What is a « billet au porteur » (bearer bill) pursuant to French law?
The bearer bill (“billet au porteur”) is a security by which the subscriber undertakes to pay a specified sum to the person who will be the physical holder of the security on the due date.
What is the legal regime applicable to bearer bills (“billets au porteur”) in France?
The bearer bill (“billet au porteur”) is subject to a regime similar to that of the blank bill, which means without indication of the beneficiary.
This also means that the bearer can write their name on the instrument in the place of the name of the payee of the instrument.
Bills are the most important category of bearer bills, often issued by banks in bearer form with a clause that allows them to be converted into promissory notes.
They are subject to a specific regime organized by articles L.223-1 to L.223-4 of the French monetary and financial code.
The validity of the bearer bill is admitted, provided that it does not compete with bank bills. Only the bearer demand bill is to be considered illegal.
The ability to subscribe to a bearer bill (“billet au porteur”) in France
The bearer bill must be subscribed by a person capable of civil or commercial liability.
It must contain mandatory information such as the signature of the subscriber, the amount to be paid and the due date.
Delivery of a bearer bill does not discharge the pre-existing obligation unless otherwise provided.
The bearer bill is comparable to a tangible asset and can be transmitted by a simple manual tradition without any necessary formality.
It can also be dematerialized. The assignor guarantees the existence of the claim at the time of the transfer but not the solvency of the debtor.
Bearer bills are treated in the same way as tangible property in terms of pledge.
The rules of payment of the amount of the bearer bill (“billet au porteur”) in France
The bearer bill is a security incorporating a claim that allows the subscriber to be civilly or commercially obligated.
It must include certain mandatory information and may be given in payment of an obligation, without extinguishing the latter. The title can be transmitted by a simple manual tradition, without any formality, and can be the object of a manual gift or of a dematerialized form.
Payment must be made when due, but grace periods may be granted. The current holder is considered legitimate and the payment made is dischargeable, even if the holder is illegitimate.
The rule of non-opposability of exceptions is applicable, which facilitates payment.
The bearer bill is subject to the five-year statute of limitations and the bearer may have recourse against a prior bearer who expressly guaranteed payment.
French law governing bearer bills:
- C. mon. fin. L. 223-1 et seq.
- C. com. L. 511-8
Main French court decisions:
- Com. Jan. 15, 2002, n° 99-15.370