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Negotiable Instruments Law of the People¡¯Republic of China (2004 Revision)

Promulgation date: 08-28-2004 Department: Standing Committee of the National People's Congress
Effective date: 01-01-1996 Subject: Negotiable Instruments

NEGOTIABLE INSTRUMENTS LAW OF THE PEOPLE'S REPUBLIC OF CHINA

(Adopted at the 13th Meeting of the Standing Committee of the Eighth National People's Congress on May 10, 1995;Revised 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 ONE GENERAL PROVISIONS

CHAPTER TWO DRAFTS

SECTION ONE DRAWING OF DRAFTS

SECTION TWO ENDORSEMENT

SECTION THREE ACCEPTANCE

SECTION FOUR GUARANTEE

SECTION FIVE PAYMENT

SECTION SIX RIGHT OF RECOURSE

CHAPTER THREE PROMISSORY NOTES

CHAPTER FOUR CHECKS

CHAPTER FIVE APPLICATION OF LAW ON FOREIGN-RELATED NEGOTIABLE INSTRUMENTS

CHAPTER SIX LEGAL RESPONSIBILITIES

CHAPTER SEVEN SUPPLEMENTARY PROVISIONS

CHAPTER ONE GENERAL PROVISIONS

Article 1 The law has been drawn up with a view to standardizing the behavior in the transaction of negotiable instruments, protecting the legitimate rights and interests of parties concerned in the negotiable transaction activities, safeguarding the social and economic order and promoting the development of the socialist market economy.

Article 2 The law applies to all transaction activities in negotiable instruments within the territory of the People's Republic of China.

Article 3 Activities of transacting negotiable instruments shall abide by law, administrative regulations and decrees and shall not in any way impinge upon the public interests,

Article 4 In drafting negotiable instruments, a drawer shall put his/her signature or seal to the instruments according to the legal conditions and bear the liabilities for the negotiable instruments in compliance with the items recorded on them.

In exercising the rights arising out of the negotiable instruments, a holder shall put his/her signature or seal to the negotiable instruments according to the legal procedures and present the instruments.

Other debtors who have put their signatures or seals on the negotiable instruments shall be obliged to perform the obligations arising out of the negotiable instruments.

The term "rights arising out of the negotiable instruments" used in this law refers to the rights of the holder to claim payment according to the amount specified in the negotiable instruments, including the right of claim and the right of recourse.

The term "obligations arising out of the negotiable instruments" used in this law refers to the obligations of the debtor to pay the amount specified in the negotiable instruments to the holder.

Article 5 Parties to a negotiable instrument may entrust their agents to put their signatures or seals to the instruments and clearly indicate the agency relationship.

If a negotiable instrument bears the signature or seal in the name of an agent without the power of attorney, the obligations arising out of the negotiable instrument shall be performed by the person or persons who have put the signatures or seals to the negotiable instrument. If an agent has gone beyond the terms of his/her reference, he/she shall perform the obligations arising out of the negotiable instrument on the part that exceeds his/her term of reference.

Article 6 If a negotiable instrument bears the signature or seal of a person who is incapable of civil acts or by a person whose civil acts have been restricted, the signature or the seal is invalid, but that shall not affect the validity of other signatures and seals on the same instrument.

Article 7 The signature and seal on a negotiable instrument mean the signature or seal or signature plus seal.

The signature and seal of a legal person and other unit using negotiable instruments shall be the seal of the legal person or unit plus the signature or seal of the legal representative or its authorized agent.