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Section XII. RE-EXCHANGE AND REDRAWING.

Art. 549. The holder of a protested bill of exchange may draw a new bill against the drawer, or one of the indorsers, to re-imburse himself for the amount of the bill and expenses of protest and reexchange.

Art. 550. The drawer of the re-exchange must annex to it the original protested bill, with proof of protest, and account of reexchange.

Art. 551. Only the following items may be included in the account of re-exchange:

The amount of the protested bill, the costs of protest, the stamp duty for the new bill, the commissions fixed by local custom, the brokerage fees for negotiating it, the postage, the damages suffered in the re-exchange.

Art. 552. In the account of re-exchange must be mentioned the name of the person on whom the new bill is drawn, its amount and the exchange at which it was negotiated.

Art. 553. The re-exchange must conform to the current rate obtaining at the place of drawing on the place where it is to be paid, to be established in the account of such re-exchange by the certificate of an exchange broker, or, where there is none, of two merchants.

Art. 554. Several accounts of re-exchange cannot be made on one bill, but the first is to be paid by one indorser after another, until finally extinguished by payment on the part of the drawer.

Art. 555. In like manner, several bills of re-exchange cannot be accumulated, but each indorser like the drawer will be liable on one, which will be regulated, as to the drawer, by the rate of exchange current at the place of payment on the place of his drawing; and, as to the indorsers, by the rate ruling in the place of their respective indorsements on the place where the re-imbursement is furnished.

Art. 556. The holder of a bill of re-exchange can only demand interest on its amount from the day when he commences action against the person from whom he is entitled to recover.

Art. 557. All actions on bills of exchange are extinguished in four years from their maturity, if no proceeding is begun on them before that time, whether the bill is protested or not.

TITLE X.

DRAFTS AND NOTES PAYABLE TO ORDER.

Art. 558. Drafts to order between merchants, and notes or due bills to order based on commercial operations, shall have the same force and effect as bills of exchange, except as to acceptance, and subject to the restrictions provided in Art. 567.

Art. 559. Drafts are always payable on demand, although not expressed, unless they designate a particular time, in which case they will be due at that time.

Art. 560. The holder cannot demand acceptance of time drafts or have recourse against the drawer or indorser until they are protested for non-payment.

Art. 561. Notes or due bills to order are payable ten days from date, if no time of payment is designated. If designated, they are due on that day without grace, indulgence or usance.

The designated time runs from the day after the date and is reckoned as in bills of exchange.

Art. 562. The same formalities which are required of the holder of a bill in suing the payer or indorser for re-imbursement, are prescribed for the holders of drafts and notes or due bills to order.

Art. 503. Drafts and notes or due bills to order must contain: the date, the amount, the time of payment, the person to whose order payment is to be made, the place where it is to be made, the origin and character of the consideration represented, the signature of the drawer or maker.

Notes which are to be paid in a place other than the maker's residence must indicate a place of payment.

Drafts must further contain the expression that they are drafts, and also the name and residence of the person on whom they are drawn.

Art. 564. Indorsements of drafts and notes are to be made in the same form as in bills of exchange.

Art. 565. The holder of a note cannot refuse to receive amounts offered on account by the debtor at the time of its maturity; and any amount received then or prior thereto must be indorsed on the note and will discharge to that extent all the indorsers. But protest must not on that account be omitted, in order to maintain the right of action against them for the balance.

Art. 566. Summary proceedings for execution cannot be had on notes and drafts, except after the defendant has judicially acknowledged his signature.

Art. 567. Holders of drafts protested for non-payment must seek recourse against the drawer and indorsers within two months after date of protest, if the draft was payable in Spanish territory; and if payable abroad, the time will be reckoned from the time when, without loss of mail, the protest could reach the residence of the drawer or indorser, to whom recourse is bad.

After the lapse of this time the liability of the indorsers is at an end, as well as that of a drawer who shows that at the maturity of the draft he had provided funds in the hands of the persons whose duty it was to pay it.

Art. 568. The provision of the former article is applicable to the indorsers of notes or due bills to order, whose liability will be at an end after two months from date of protest, leaving to the holder his remedy only against the person immediately liable on the note.

Art. 569. No suit can be brought for the payment or re-imbursement of drafts and commercial notes more than four years after their maturity.

Art. 570. Drafts or notes which are not drawn to order are not commercial contracts but simple promises to pay subject to the ordinary law of loan contracts.

Art. 571. Notes payable to bearer without certain designation of any person are not the subject either of ordinary or commercial actions.

TITLE XI.

LETTERS OF CREDIT.

Art. 572. Letters of credit, to be considered commercial contracts, must be given by one merchant to another in carrying out a mercantile transaction.

Art. 573. Letters of credit cannot be made to order without specifying a particular payee. In making use of it the holder must prove his identity, if not personally known to the payer.

Art. 574. Every letter of credit must be drawn for a fixed sum as a maximum to be paid the holder; and such as have not this requisite are simple letters of recommendation.

Art. 575. The giver of a letter of credit is liable to the person on whom it is given for the amount he may pay upon it, not exceeding that named in the letter.

Art. 576. A letter of credit cannot be protested nor can the holder have any action on it against the drawer, although it be not paid.

But if it appear that the drawer revoked it at an unreasonable time, and fraudulently, in order to hinder the business of the payee, he will be liable to him for the damages consequent thereon.

Art. 577. If there occurs reasonable cause which has weakened the credit of the payee of a letter of credit, the drawer may cancel it and give notice of countermand to the drawee without incurring liability thereby.

Art. 578. The holder of a letter of credit must without delay reimburse the drawer the amount received upon the letter, if he has not before placed it in the drawer's hands; and on his failure to do so, the drawer may demand it by summary proceeding, with lawful interest on the debt from the day of demand and the exchange current between the place of payment and the place of re-imbursement.

Art. 579. When the holder of a letter of credit has made no use of it within the time agreed, or, if no time is expressed, within such time as a judge of first instance may under the circumstances consider sufficient, he must return it to the drawer on request or give security for the amount of it until the drawee receives notice of its revocation.

TITLE XII.

GENERAL PROVISIONS AS TO PRESCRIPTION OF COMMER

CIAL CONTRACTS.

Art. 580. All the periods fixed by special provisions of this Code for actions and demands and proceedings on commercial contracts are final and cannot be extended by release on any ground, pretext or privilege.

Art. 581. Actions which have no time limited by the law merchant are outlawed in the time allowed by the forms of the common law for actions of like nature.

Art. 582. The prescription is interrupted by demand or any other kind of judicial summons addressed to the debtor or by renewal of the instrument on which the action is founded. In the first of these cases the time will begin to run anew when the last motion was made in the suit on the part of any litigating party; and in the second case, from the date of the new instrument, and, if the time of payment is extended by it, from the time of its maturity.

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