MERCANTILE LAW REVIEW CODE OF COMMERCE PERFECTION GR: commercial contracts are consensual as to perfection.

EXC: when the code of commerce requires specific forms, such as charter parties, loan on bottomry and respondentia EXACT MOMENT OF PERFECTION GR: COGNITION THEORY all contracts, whether civil or commercial are perfected from the moment the offeror has notice or has knowledge of the offerees acceptance. (art. 1319 of the civil code) XPN: MANIFESTATION THEORY a theory in the perfection of contracts which recognizes that the contract is perfected at the time when the acceptance is made by the offeree (art. 54) applicable to contracts still specifically governed by the code of commerce WHAT IS A JOINT ACCOUNT? a joint account is a transaction of merchants where the merchants agree to continue the amount of capital agreed upon and participating in the favorable or unfavorable results thereof in the proportion that they may determine.(art 239) JOINT ACCOUNT VS. PARTNERSHIP JOINT ACCOUNT No firm name No common fund No juridical personality Only ostensible partner (OP) liable to third persons Liquidation - OP PARTNERSHIP Has a firm name Has a common fund Has juridical personality ALL general partners liable to third persons Liquidation - Any partner

OSTENSIBLE PARTNER A PARTNER WHOSE NAME IS MADE KNOWN AND APPEARS TO THE WORLD AS A PARTNER AND WHO IN REALITY SUCH.

Mercantile Law Review Atty. Tombo Session 1

LETTERS OF CREDIT WHAT IS A LETTER OF CREDIT? A LETTER OF CREDIT IS one whereby one person requests some other person to advance money or give credit to a third person and promises that he will repay these to the person making the advancement or accept the bills drawn upon himself for the like amount.(bpi vs. cir g.r.no. 137002,july 27, 2006) STAGES IN LC TRANSACTIONS 1. contract of sale between the buyer and the seller; 2. application for lc by the buyer with the bank; 3. issuance of lc by the bank; 4. shipping of goods by the seller; 5. execution of draft and tender of documents by the seller; 6. redemption of draft payment and obtaining of documents by the issuing bank; 7. reimbursement to the bank and obtaining of documents by the buyer. WHAT RULES GOVERN LC TRANSACTIONS? uniform customs and practice (ucp) there being no specific provisions which govern the legal complexities arising from transactions involving lc, not only between or among banks themselves but also between banks and the seller or the buyer, the applicability of ucp is undeniable.(bank of america sa vs. ca) relate to art. 2 of code of commerce WHAT IS A DRAFT? A draft is a form of bill of exchange used mainly in transaction between persons physically remote from each other. it is an order made by one person, say the buyer of the goods, addressed to a person having in possession funds of such buyer, ordering the addressee to pay the purchase price to the seller of the goods. order made by one bank to another, it is referred to as a bank draft. WHAT IS A FOREIGN BILL OF EXCHANGE? A BILL OF EXCHANGE WHICH IS NOT OR ON ITS FACE PURPORTS TO BE BOTH DRAWN AND PAYABLE WITHIN THE PHILIPPINES. (SEC 129, NIL) INDEPENDENCE PRINCIPLE the three (3) basic contracts are distinct and independent and the undertaking of the respective parties in each are neither subject to claims and defenses nor affected by the breach in the others. a direct consequence of the independence principle is the rule that banks deal only with documents and not with goods, services or obligations to which they relate.the bank determines compliance with the lc by examining the shipping documents presented. it is precluded from determining whether the main contract is actually accomplished or not. (bank of america sa vs. ca) 3 INDEPENDENT CONTRACTS IN LC contract of sale between the buyer and the seller; contract of the buyer with the issuing bank; the lc proper which the bank promises to pay the seller pursuant to the terms and conditions stated therein.(seller and the bank)
Mercantile Law Review Atty. Tombo Session 1