Commercial Documents

SYNOPSIS

A. INTRODUCTION

1. The Credit System in Argentina 9.101
2. Types of Credit Documents in Argentina 9.104

B. BILLS OF EXCHANGE 9.105

C. PROMISSORY NOTES 9.112

D. CHECKS 9.114

E. BILLS OF LADING 9.127

F. FIXED TERM CERTIFICATES OF DEPOSIT 9.130

G. CREDIT INVOICES 9.133



A. INTRODUCTION

9.101 The legislation relating to credit documents in Argentina is basically contained in the Civil and Commercial Codes and specific laws which shall be identified as each Credit document is analyzed.

9.102 If the credit documents are in bearer form they are transferable by delivery, if they are to the order they may be transferable by endorsement.

9.103 Some credit documents may be issued in favor of a designated person and not be endorsable.

2. Types of Credit Documents in Argentina

9.104 The following are the principal credit documents currently in use in Argentina:

(a) bills of exchange;

(b) promissory notes;

(c) checks;

(d) sale invoices;

(e) bills of lading;

(f) fixed term bank deposit certificates.

MENU



B. BILLS OF EXCHANGE (Decree-Law Nro 5965/63 - July, 19, 1963)

9.105 Under Argentine law there are two instruments of exchange, namely the bill of exchange and the promissory note.

9.106 The bill of exchange, in the form of a payment order, constitutes, as is the case of promissory notes, an unconditional promise to pay, the difference being that the promise given by the person issuing the bill of exchange (the drawer) is an indirect promise to pay.

9.107 An exchange instrument is a formal, self sufficient and complete credit instrument, which contains an obligation to pay a specific sum of money at a designated time and place.

9.108 A bill of exchange is an order to pay, and must contain the following particulars:

(a) the heading "bill of exchange" or the expression "to the order" in the language in which the documents is written;

(b) the unconditional promise to pay a specific designated amount;

(c) the name of the person liable for payment (drawee);

(d) the maturity date;

(e) the place of payment;

(f) the name of the person to whom or to whose order the bill is payable;

(g) the date and place of issuance of the bill of exchange;

(h) the issuer’s signature.

9.109 Bills of exchange are endorsable unless when marked "not negotiable", in which case transference must be performed in the same manner, and with the same results, as an ordinary debt assignment.

9.110 The bearer of a bill of exchange may exercise his rights of action against the drawer, the acceptor, the endorsers and any person signing the bill of exchange as a guarantor.

9.111 Limitation period applying to legal actions to be brought against the acceptor is three years from maturity date. Any action by the holder against the issuer or endorsers must be brought within one year from the date on which the bill of exchange was protested -protest consisting of a formal statement by a notary public at the holder’s request certifying that the bill of exchange was presented for payment which was refused- or from its maturity date if the bill contains a "no expense" clause. Legal actions for reimbursement by endorsers against other endorsers or the issuer have a limitation period of six months from payment or since the date of notice of a court claim brought against the endorser.

MENU



C. PROMISSORY NOTES (Decree-law 5965/63)

9.112 Promissory notes must expressly fulfill the following essential requirements:

(a) the expressions "to the order" or "promissory note" in the note’s language.

(b) the unconditional promise to pay the designated certain amount;

(c) the maturity date;

(d) the place of payment;

(e) the name of the person to whom or to whose order payment must be performed;

(f) the date and place of issuance of the promissory note;

(g) the issuer’s signature.

9.113 Promissory notes are endorsable. The statute of limitations applying to the bill of exchange is extensive to promissory notes.

MENU



D. CHECKS (Law Nro 24.452 as amended by Law 24.760)

9.114 Law 24.452 as amended, dated February 8, 1995, established two types of checks, namely the ordinary check which was in use before the law’s enforcement and the postponed payment check.

Ordinary check

9.115 The ordinary check is always paid at sight at the time of presentation, whatever its date and even though this is not stated.

9.116 An ordinary check must state on its face:

(a) the word "check" in the language in which the check is written;

(b) the check’s printed serial number;

(c) the date and place of issuance;

(d) The drafted bank’s name and place of payment;

(e) The order to pay the certain designated amount in words and numbers, indicating the draft’s currency. If the amount as expressed in words and numbers were to differ, the former shall prevail.

