Negotiable Instruments Law of the People's Republic of China (Amended in 2004)

Negotiable Instruments Law of the People's Republic of China (Amended in 2004)

Order of the President [2004] No.22

August 28, 2004

(Adopted by the Order of the President [1995] No.49 at the 13th Session of the Standing Committee of the Eighth National People's Congress on May 10, 1995; and amended according to the Decision on Amending the Negotiable Instruments Law of the People's Republic of China adopted at the 11th session of the Standing Committee of the 10th National People's Congress of the People's Republic of China on August 28, 2004)

CONTENTS

Chapter I General Provisions
Chapter II Drafts
Section 1 Drawing of Drafts
Section 2 Endorsement
Section 3 Acceptance
Section 4 Gurantees
Section 5 Payment
Section 6 Right of Recourse
Chapter III Promissory Notes
Chapter IV Checks
Chapter V Application of the Law to Foreign Negotiable Instruments
Chapter VI Legal Liabilities
Chapter VII Supplementary Provisions

Chapter I General Provisions

Article 1 This Law has been formulated with the goal of standardizing conduct related to negotiable instrument transactions, protecting the legitimate rights and interests of parties to negotiable instrument transactions, safeguarding the social and economic order, and promoting the development of the socialist market economy.

Article 2 This Law is applicable to all negotiable instrument transactions within the territory of the People's Republic of China.
For the purposes of this Law, negotiable instruments shall refer to drafts, promissory notes, and checks.

Article 3 Negotiable instrument transactions shall be conducted in accordance with laws and administrative regulations and shall not be in any way harmful to the public interest.

Article 4 When drafting negotiable instruments, drawers shall place their signature or stamp on the instruments as required by law and accept negotiable instrument liabilities as stipulated by the contents of said instruments.
When exercising negotiable instrument rights, bearers shall place their signature or stamp on the negotiable instruments pursuant to the legal procedures before presenting the instruments.
Other obligors who place their signatures or stamps on negotiable instruments shall accept negotiable instrument liabilities as stipulated by the contents of said instruments.
For the purposes of this Law, "negotiable instrument rights" refer to the rights of the bearer to claim payment pursuant to the amount specified on relevant negotiable instruments and shall include the right of claim and the right of recourse.
For the purposes of this Law, "negotiable instrument liabilities" refer to the obligations of the obligor to pay to the bearer the amount specified on relevant negotiable instruments.

Article 5 Parties to a negotiable instrument may entrust representatives to place signatures or stamps on the instruments, clearly indicating this relationship on the instrument.
Where a negotiable instrument bears the signature or stamp of a representative without power of attorney, the negotiable instrument liabilities shall be accepted by the person or persons who placed their signatures or stamps on the negotiable instrument. When representatives go beyond the scope of their entrustment, they shall accept negotiable instrument liabilities for that part which exceeds that scope.

Article 6 Where a negotiable instrument bears the signature or stamp of a person who lacks the ability to exercise their civil rights or of a person whose civil rights are restricted, said signature or seal shall not be valid, however this shall not affect the validity of other signatures and stamps on the instrument in question.

Article 7 Signatures and stamps on a negotiable instrument may refer to signatures, stamps, or signatures with stamps.
On negotiable instruments, the signatures and stamps of a legal person or other entity shall include the stamp of the legal person or entity as well as the signature or stamp of their legal representative or other authorized representative.
Negotiable instruments shall be signed with the legal names of relevant parties.

Article 8 The value of negotiable instruments shall be written in both formal Chinese numerals as well as Arabic numerals, and the two numbers shall be identical. The negotiable instrument shall not be valid if the two numbers are inconsistent.

Article 9 The contents of a negotiable instrument shall conform to the provisions of this law.
The amount(s), date and name of the beneficiary shall not be altered. If they are altered, the negotiable instrument shall not longer be valid.
Other contents of a negotiable instrument may be altered by the persons who originally created them, with the alteration certified by means of their signature or stamp.

Article 10 The draft, acquisition, and transfer of a negotiable instrument shall carried out in good faith; it shall be viewed as an legal exchange and as debt transaction.
The receipt of negotiable instruments must be balanced by a corresponding payment, i.e. a price agreed on by both parties.

Article 11 If a negotiable instrument is lawfully obtained without payment as a result of taxation, inheritance, or donation, it shall not restricted by the abovementioned corresponding payment rule. However the new bearer of the instrument shall not enjoy rights greater than those enjoyed by the previous bearer.
The previous bearer refers to the obligors whose signature or stamp were placed on the negotiable instruments before they are acquired by the present bearer or signatory.

Article 12 In the case where a negotiable instrument is acquired by deception, theft or coercion or where a negotiable instrument which has acquired by deception, theft or coercion is transferred to others who have malicious motives and full knowledge of relevant illegal activities, the bearer shall not enjoy relevant negotiable instrument rights.
When bearers, as a result of major error, obtain negotiable instruments in a manner not conforming to the provisions of this Law, they shall not enjoy the relevant negotiable instrument rights,

Article 13 Negotiable instruments obligors shall not refuse the claims of the bearer using defenses asserted against the drawer or the prior bearer, except in the case when the bearer has acquired the negotiable instruments with full knowledge of said defenses.
Negotiable instruments obligors may refuse bearers which have a direct debtor-creditor relationship with said obligors and which have failed to fulfill their obligations.
For the purposes of this Law, "refuse" refers to a refusal, by negotiable instrument obligors pursuant to the stipulations of this Law, to fulfill their obligations to creditors.

Article 14 The contents of negotiable instruments shall be genuine. Forgery or alteration is prohibited. Those who forge or alter the signatures, stamps, or other contents of the negotiable instruments may be held legally liable.
Forged or altered signatures or stamps on a negotiable instrument do not affect the validity of the other genuine signatures or stamps on the same negotiable instrument.
If any of the contents of a negotiable instrument is altered, the person who signed the instrument prior to the alteration shall still be liable for the original content. The person who signs the instruments subsequent to the alteration shall be liable for the new content. Where it is impossible to tell whether signatures and stamps were added prior to or subsequent to the alteration, they shall regarded as being made prior to the alterations.

Article 15 In the case where a negotiable instrument is lost, the previous bearer may promptly notify the negotiable instrument obligor to stop payment on the lost instrument, except in cases where the obligor has not been recorded or it is otherwise impossible to determine the identity of the obligor or their representative.
The obligor shall suspend payment upon receipt of notification to stop payment due to loss of instrument.
Within three days of issuing the notification to suspend payment or immediately after the negotiable instrument is lost, the previous bearer may apply for public hearing with the people's court or file a suit with the people's court.

Article 16 The exercising of the negotiable instrument rights to make claims against instrument obligors or the protection of negotiable instrument rights shall be conducted at the business location and during the business hours of the parties to the negotiable instruments in question or, if the parties to the negotiable instruments have no business location, their residences.

Article 17 The negotiable instrument rights shall expire if they are not exercised within the following time limits:
1.
　　......