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Appearances concerning the using of the bill of exchange and the promissory note in Romania.

1. INTRODUCTION

The choosing of a payment instrument in the scrolling of economic affairs, involves from the managers and of the teams of specialists, depth knowledge in the field of commercial law, banking, financial, especially as each of these instruments have their own particularities of form and background.

This choice also depends on other factors too such as: national legislation, which must be aligned to the international one, by the experience accumulated in time and by the tradition in using such payment instrument, the company's position on the domestic and international markets, the relationship between the trader and his bank or working on family banks, the economic and financial power of the company etc.

Due to the fact that between the dispatch of the goods and that of the amount of cash is a considerable difference of time and space, each contractor seeks, during negotiations, to win as many guarantees: the seller that will pick up in time the value of the goods sold and the buyer that will receive in time the requested quantity of goods at the price and quality parameters established in the contract.

The separation in time of both operations involving the act of selling, respectively the time of delivery of goods by that of payment of price (immediate delivery-postpayment) gave birth to a complex process of creating effects of trade, which constitutes the guarantee of obligation of payment enforcement resulting from sale of goods.

2. BODY OF PAPER

The bill of exchange and the promisorry note are used as instruments of comercial credit for delaying payment, at maturity, to obtain funds in cash, when they are discouted at a bank, or to cover a payment obligation, when the beneficiary endorses them to a third creditor. In order to have the function of the commercial credit instruments, the promissory note and the bill of exchange should always be payable at term, as any other redeemable debenture. Owing to this function, the customer obtains a loan binding himself only with the bill. The sellers who thus on the bill only the signature of the issuing customer, holds a debenture over the customer.

The issue of a promissory note by the importer or the acceptance of a Bill of exchange by the exporter are means of accomplishing personal guarantee.

In the Romanian Commercial Code since 1929, the two instruments were seen as a unique instrument, the promissory note being considered a form of bill of exchange. Here's how it was formulated in Article 270 of the Romanian Commercial Code the definition of bill of exchange: "the bill of exchange including the bond of paiment or the bond the pay to be done at maturity the estabilised amount to the person which appearance.... The bill of exchange including the obligation to pay at maturity a fixed amount of money is called a promissory note too. The bill of exchange including the obligation to make the pay to be done at maturity a fixed amount of money is also caleed policy or treat" (Dragoescu, 2000).

But the bill of exchange and the promissory note can not be regarded as two forms of the same instrument, for several reasons, namely: the obligation of the issuer in the case of the promissory note differs from the obligation of the issuer in the case of the bill of exchange, more specifically said, the issuer's obligation in the case of the promissory note lies in making itself the payment, and the drawer's obligation, the issuer in the case of bill of exchange, is to ensure the payment, the obligation of payment occurs only in the event of failure of payment or denied payment by the paying shirred.

Thus, if the payer signature as the main cambial obliged appears on the promissory note from the beginning of issue, the payer signature does not appear on the bill of exchange in the moment of issuing the title, it being able not to appear at all materialized on the title specially in that cambial process. "The payment debtor of the promissory note is the principal cambial obliged, since the issuance of the title, while the payment debtor of the bill of exchange becomes the principal cambial obliged only when he accepts the title".

Another reason why you can not put equivalence between the bill of exchange and the promissory note is that, a promissory note can not be delivered to the issuer order, as it is possible in the case of bill of exchange because the promissory would not be "in order" but it will be "at sight".

In other specialized papers they believe that the commercial credit instrument generically named bill of exchange includes two forms: treat, the first form of the bill of exchange in which are engaged in three persons: the drawer, the shirred, and the beneficiary, and "the promissory note, a second form of the bill of exchange is an easier instrument than the treat, because from the three persons participating in a treat remain only two ... disappearing the shirred who in his quality as a creditor gave order to pay to the debtor, so the formula "you will pay" used to treat is replaced with "I'll pay "" (Hoanja, 2001).

In some specialized work is deemed that the treat and the bill of exchange are two different instruments, the bill of exchange is in this sense "a negotiable credit title, and while a payment instrument, ... and the treat has the same content as the bill of exchange, but there are three participants: the drawer, the drawee and the beneficiary" (Manolescu, 2006).

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"A promissory note says in effect "I promise to pay you...." and then describes how and when you're to make payments" (Steingold, 2008).

Another distinction between the bill of exchange and the promissory note refers to the quality of the debtor's signature. The debtor of the promissory note signs the title as the issuer and the shirred debtor in the bill of exchange, signs to accept. "The borrower must sign the promissory note for it to be valid" (Leonard & Warner, 2007).

