PROTEST FOR NON-PAYMENT or NON-ACCEPTANCE

QUESTION

Dear Mr. Old Man,

Could you please clarify the phrase “Protest for non-payment/non-acceptance” in collection instructions?

Thank you.

PM

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ANSWER

Hi,

In order to understand what “PROTEST FOR NON-PAYMENT or NON-ACCEPTANCE” is, you need to understand what “NOTING” is.

According to the UK Bills of Exchange Acts 1882, NOTING is the procedure where a notary public presents the bill of exchange to the drawee on the same day it was refused or on the next business day. If the drawee continues to dishonour the bill of exchange, the notary will note on the bill the amount of his charges, the date and his intial. The reason for refusal is shown on the NOTE attached to the bill of exchange.

PROTESTING is the procedure following the noting of the bill of exchange and the notary is required to issue a certificate certifying that the bill of exchange has been dishonoured. This certificate is called “PROTEST FOR NON-PAYMENT or NON-ACCEPTANCE”.  

The purpose of protest is to preserve the right of action against the drawer or the endorsers.

Please note the legal procedures for protest for non-payment or non-acceptance differ from country to country. The Vietnamese law on negotiable instruments (2005) does not deal with noting and protesting. It allows the beneficiary to have recourse from the drawer or the endorser if the instrument is dishonoured.

PROTEST or PROTEST FOR NON-PAYMENT or NON-ACCEPTANCE is provided in Article 24 Uniform Rules for Collections (URC 522), which says:

“The collection instruction should give specific instructions regarding protest (or other legal process in lieu thereof), in the event of non-payment or non-acceptance.

In the absence of such specific instructions, the banks concerned with the collection have no obligation to have the documents protested (or subjected to other legal process in lieu thereof) for non-payment or non-acceptance.

Any charges and/or expenses incurred by banks in connection with such protest or other legal process, will be for the account of the party from whom the collection instruction was received”.

Kind regards,

Mr. Old Man