Law commission consultation on digital assets and (electronic) trade documents in private international law

We provisionally propose that section 72(2) should be amended to make it clearer that it applies to all the issues that fall under the “wide” view of what section 72(2) currently encompasses. This would mean that the amended section 72(2) would apply to the law governing contractual obligations (understood in the ordinary modern sense of the substantive rights and obligations of the parties) arising from a bill of exchange and is not limited to “interpretation” in a narrow sense.

Do consultees agree?

We provisionally propose that the default law applicable to contractual obligations arising from a bill of exchange should be the law chosen by the party incurring the obligation, as indicated on the bill alongside their signature.

Do consultees agree?

We provisionally propose that, where no choice of law is made on the face of the bill, the acceptor’s liability arising from their contract of acceptance should be the law of the place where the instrument is payable, as interpreted consistently with the place of “proper presentment” under section 45 of the Bills of Exchange Act 1882:

1. 1. The law of the place where the instrument is payable, as indicated on the face of the bill.
   2. Where no place of payment is specified, but the address of the drawee/acceptor is given in the bill, the law of the place of the address.
   3. Where no place of payment is specified and no address given, the law of the place where the drawee/acceptor has their habitual residence.

Do consultees agree?

We provisionally propose that, in the absence of a valid choice by a person incurring secondary liability on the bill, the law applicable to that person’s liability on the bill should be the law of the place where that person has their habitual residence.

Do consultees agree?

We provisionally propose that no “escape clause” is necessary or desirable. The framework we have provisionally proposed gives sufficient scope for parties to select the law that is to apply to their contractual obligations, and that it would be rare for a party not to indicate a choice of law. Even in the absence of a choice, the framework we have proposed gives a clear indication of the applicable law that accords with commercial realities of the transactions and expectations of the parties.

Do consultees agree?

We provisionally propose that the formal validity of a contract on a bill of exchange will be upheld if it complies with one of:

1. The law governing the substance of the relevant contract.
2. The law governing the substance of the drawer’s contract.
3. The law governing the substance of the acceptor’s contract.
4. The law of the place where the instrument is payable.

Do consultees agree?

We provisionally propose that section 72(3) should be reformed as follows:

1. The duties of the holder with respect to presentment for acceptance should be governed by the law of the place where the drawee has their habitual residence.
2. The necessity for or sufficiency of a protest or notice upon dishonour by non-acceptance should be governed by the law of the place where the drawee has their habitual residence.
3. The duties of the holder with respect to presentment for payment should be governed by the law of the place where the bill is payable.
4. The necessity for or sufficiency of a protest or notice upon dishonour by non-payment should be governed by the law of the place where the bill is payable.

Do consultees agree?