Banking Contracts

BANKING CONTRACTS
Sergio Rodríguez Azuero

Legis Publishing. Colombia. 2003
BANKING CONTRACTS
First reprint of the fifth edition 2003 Fifth edition 2002

Second reprint of the fourth edition 1998
First reprint of the fourth edition 1997 Fourth edition 1990
Third edition 1985
Second edition 1979
First edition 1977
@ Sergio Rodríguez Azuero @ Legis Editores SA
Total or partial reproduction of this book is prohibited.
by any reprographic or phonic process, by photocopy, microfilm, offset or
mimeograph, without prior authorization from the Author (L. 23/82).
LEGIS
President: Juan Alberto Castro F.
Editorial Manager: Andrés Chaves Pinzón Editorial Director: Martha Helena
Penen Lastra Editorial Coordinator: Luis Arturo Lara O. Cover Design: José
Daniel Ahumada R. Layout: Ricardo Rojas Zamudio Printing: LEGIS SA
ISBN: 958-653-313-1
Printed in Colombia
To my students
and the team of lawyers
"Rodríguez-Azuero Associates".
This work has been enriched and
renewed with your contributions
everyday, throughout the
years we have shared.
THE AUTHOR
SERGIO RODRÍGUEZ AZUERO is a Doctor of Jurisprudence from the Colegio
Mayor de Nuestra Señora del Rosario. Professor of Commercial Law, Honorary
Member and Former Counselor of the same University. Professor in the
Specialization of Commercial Law at the Externado de Colombia and in Trust
Administration at the Universidad de los Andes.
Founding Partner of Rodríguez-Azuero Asociados SA
He was Manager of the Colombian Banking Association, Vice President of

Banco Colpatria and worked in Paris, under the auspices of the Ministry of
Finance, with the banks Sudameris, Nacional de Paris and the Bank of France.
Author of the books "Banking Contracts. Its significance in Latin America" and
"The Responsibility of the Trustee", in addition to numerous essays on Financial
Law; he has participated as a guest speaker in numerous international forums in
Mexico City, Cancún, Guatemala, Caracas, Panama, Bogotá, Quito, Guayaquil,
Lima , Buenos Aires, Rosario, Santa Fe, Montevideo, San Pedro Sula, Santiago
de Chile, San José and San Salvador.
He was part of the Commission appointed by the National Government in 1982

to prepare a draft Financial Reform Law and was a main member of the Board of
Directors of Banco de Colombia in 1984. He directed the Committee on the
Financial Sector for President Gaviria's campaign. He was President of the
Colombo-French Chamber of Commerce. He was President of the Association of
Trustees. He is Director of the Postgraduate Course in Financial Law at the
Universidad del Rosario, member of the review commission of the Commercial
Code and is a member of the list of arbitrators of the Bogotá Chamber of
Commerce, the International Center for Commercial Arbitration of British
Columbia, and the London Court of International Arbitration and the G-3
Convention (Colombia, Mexico and Venezuela).
He is "Knight of the Legion of Honor" of the French government, Corresponding

Member of the Colombian Academy of Jurisprudence, Professor Emeritus of the
Universidad del Rosario and Associate Judge of the Constitutional Court.
GENERAL INDEX
The author
Presentation to the fifth edition
Presentation to the first edition
Presentation to the second edition
Presentation to the third edition
Presentation to the fourth edition
As a prologue to the fifth edition
Prologue to previous editions
Introduction
1. CONTENT OF THE BOOK

