Promissory Note Domiciliation

Domiciliation of a bill of exchange - is an appointment of a special place of payment (domicile) on a bill of payment, other than the location of the person who is indicated as a payer on this bill of exchange, by means of applying the domicile formula.

The bill drawer, when drawing up a bill of exchange, may appoint not only a special place of payment, but also a person who will pay the bill at the place of domiciliation (domiciliary). If case such a person is not appointed, it means that the one can be appointed by the drawee (payer) upon acceptance of the bill.  If the latter does not do this, it is considered that the acceptor will make the payment himself at the place of domiciliation.

In case when the payer has appointed a payment place (settlement) to pay the bill other than his location, the bill is considered domiciled, and the person who is appointed to make the payment is considered a domiciliary agent.

If the location of the payer and the place of payment are the same, the bill of exchange is not considered domiciled, while the person who is to make the payment is a special payer.

Payment of bills by which the Bank acts as a special payer (domiciliary agent) is the Bank’s execution on behalf of a principal payer on bills (domiciliary) of bills operations based on the instructions received from the principal, specifically:

  • Acceptance of bills of exchange from the bill holder.
  • Making payment on bills of exchange.
  • Transfer of bills to the bill payer after the full payment of bills.

A bank can be appointed as a special payer (domiciliary) for both ordinary bills and transfer bills of exchange.

If a special payer (domiciliary) is not specified by the drawer, it may be appointed by the payer upon acceptance. However, the payer cannot change the place of payment (settlement).  Changing the place of payment upon the bill acceptance is equivalent to a refusal to accept it.  If the bill of exchange is payable at the place of the payer’s residence, he may, upon its acceptance, indicate another address in the same location (settlement).

Given the instructions of the principal, the Bank may accept bills of exchange for payment and make payment on them at the expense of the principal. The principal may be the drawer, the bill acceptor, or the payer of the transfer bill of exchange.

In this setting, the Bank becomes a special payer (domiciliary) and pays a bill of exchange only if the principal had preliminarily paid him the bill amount.

Operations on domiciliation of bills of exchange are carried out on the grounds of an agreement between the principal and the Bank.

When performing an operation, the Bank is responsible only for the proper execution of the principal’s instructions specified in the agreement.