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Example of the debtor's payment


News about the legal situation in Germany:

Strictly speaking the commissioning of lawyers is only necessary (and even so, subject to exceptions) in three cases. First, where the bill is payable 'after sight' (ie is expressed to be payable within a certain time after it has been brought to the notice of the drawee) - clearly here it must be 'presented' because, until it is, its maturity date remains unascertained. Second, where the bill itself expressly stipulates that it shall be presented to the German debtor for acceptance.
Terms are of two kinds; they are either conditions or warranties. Conditions are terms of major importance which form the main basis of the contract and breach of a condition gives the party aggrieved a right to damages or (though subject to an important qualification which will be noted shortly) a right, at his option, to repudiate the contract. Warranties are terms of minor importance and breach of warranty gives a right only to damages.
Traditionally the question whether a particular term is a condition or a warranty is referred to the intention of the parties themselves to be gleaned either from any statements they may make as to the comparative importance of the term in question of from the general tenor of the contract as a whole. This general statement, however, requires to be qualified. In the first place, once the contract is executed, that is to say substantially entered upon, a condition becomes an 'ex post facto' warranty; this means that it is treated as if it were a warranty and its breach gives rise only to a claim to damages. The reason for this is that repudiation is only really practical as long as the parties have not done anything under the contract to alter their position.
In the second place it must be noted that the terminology is comparatively new and that until comparatively recent times the words 'condition' and 'warranty' were used interchangeably; further even in present day usage 'condition' may be used to mean something somewhat different, namely a stipulation which either suspends the implementation of the contract or resolves the contract after it has come into force. The important rule that upon a conveyance where according to the usual practice, the completion of the contract is made subject to exchange of documents either party may withdraw until the exchange has actually been effected illustrates the operation of a condition precedent.

Bills and invoices

Third, where the bill is drawn payable elsewhere than at the place of residence in Germany or business of the drawee. Of course these categories do not include cheques. Where an unpaid bill in Germany of these kind comes into the hands of a holder he must either present it to the drawee for acceptance, or negotiate it within a reasonable time. Upon presentment, the drawee must accept the bill within 24 hours. If the drawee fails to do so within that time, or if he repudiates liability, he will have 'dishonoured' the bill. If this happens, the debtor must give notice of dishonour to the drawer, or to the person who indorsed the bill to him. Notice of dishonour must not be given prematurely before dishonour.
It is effective from time of receipt and must be given within a reasonable time of dishonour or in the case of written notice sent by German post it must normally be despatched on the day of dishonour or, at least, by the following day.


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