1.1. COMMERCIAL BANK CONTRACTS
1.2. AGAINST TOS THAT DEVELOP THE SOCIAL OBJECT
2. RECIPIENTS
3. METHODOLOGY
FIRST PART
FUNDAMENTAL NOTIONS
Chapter I
GENERAL PRINCIPLES
1. LAW
1.1. NOTION
1.2. PUBLIC RIGHT AND PRIVATE RIGHT
1.2.1. Public Law
1.2.2. Private right
1.3. COMMERCIAL LAW
1.3.1. As part of Private Law
1.3.2. Content
1.3.3. Characteristics
1.3.3.1. Customary character
1.3.3.2. Professional
1.3.3.3. Trend towards internationalization
1.3.3.4. Lucrative
1.3.3.5. Particular content of formalism
1.3.3.6. Publication trend
1.3.3.7. Law of acts carried out massively
2. ELEMENTS OF LAW
2.1. SUBJECTS
2.1.1. Active subject and passive subject
2.1.2. Natural person..
2.1.3. Legal person
2.1.3.1. Notion
a) Negative theories
b) Fiction theories
c) Theories of reality
2.1.3.2. Classification
2.1.4. Personality attributes
2.1.4.1. Name
2.1.4.2. Nationality
2.1.4.3. Home
2.1.4.4. Civil status
2.1.4.5. Heritage
2.1.4.6. Ability
2.2. OBJECT OF THE LAW
2.2.1. State Organization
2.2.2. Social guarantees
2.2.3. Family relationships
2.2.4. Property relations
2.2.4.1. Real and personal rights
2.2.4.2. Universal rights
2.2.4.3. Intellectual rights
3. SOURCES OF LAW
3.1. THE LAW ..........
3.1.1.
3.1.2.
3.2. CUSTOM
3.2.1.
3.2.2.
3.2.3.
3.2.4.
3.2.
3.3.
Notion
Characteristics
3.1.2.1. Emanation of authority
3.1.2.2.
3.1.2.3. 3.1.2.4.
Generality .
Mandatory .
Permanence .
Notion .
Classes
Importance of custom in commercial law.........
Test of habit
4. JURISPRUDENCE
3.3.1. Notion
3.4.
THE DOCTRINE
OBLIGATIONS
NOTION
4.1.
4.2.
SOURCES
4.2.1. Legal act
4.2.2.
4.2.3.
4.2.1.1.
Legal fact
4.2.2.1. Notion
4.2.2.2.
Notion.
Classification
Law
CLASSIFICATION OF OBLIGATIONS
4.3.1.
4.3.2.
4.3.3.
4.3.4.
4.3.5.
4.3.
Positive and negative
Main or accessories
Pure and simple
Conditional and term
Of genus or species
4.3.6. Of means or result
4.3.7. Alternatives or simple object
4.3.8. Optional
4.3.9. Solidarity or joint
4.3.10. Divisible or indivisible
4.3.11. Natural
4.4. EFFECTS OF OBLIGATIONS
4.4.1. Direct effects
4.4.1.1. Fulfillment of the obligation
4.4.1.2. Breach
4.4.2. Indirect effects
4.4.2.1. Guarantee measures
4.4.2.2. Conservative measures
4.4.2.3. Executive measures
4.5. EXTINCTION OF OBLIGATIONS
4.5.1. Pay
4.5.1.1. Notion
4.5.1.2. Who can pay
4.5.1.3. Recipient, time and place of payment
4.5.1.4. How it should be done and how payment is allocated
4.5.1.5. Payment by consignment
4.5.1.6. Settlement
4.5.2. Novation
4.5.3. Remission
4.5.4. Compensation
4.5.5. Confusion
4.5.6. Impossibility of execution or loss of the thing owed
4.5.7. Prescription
4.5.8. Term and condition
4.5.9. Transaction
4.5.10. Mutual agreement
4.5.11. Unilateral termination (Revocation and resignation)
4.5.12. Death of the creditor or debtor
4.5.13. Court decision
5. CONTRACTS
5.1. NOTION
5.2. EFFECTIVENESS OF LEGAL ACTS
5.2.1. Existence requirements
5.2.1.1. Willpower
5.2.1.2. Object
