Bills of exchange and promissory notes, and their enforcement
Bills of exchange and promissory notes are read from Commercial Law No. 30 of 1984, not from the general rules on claiming a debt. The general framework for a company is on registering a company. The general recovery path before an Enforcement Directorate, after a judgment or an instrument that may be enforced, is on debt recovery. The Law Office of Ali Barakat follows the question from Baghdad, al-Yarmouk.
Commercial paper and the draft (bill of exchange)
Article 39 defines a commercial paper as a formal instrument in a prescribed form, by which a person undertakes, or orders another person, to pay a specified sum of money at a specified time and place, and which is negotiable by endorsement or by delivery. Creating commercial papers, and the operations relating to them, is a commercial act regardless of the character of the person who does so and of that person's intention, under article 6.
The commercial draft (siftaja), later called "the draft" in the Law, must contain the particulars article 40 lists: the words "commercial draft" or "siftaja" written in the body of the paper and in the language in which it is written; an unconditional order to pay a specified sum of money; the name of the person ordered to pay (the drawee); the maturity date; the place of payment; the name of the person to whom, or to whose order, payment is to be made (the beneficiary); the date and place of issue; and the name and signature of the person who issued the draft (the drawer). If the paper lacks one of the mandatory particulars, it is an incomplete draft and has no effect as a commercial paper except in the cases article 41 excepts, including treating it as payable at sight if no maturity date is stated. The name "bill of exchange" (kamiala) is also used in practice for this paper; the statutory name in the text is the commercial draft or siftaja.
The promissory note
A promissory note must contain the particulars article 133 lists: a "to order" clause, or the words "promissory note", written in the body of the note in the language in which it is written; an unconditional undertaking to pay a specified sum of money; the maturity date; the place of payment; the name of the person to whom, or to whose order, payment is to be made; the date and place of issue; and the name, signature and residence of the person who issued the note (the maker). If the paper lacks one of those particulars, it is an incomplete promissory note, except in the cases article 134 excepts. The rules on the draft as to capacity, endorsement, maturity, payment, recourse for non-payment and protest apply to the promissory note, to the extent they do not conflict with its nature, under article 135. The maker of a promissory note is bound in the same way as the acceptor of a draft, under article 136.
A protest of non-acceptance or of non-payment is made through a notary public, under article 180, within the limits the chapter on that subject draws.
Enforcement before an Enforcement Directorate
Enforcement Law No. 45 of 1980 as amended applies to judgments and to instruments that may be enforced, under article 3. The right in an instrument that may be enforced must be ascertained, due and not conditional, and must not be contrary to public order or morals, under article 13. The instruments that may be enforced are listed in article 14, and they include negotiable commercial papers, subject to the conditions the same article sets out. If a bill of exchange or a promissory note falls within that description, enforcement proceeds before the Enforcement Directorate administered by the enforcement notary. That is the path of an instrument that may be enforced. It is narrower than a general claim for a debt for which there is no such instrument. If there is no instrument that may be enforced, the starting point is a claim in a lawsuit, as set out on the debt-recovery page, without repeating that page's wording.
The office follows a reading from Baghdad, al-Yarmouk.
Legal basis and sources
- Commercial Law No. 30 of 1984, articles 6, 39, 40, 133 and 180
- Enforcement Law No. 45 of 1980 as amended, articles 13 and 14
Frequently asked questions
What is the subject of the rules on bills of exchange and promissory notes?
Its subject is the form of the bill of exchange and of the promissory note under the Commercial Law, and their enforcement if the paper falls among the instruments listed in article 14 of the Enforcement Law.
What is the difference between a commercial draft and a promissory note?
A draft is an unconditional order addressed to a drawee, under article 40. A promissory note is an undertaking by the maker to pay, under article 133, and the rules on the draft apply to it to the extent they do not conflict with its nature.
Where does enforcement take place if the paper is an instrument that may be enforced?
Before an Enforcement Directorate, under Enforcement Law No. 45 of 1980, once the description of an instrument that may be enforced, and the conditions in article 13, are met.
Related topics and articles
- 01Obligations that recur after a company is recordedFinal accounts, the audit, the general-assembly meeting and copies sent to the Registrar, distinct from post-incorporation steps and from branch duties.
- 02The address of a company or branch, a lease and a title deedThe company's address in its contract, before the Registrar and in the commercial register; a lease or deed may evidence it. Not a real-estate page.
- 03Registering a company in Basra: which department is approached, and what differs from Baghdad?Registering a company when dealing in Basra under the federal Companies Law, followed from Baghdad.
- 04Company forms under the Iraqi Companies LawCompany types under Companies Law No. 21 of 1997 as amended: joint-stock, limited, partnership, simple, sole proprietorship and holding.
- 05What is required of the company after the certificate of incorporation is issued?What follows the certificate of incorporation: the founders meeting, the commercial register and a tax file, distinct from recurring yearly filings.