Commercial law strictly means the branch of private law, and especially business law, governing the exercise of the profession of merchant and defining the legal regime applicable to commercial acts.
In a broader sense, commercial law also includes aspects relating to goodwill, commercial leases, restrictive practices of competition and unfair competition.
Commercial law constitutes a large part of the activity of a business lawyer.
Specialized in commercial litigation, Bélot Malan et Associés law firm develops a large part of its litigation activity with issues relating to this matter.
Within commercial law, brokerage law – which constitutes all the rules applicable to commercial papers – represents a major area, as does the issue of assignments of professional receivables.
The following developments aim to briefly present the commercial bills as a whole, then to expose the main characteristics of the two main commercial bills: the bill of exchange and the promissory note. The mechanism of the Dailly assignment, the main mechanism for the assignment of professional debts in French commercial law will also be exposed.
Definition and characteristics of commercial paper
The definition of commercial paper
Not defined by the Commercial Code, commercial paper constitutes both payment and credit instruments.
According to Hervé Causse, they are defined as negotiable securities which establish, for the benefit of the holder, a claim for a sum of money, and serve for its payment.
Characteristics of commercial paper
Commercial paper has five main characteristics:
- Commercial bills are negotiable securities by endorsement, tradition or transfer,
- Commercial bills carry a commitment to pay a sum of money within a certain period,
- The debt induced by a commercial paper is fully incorporated in the title (the commercial paper), which is not then the simple instrument of proof but constitutes a new title largely purged of the vices of the original debt,
- Commercial paper is short term, distinguishing itself from other securities such as stocks or bonds,
- Commercial paper is close to money in a sense that it constitutes, in business life, a normal method of payment.
Commercial papers obey two operating patterns depending on whether their creation is the work of a creditor (this is the case with bills of exchange) or a debtor (this is the case with promissory notes). The two instruments are similar by their effects.
The two main commercial bills: the bill of exchange and the promissory note
The bill of exchange
The definition and nature of the bill of exchange
The bill of exchange constitutes a commercial paper often called “draft” in the practice of commercial law.
Not defined by law, the doctrine refers to it as the title by which a person named shooter invites another person named drawee to pay a sum of money on a specified date payable to a designated beneficiary.
The bill of exchange is governed by articles L. 511-1 to L. 511-81 of the French commercial code. It constitutes a commercial act by form, according to article L. 110-1 of the commercial code, and keeps its commercial form between all persons, whatever the activity of the signatory.
The characteristics of the bill of exchange
The bill of exchange mainly represents a credit instrument for several reasons.
– As a commercial effect, it allows a seller (drawer) to grant time limits to a buyer (drawee),
– As a financial effect, it allows a credit institution (beneficiary) to establish its debt obligation or to grant a credit by signature by accepting a draft (drawee) or by endorsing it,
– Generally, the beneficiary of the bill – or the one to whom this title was transmitted – can obtain funds, in advance, by discounting it, that is to say by selling it to a credit institution,
● Finally, the bill of exchange can allow the bank to do the refinancing.
Definition and nature of the promissory note
Commercial paper, the promissory note is defined as the title by which a person, called subscriber, undertakes to pay another, called beneficiary, or to his order, a sum of money on a determined date.
It is governed by Articles L. 512-1 to L. 512-8 of the Commercial Code as well as by numerous provisions relating to the bill of exchange.
Characteristics of the promissory note
The promissory note can be used for the mobilization of credits insofar as the mobilization effects (most often promissory notes) allow the credit provider to refinance with a mobilizing organization.
Regarding the nature of the promissory note, it is commercial if it is subscribed on the occasion of a commercial transaction or signed by a merchant for the needs of his trade. The interests of the distinction are reduced today to the capacity necessary to subscribe a note and to the jurisdiction. The texts considerably extend, in law and in practice, the jurisdiction of the consular courts.
Thus, according to article L. 721-4 of the commercial code, the commercial court has the jurisdiction over promissory notes when these bear at the same time the signatures of traders and non-traders.
The assignment of the professional claims “Dailly”
The definition of the “Dailly” assignment
A “Dailly” assignment, named after the senator at the origin of the law establishing this mechanism for assigning professional debt obligations, designates the possibility in France for a creditor (“the assignor”) to assign his professional claims in simple forms as well as the guarantees and securities which are the accessories to a person called “assignee”, who is necessarily a credit institution.
The “Dailly” assignment is governed by the provisions of Articles L. 313-23 et seq. of the Monetary and Financial Code.
The mechanism of the “Dailly” assignement
The “Dailly” assignment is made by means of a simple slip, known as a Dailly slip, and concerns all types of credit.
At the risk of being unenforceable against third parties, the Dailly slip must include the following information:
- The slip must include the title “act of assignment of professional claims” or “act of pledge of professional debt obligations”. The mention “professional claims” should be made even though, as claims on a legal person, they would not really have this character,
- The schedule must state that it is subject to the provisions of articles L. 313-23 to L. 313-34 of the Monetary and Financial Code,
- The deed of assignment must mention the name or the corporate name of the credit institution, of the alternative investment fund mentioned,
- The deed must mention the designation or individualization of the assigned or pledged claims, or at least of the elements likely to effect this designation or this individualization.
The assignee of the claim can only be a credit institution. If the slip is transmitted, the assignee credit institution can only transmit it to another credit institution. Only professional claims can be the subject of a “Dailly” assignment.
These claims may belong to natural persons, legal persons and even to legal persons under public law, regardless of the civil or commercial nature of their activity.