5.2.1.3. Cause
5.2.1.4. Imposed form
5.2.1.5. Elements of essence
5.2.2. Validity requirements
5.2.2.1. Ability
5.2.2.2. Lawful object
5.2.2.3. lawful cause
5.2.2.4. Non-observance of all forms
5.2.3. Opposability requirements
5.3. INEFFECTIVENESS OF CONTRACTS
5.3.1. Nonexistence
5.3.2. Disability
5.3.2.1. Absolute nullity
a) Disability
5.3.2.2. The relative nullity
a) Error
b) Violence
c) Fraud
d) Injury
5.3.2.3. Disabilities
5.3.2.4. Rescission
5.4. CLASSIFICATION OF CONTRACTS
5.4.1. Unilateral and bilateral
5.4.2. Free and expensive
5.4.3. Commutative and random
5.4.4. Main and accessories
5.4.5. Instantaneous and "successive tract"
5.4.6. Of colaboration
5.4.7. Consensual and real
5.4.8. Solemn or formal
5.4.9. Typical and atypical
5.4.10. Relative or individual and collective
5.4.11. Accession and free discussion
5.5. INTERPRETATION OF CONTRACTS
5.5.1. Criteria
5.5.2. Rules of interpretation
5.5.2.1. Intention before literality
5.5.2.2. Previous and subsequent conduct of the contracting parties
5.5.2.3. Good faith
5.5.2.4. Systematic interpretation
5.5.2.5. Positive interpretation
5.5.2.6. Ambiguous clauses, due to the uses of the place
5.5.2.7. Meaning that best suits the nature and purpose of the
contract
5.5.2.8. Favorability of the clauses for those who did not impose
them
5.6. TERMINATION OF CONTRACTS
Chapter II
BANKING LAW
1. GENERAL FRAMEWORK
1.1. BACKGROUND
1.2. NOTION OF BANKING LAW
1.2.1. Public Banking Law
1.2.1.1. Prior authorization
1.2.1.2. Permanent intervention
1.2.1.3. Imposition of sanctions
1.2.2. Private Banking Law
1.3. OBJECT
2. BANKING SYSTEM
2.1. NOTION
2.2. REGULATORY ENTITIES
2.2.1. Regulatory power to
2.2.2. Central Banking
2.2.2.1. Concept
2.2.2.2. Features
a) Dictate regulations regarding currency, credit, exchanges
and foreign trade
b) Issue the currency
c) Be a Bank of Banks
d) Be a government banker and tax agent
e) Be a depository of the reserves
2.3. FINANCIAL INTERMEDIARIES ..
2.3.1. Notion and content
2.3.2. Bank classification
2.3.2.1. Commercial or warehouse
2.3.2.2. Financial or investment
2.3.2.3. Mortgages
2.3.2.4. Saving
2.3.2.5. Trustees
2.3.2.6. Capitalization
2.3.2.7. Domestic and foreign
2.3.2.8. Public and private
2.3.2.9. Agricultural, livestock or mining credit
2.3.2.10. Cooperative Banks
2.4. CONTROL ENTITIES
2.4.1. The international panorama
2.4.2. Principal functions
2.4.2.1. Participate in the birth
2.4.2.2. Maintain the commercial registry
2.4.2.3. Possess and qualify your directors
2.4.2.4. Authorize the opening of branches
2.4.2.5. Authorize the opening of bank sections
2.4.2.6. Point out standards on accounting and operations
2.4.2.7. Apply sanctions for non-compliance with the law......
2.4.2.8. Adopt sanitation measures
2.4.2.9. Take possession of an establishment
2.4.2.10. Exercise jurisdictional functions
2.4.2.11. Perform consolidated supervision
2.5. SPECIAL SUPPORT ENTITIES

