A bill of exchange is a security that represents a certain claim of its owner against the issuer. A bill of exchange must contain the statutorily defined information precisely, otherwise it is invalid. These requirements are contained in Act No. 191/1950 Coll., on bills of exchange and cheques. According to the act, a bill of exchange must contain:

• A designation it is a bill of exchange (literal designation in the document’s text)
• An order to pay the set amount (without additional conditions)
• The name and address of the person who is to pay the bill
• Information about maturity
• Information about the place of payment
• The name of the creditor, i.e. the person who is to be paid
• The date and place of issue
• The issuer’s signature 

As in practice, a bill of exchange is often used to secure financial obligations, in particular loans, the instrument is much used by legal laymen. In such case there is a risk that one of the statutory requisites will be omitted and the bill itself will be invalid.

To prevent such cases, bill of exchange forms are available. They are documents that have all the statutory requisites pre-printed and the parties to them only write in information in the relevant boxes, in accordance with the instructions specified. If such form is completed negligently, however, may arise various interpretation problems. A statement on one such problem has been recently made by the Supreme Court of the Czech Republic in its ruling file reference 29 Cdo 3251/2012 dated 30 April 2014.

1. Disputed Date of Issue 

It was a case where the bill of exchange form contained, by the date of issue, an instruction for completion stating “month in words”. The date of issue “17.10.October 2007” was then completed on the bill.

The court dealt with the question of the certainty of such arrangement. The Supreme Court regarded the agreement as sufficiently certain, as it would be clear to any person, i.e. not only the parties to the bill, without reasonable doubt, that the date of issue was 17 October 2007, and that the number 10 does not designate the day, but the month.

When making its assessment the court had regard to the composition and value of the characters in the information, to the fact that it was the first time data in the bill declaration, with the pre-printed instruction for completion “month in words” located immediately under the disputed entry, where the following information about the bill’s maturity date (with the same pre-printed instruction) is given as “24 October 2007” in the bill.

In this decision the Supreme Court continued with the established trend of interpreting disputed entries on bills of exchange as valid rather than invalid.

2. Another Disputed Date of Issue

The Supreme Court of the Czech Republic had previously dealt with the issue of a bill of exchange, in ruling file reference 29 Cdo 3106/2009 dated 20 January 2011.

In this case the date of issue was given as “06.2./07”, and what was disputed was whether such date of issue was sufficiently certain. So in this case the Supreme Court of the Czech Republic came down in favour of the validity of such provision, as it did not have any reasonable doubts that the last datum in the entry “06.2./07” was an abbreviation for the year 2007 and it was not a bill of exchange from the period of Roman law, as it could not be reasonably expected that somebody would have such bill of exchange in their possession today (on ordinary paper with parties having names that did not previously exist).

3. Disputed Maturity Date

In another case (in a ruling dated 26 January 2011, file reference 29 Cdo 945/2009), the Supreme Court assessed the validity of a bill of exchange in relation to the entry of its maturity date, where a form was used for the issue of the bill on which the maturity date was pre-printed as: “On ____________ 19_____”, where under the long line the text “Month in words” was found. In this part of the form, above the long line, “20. September” was typed, and above the short line after the number “19” the number “2001” was typed. Here the court deduced that there are no reasonable doubts about the fact that the bill of exchange was payable on 20 September 2001, as it is not reasonable to assume that any person intended to set the bill’s maturity in the year 192001.

4. Disputed Place of Issue

The Supreme Court has also dealt with a disputed place of payment. It was in ruling file reference 29 Cdo 3106/2009, dated 20 January 2011 (the same as in section 2.). In this case there was a dispute over whether the designation of the place of payment “Kostelec” was sufficiently certain, as there are several such places in the territory of the CzechRepublic.

In its decision the court concluded that the requirement of certainty of the place of payment is satisfied if the place of payment on a bill of exchange is precise in terms of municipality or town. If there are several such places, this fact does not cause the bill to be invalid for uncertainty, but it means that the bill of exchange can be submitted in any suitable place. The Supreme Court of the Czech Republic reached the same conclusion in a ruling dated 25 February 2009, file reference 29 Cdo 3964/2007.

5. Conclusion

With regard to the above, it is clear that not only the current, but also earlier and established case law of the Supreme Court of the Czech Republic supports an interpretation of provisions in bills of exchange that allow them to remain valid.

If, therefore, a party spoils the completion of a bill of exchange form and therefore give rise to an interpretation problem, this does not automatically mean that all is lost and the bill of exchange invalid. According to the aforementioned case law, it is enough if, without reasonable doubt, it is clear to anybody what was meant by such “unusual” entry.

For more information, please contact our office’s partner, Mgr. Jiri Kučera, e-mail: jkucera@kuceralegal.cz ; tel.: + 420 604 242 241