(f) The issuer’s signature;

Postponed payment check

9.117 The postponed payment check is a payment order to be performed on a given date set after the issuance date and drawn against a commercial bank in which the issuer will have, at maturity date, enough funds deposited in its banking account or the bank’s authorization to overdraw.

9.118 The postponed payment check must comply with the following formal requirements:

(a) the printed words "Cheque de pago diferido" (Postponed payment check);

(b) the check’s printed serial number;

(c) the date and place of issuance;

(d) a maturity date not under 30 or over 360 days from presentation for registration;

(e) the drafted bank’s name and place of payment;

(f) the beneficiary’s name or to the bearer;

(g) the designated amount in words and numbers;

(h) the issuer’s name, address and tax or labour identification;

(i) the issuer’s signature.

9.119 The postponed payment check may be registered with the drawn bank. The only effect of the registration of the check with the drawn bank is to certify that such a document meets the formal requirements mentioned above. Registration does not generate any liability for the drawn bank if the check is not actually paid at its maturity date.

9.120 If upon registration the postponed payment check does not comply with one or more of the formal requirements, the Central Bank has established a preventive procedure whereby the drawn bank must require the issuing account holder to amend such defects before denying registration.

9.121 The postponed payment check may be endorsed or transferred in the ways applicable to ordinary checks (crossed check, accounting check, etc.) are also applicable for this check.

Common requirements for both checks

9.122 Checks may be issued to a certain person, and are then endorsable, or to a certain person with the clause "no a la orden" (not to the order), and are then only transmissible by an assignment of rights, or to the bearer’s order in which case they are transmissible by delivery.

9.123 The time period for cashing a check is 30 days from issuance date if the check was issued in the country and 60 days if the check was issued in another country and is payable in Argentina.

9.124 A check may also be crossed ("cheque cruzado") by two slanting crosswise parallel lines drawn on the face of the check and meaning it to be paid only into a bank account, or an accounting check ("para acreditar en cuenta") to be cashed by a book entry, or a certified check ("cheque certificado") whereby the drawee affects sufficient funds to cover the designated amount, debiting the issuer’s account beyond and notwithstanding any possible contingency, for payment of the check within a period not in excess of five business days.

9.125 A check may also include the provision "non negociable" to the effect that it does not grant a better right to the beneficiary and cannot be transferred by him granting better rights than those belonging to the issuer.

9.126 Anyone issuing a bad check which is refused by the drafted bank due to no or insufficient funding in the drafted account shall be guilty of fraud pursuant to the Penal Code.

MENU



E. BILLS OF LADING (sections 165 through 168 of the Code of Commerce and 298 of Maritime Law Nº 20.094)

9.127 A bill of lading constitutes documentary proof of the receipt of goods for shipment by the carrier and of his obligation to deliver the goods at the appointed destination, in accordance with the terms and conditions agreed to between the parties. The bill of lading constitutes title to the goods and, as credit document, may be issued to a designated person, to a beneficiary’s order or to the bearer’s order, and may be assigned, endorsed or delivered to the benefit of third parties thus transferring title to the designated goods. Any provision not expressly included and which purports to restrict or modify a bill of lading is deemed to no effect if opposed to third party beneficiaries.

9.128 A duly dated and signed bill of lading must contain:

(a) the name and address of the owner of the goods or the shipper, the carrier or shipping agent and that of the person to who or to whose order the goods must be delivered unless the bill is issued to the bearer, and the place of delivery;

(b) the designated goods, their quality, weight, measure or number of cases, with their markings, type of casings or packagings;

(c) the freight amount, and whether or not it has been paid;

(d) the time for delivery;

(e) the rest of the agreement provisions.