2.5.1. Asset strengthening
2.5.1.1. Capitalize
2.5.1.2. Grant credits
2.5.1.3. Guarantee operations
2.5.2. Support for small depositors
2.5.3. Administrative liquidation
3. BANKING OPERATIONS
3.1. NOTION..
3.2. CLASSIFICATION
a) Passive banking operations
b) Active banking operations
c) Neutral or complementary banking operations
Chapter III
INTRODUCTION TO BANKING CONTRACTS
1. NOTION
2. CHARACTERISTICS
2.1. RELATIONSHIP WITH THE TECHNICAL STRUCTURE
2.2. VERY PERSONAL CHARACTER
2.3. PROFESSIONAL CONTRACTING
2.3.1. Notion of professional
2.3.2. Professional obligations
2.3.2.1. Loyalty
2.3.2.2. Information
2.3.2.3. Efficiency and Prudence
2.3.3. Professional responsibility
2.4. BINDING BY ADHESION
2.4.1. Reason to be
2.4.2. Protection mechanisms for the client
2.5. BANKING SECRECY
2.6. INTERNATION ALIZATION
3. ELECTRONIC BANKING
3.1. REASON FOR ITS INDEPENDENT MENTION
3.2. POSSIBILITIES FOR CUSTOMERS
3.2.1. cashier service
3.2.2. Getting credit
3.2.2.1. Mutual
3.2.2.2. Credit opening
3.2.2.3. Letter of credit
3.2.3. Transfer service
3.2.4. What will come
3.3. ROUTING NETWORKS
3.4. PLASTIC MONEY
3.4.1. Notion and development
3.4.2. Legal nature
3.4.3. Credit card
3.4.3.1. Notion and evolution
3.4.3.2. Relationships between the owner of the trademark and the owner
Of the brand
3.4.3.3. Between the card issuing bank and the cardholder
Between the cardholder and the merchant
Between the issuing bank and the merchant
Between the acquiring bank and the merchant
Between the issuing bank and the acquiring bank
Between the banks (issuer and acquirer), the
commerce establishment and the switch (Network)
3.4.4. Debit Cards
3.4.4.1. Notion
3.4.4.2. Electronic terminals
a) ATM (Automated Teller Machines) or electronic teller machines
3.4.3.4.
3.4.3.5.
3.4.3.6.
3.4.3.7.
3.4.3.8.
b) POS (Point of Sale System) or Center of payments
3.4.5. Smartcards
3.4.5.1. Notion
3.5. REMOTE BANKING OR HOME BANKING
3.5.1. through the phone
3.5.2. Through the computer
3.5.2.1. direct network
3.5.2.2. Internet
3.5.2.3. Through other means
3.6. ELECTRONIC FUNDS TRANSFER
3.6.1. SWIFT (Society for world wide interbank communications)
3.6.2. Automated Clearing Houses or ACH
(Automated clearing houses)
3.7. RISKS
3.7.1. Variables that generate it
3.7.2. Nature of risks
3.7.3. Current responses
3.7.3.1. Encryption
3.7.3.2. Certification
3.7.3.3. Technological instruments
3.7.3.4. Legislations
3.8. ELECTRONIC OR COMPUTER CONTRACT
3 .8.1. Notion.
3.8.2. Contract formation
3.8.3. Existence and validity of the Electronic Contract
3.8.4. The electronic signature
3.8.5. Conflict of laws and jurisdictions
3.9. ELECTRONIC MONEY
3.9.1. electronic check
3.9.2. Digital money
3.10. DATABASES
3.1 0.1. Notion
3.10.2. Classes within banking activity
3.10.2.1. Central risk
a) Stock market
b) Credit market
3.10.2.2. Negative credit information centers
a) Canceled checking accounts
b) Write-off portfolio
3.10.3. Habeas Data
3.11. CENTRALIZED SECURITIES DEPOSITS
3.11.1. Notion
3.11.2. The securities deposit contract
3.11.2.1. The truncation of the circulation of titles
values .
