only to the international instruments that have in both their headings and text the words “international bills of exchange (UNCITRAL Convention)” or “international Promissory Notes (UNCITRAL)”.  They will be treated as international if they specify two places located in different states listed in articles 2(1) and 2(2) of the convention accordingly.  

The rights of a protected holder are freed from claims and defenses to a greater extent. Article 45 of the convention gives a warranty for an instrument in the case of a transfer that does not bear any unauthorized signature and has not been materially altered. The convention introduces many beneficial provisions. It permits an instrument to bear interest at a variable rate in accordance with the provisions mentioned in the instrument and in relation to reference rates published. However, Uniform Commercial Code does not insist on payment of interest unless it is an interest-bearing instrument. It also allows reference to a foreign exchange rate such as a bank exchange rate at a certain date in a certain place. The convention also allows payment in installments at successive dates.  The convention has a provision to make payments in units of value other than the currency. In accordance with UCC, the convention also states that the payment shall be made in the currency that is expressed in the instrument unless it indicates to make payment in a particular currency. It also authorizes facsimile or any equivalent authentication of signature other than handwritten one (Bcbqatar, 2008).