9.129 Maritime bills of lading must contain:

(a)the carrier’s name and address

(b)the shipper’s mane and address;

(c)the ship’s name and nationality;

(d)the vessel’s port of loading and unloading or destination;

(e)the consignee’s name or that of the person or legal entity designated to be given notice of arrival when the bill is to the shipper’s or to that of an intermediating vessel;

(f)the nature and quality of the wares, the number of items or pieces or quantity or weight, and the identification case markings;

(g)the apparent condition of the goods;

(h)the freight charges and place of payment;

(i)the number of delivered originals;

(j)the place, date and signature of the carrier, agent or captain.

MENU



F. FIXED TERM CERTIFICATES OF DEPOSIT (Law Nro 20.663)

9.130 Fixed term certificates of deposit are acknowledgements by a bank to pay the depositor or to his order at maturity date the deposited amount plus the agreed interest.

9.131 Fixed term certificates of deposit and must contain:

(a)the title "Certificado de depósito a plazo fijo nominativo transferible" (fixed term designated transferable certificate of deposit);

(b)the name and address of the depository bank;

(c)the place and date of issuance;

(d)the depositor’s full name and address;

(e)the amount deposited;

(f)the agreed interest rate and maturity date;

(g)the place of payment and the bank representative’s signature.

9.132 Fixed term certificates of deposit must be issued in the depositor’s name, never to the bearer, and are endorsable only in favour of designated beneficiaries. Endorsers are not liable for payment.

MENU



G. CREDIT INVOICES (Law Nº 24.760 and Decrees Nº 376/97 and 377/97)

9.133 Though Law Nº 24.760 has recently introduced credit invoices ("Factura de Crédito") for purposes of purchase financing and leasing of goods and services financing, its enforcement has been postponed until March 1998.

9.134 When billing by one of the parties is required pursuant to the contract, issuance of a credit invoice is obligatory when all the following circumstances concur:

(a)that the contract provide for the sale or lease of movable goods or for the hiring of services or work not to be performed for wages;

(b)that both parties be domiciled in the country, or billing in accordance to Law Nº 24.760 be enforceable under an international treaty, and none of the parties be a government office or agency;

(c)that there be a term for payment extending beyond delivery date of the goods or work or the date set for rendering of the service, and the credit invoice receipt does not state that a postponed payment check has been issued, endorsed or guaranteed by the buyer or hirer for the purpose of payment, or another credit invoice has been endorsed or guaranteed by the buyer or hirer to that effect, or the credit invoice has been included in an open account existing between the parties;

(d)that the buyer or hirer buy, store, use or consume the goods, services or work, directly or indirectly toward the end of any manufacturing, transformation or trade process or in the service to third parties.

9.135 Credit invoices must contain:

(a)the printed expression "Credit Invoice" (Factura de Crédito);

(b)the date and place of issuance;

(c)the maturity date established as a definite day;

(d)the place of payment, in the absence of which payment is due at the buyer’s or hirer’s domicile;

(e)the parties’ name and address;

(f)the amount due in numbers and words and the type of currency. If payment is due in instalments as many credit invoices as instalments must be issued, each of which must state the total number of instalments and the number of the specific instalment thus issued, and each of such credit invoices is on its own a separate and independent credit document;

(g)the express statement of any advance payment, if such be the case, duly deducted from the amount payable;

(h)the seller’s or contractor’s and the buyer’s or hirer’s signature, the latter having the irrevocable effect of an acceptance of the credit invoice’s exactness and of payment liability.

9136. On receipt of the credit invoice, the seller or service or work contractor must issue an "invoice receipt" (recibo de factura), which is proof of title to the goods.

9.137 The buyer or hirer may refuse acceptance of a credit invoice:

(a)when issued for damaged wares unless they have been delivered at his risk;

(b)in case of duly proven quantity or quality differences or other defects of the wares;

(c)when the parties differ as to the period established for payment or as to the price;

(d)when the service or work are not performed as provided for in the contract.

(e)when the credit invoice formalities have not been duly fulfilled.

9.138 Unless forbidden by the acceptor or endorser, in which case they may be transferred by way of an assignment, credit invoices are endorsable after having been accepted. Endorsements must be completed to a beneficiary and may not be in bearer form. Unless otherwise expressly provided for, endorsers guarantee payment of the credit invoice.

MENU