I am on the same opinion of other authors who believe that the terms bill of exchange and the promissory note are never equal because the bill of exchange is an unconditionated order of payment, while the promissory note is not an order, it is a commitment of payment.

According to the law nr. 83/1994, concerning the promissory note and the bill of exchange, these valuable papers are "guarantee modalities of intern and extern price payment, beside the negotiable credit titles, the guarantee being assured by the quality of these credit titles, being executorial right titles". This means, that it isn't necessary to be obtained through justice, the debtor's execution right, but after the protest advance by the creditor, without complicated formalities, it passes to obliged execution of the debtor exactly on the basis of the title signed by him. Although these instruments have the legal quality of being executorial right titles, many companies in Romania, are using them to deceive their business partners. These companies are economically operators who issue payment instruments without coverage and, implicitly, enter into CIP records with major payments incidents.

Payment Incident Bureau, abbreviated CIP, "is a centre for intermediation and management on behalf of the National Bank of Romania of the specific information of payment incidents both from the bank point of view (drawer in overdrafts, namely drawings from accounts over the available limit) and the social point of view (thievery of payment instruments). The payment incidents are generated by instruments unconform to the regulations of the National Bank of Romania in force".

The payment incident is that information conveyed towards the Payment Incident Bureau relating to the non-fulfilment exactly or just in time the obligations of the participants before or during the process of settlement of the instrument, notified to the Centre Incident Payments by the reporting persons.

In Romania is not used at all the bill of exchange, the settlements forward being made especially by issuing promissory notes and cheques. But there are many companies in Romania that do not use the promissory notes in the qualities for which they were created, namely as a tool of commercial credit instrument and the guarantee instrument, but as instruments of fraud, becoming a real "public hazard" for business. One of the causes that determines the inclusion of serious business and good payer firms among those issuing payment instruments without coverage "on the rolling tape is modifying the shareholders.

Thus the team that publishes the magazines "FINANCIARUL" and "IASI INVEST" have made a study and found out that the same persons who manage companies' with "notable performances" in the field of payment incidents are the shareholders or the associates to other companies too being in banking prohibition or in CIP's sights with major incidents in paying the promissory notes. Every time when a company pays with the promissory note or with the bill of exchange should be made an inspection at Central Incident Payments, especially if the amount is important and if the first deal concluded with the company because it could find information about fraud committed or not, by the business partner.

3. CONCLUSION

The lack of discipline in the Romanian business environment and the desire of some to enrich fraudulently by the issuance of the bills of exchange without coverage and that than have generated major incidents of payment, led to loss the confidence of serious and honest economic agents in using the bills of exchange. Although the two instruments have appeared in practice since the Middle Ages as a commercial credit instruments, as tools of payment and guarantee, they have lately become instruments of fraud and deceit, some became true experts in the issue of instruments of payment without coverage. The fact that in the CIP records appear more than 500 companies from Romania which have generated major incidents of payment regarding to the bills of exchange, and for some companies, the CIP's records include many pages, with dozen or even hundreds of incidents, plus the fact that only a company refused to pay in the last six months promissory notes in total value worth one million euro represents a "proof that there is no confidence in using these tools. It is very important that when a company is put in a position to accept in exchange for the amount of goods delivered a promissory note, to verify at the CIP the financial position of the issuing company of the instrument, because if a company appears in the CIP's records it means that it does not honoured its payment obligations towards its previous creditors and there is a high probability it will not honour any further debts.

4. REFERENCES

Dragoescu E., (2000), Currency, financial and credit international relations, D. Cantemir Publisher, ISBN 973-8024-22-4. Targu Mures

Hoanfa N., (2001), Money and banks, Economic Publishing House, ISBN 973-590-500-5, Bucharest

Leonard R., Warner R., (2007), 101 Law Forms for Personal Use, Published by Nolo, ISBN 1413307124, Berkeley CA

Manolescu G., (2006), Currency and credit, Published by Foundation, Romania for Tomorrow, ISBN 978-973-725-567-9, Bucharest

Steingold F., (2008), Legal Forms for Starting & Running a Small Business, Published by Nolo, ISBN 141330754X, Berkeley CA
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Author:Ignat, Andreea; Avram, Laura; Horja, Monica; Vancea, Smaranda
Publication:Annals of DAAAM & Proceedings
Date:Jan 1, 2008
Words:1872
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