3.11.2.2. Main rights and obligations of the parties
a) The central securities depository
b) From the depositor
3.11.3. Responsibility.
3.12. INTERBANK OPERATIONS
3.12.1. Check Clearing
3.12.2. Other electronic services of the Central Bank.
4. LEGISLATIVE SOURCES
5. REFERENCES TO INTERNAL LEGISLATIONS
SECOND PART
CONTRACTS PRECEDING THE CARRYING OUT OF PASSIVE
OPERATIONS
Chapter IV
BANK DEPOSITS
1. CONTENT
2. REGULAR AND IRREGULAR DEPOSITS
2.1. REGULAR DEPOSITS
2.2. IRREGULAR DEPOSITS
3. IRREGULAR MONEY DEPOSITS
3.1. NOTION AND CHARACTERISTICS
3.2. LEGAL NATURE
3.3. BANK OBLIGATIONS
3.3.1. Refund of the amount received
3.3.2. Custody of deposited monies
3.3.3. Interest payment
3.4. CLASSIFICATION.
3.4.1. Due to the way it is handled
3.4.2. Due to its demandability
3.4.3. For the social function
3.4.4. To fulfill some special function.
4. IRREGULAR DEPOSITS OF TITLES
4.1. PURPOSE OF THE DEPOSIT
4.2. MODALITIES
4.3. OBLIGATIONS OF THE PARTIES
4.4. ITS DEVELOPMENT IN LATIN AMERICAN BANKING
5. SECURITIES DEPOSITS
Chapter V
DEPOSITS IN CURRENT ACCOUNTS
1. CURRENT ACCOUNT
1.1. ACCOUNTING NOTION
1.2. COMMERCIAL CURRENT ACCOUNT
2. BANK CURRENT ACCOUNT
2.1. RELATIONSHIPS WITH THE COMMERCIAL CURRENT ACCOUNT
2.2. CONCEPT AND DEFINITION
2.3. LEGAL NATURE AND CHARACTERISTICS
2.3.1. Self-employed and main...
2.3.2. Real or consensual
2.3.3. Unilateral or bilateral.
2.3.4. Onerous and commutative
2.3.5. Of successive tract
2.3.6. Accession
3. OPENING AND OPERATION OF THE ACCOUNT
3.1. GENERAL REQUIREMENTS
3.2. ACCOUNT OPENING
3.2.1. Identification of the contractor
3.2.2. Verification of moral and economic solvency.
2.3. Full of formal requirements
3.3. PLURALITY OF HOLDERS
3.3.1. Solidarity plurality
3.3.2. Joint or collective plurality
3.3.3. Optional drawer
3.4. THE CHECK
3.4.1. Typical title
3.4.2. Historical background
3.4.3. Legislative systems and definitions
3.4.4. Differences with the bill of exchange
3.4.5. Legal nature of the authorization to release it 3.4.6. Check circulation
3.4.7. Presentation for payment
3.4;8. I protest.
3.4.9. Foreign exchange actions
4. OBLIGATIONS OF THE BANK
4.1. RECEIVE DEPOSITS
4.1.1. In money
4.1.2. on checks
4.1.3. In other titles
4.1.4. Deposit made by third parties
4.1.5. Night deposits
4.2. PROVIDE DOCUMENTS OR SKELETONS
NECESSARY ... ... ...
4.2.1. Consignment forms
4.2.2. Checks or checkbooks
4.3. KEEP CURRENT ACCOUNT AND PROVIDE DATA
ABOUT YOUR STATUS
4.4. PAY THE CHECKS
4.4.1. Requirements verification
4.4.1.1. Validity requirements
a) Drawn bank
b) Incorporated right and opportunity to
your exercise
c) Date and place of creation
d) Legitimation of the holder
e) Signature of the subscriber
4.4.1.2. Regularity requirements
a) Drawer's checkbook.
b) Formal regularity.
c) Agreement between the mentioned quantities
4.4.2. Just reasons for not paying
4.4.2.1. Failure to comply with check existence requirements
4.4.2.2. Failure to comply with regularity requirements.....
4.4.2.3. Untimely presentation of the check .
4.4.3. Partial payment.
4.4.3.1. Legislative regulation
4.4.3.2. Partial payment and provision
4.4.4. Liability for poor payment
4.4.5. Liability for non-payment
4.4.6. Payment and termination of the contract
4.5. NOT PAYING THE CHECKS
4.5.1. Non-payment order
4.5.2. Bankruptcy or contest
4.5.3. Expiration and prescription
4.6. PAY INTEREST
4.7. MAINTAIN THE BANK RESERVE OR SECRET
5. CUSTOMER OBLIGATIONS
5.1. MAINTAIN SUFFICIENT FUNDS
5.1.1. The obligation to have sufficient funds and partial payment.
5.1.2. The overdraft current account
5.2. CUSTODY THE CHECK BOOK
5.3. USE THE DOCUMENTS OR SKELETONS REQUIRED BY LAW
5.4. RETURN THE CHECKS AT THE END OF THE CONTRACT.
6. POWERS OF THE BANK
6.1. MAKE UP FOR
6.2. DEMAND IMMEDIATELY OVERDRAFTS
7. POWERS OF THE CUSTOMER
7.1. DISPOSAL OF YOUR FUNDS
7.1.1. Direct receipt...
7.1.2. counter check
7.1.3. ordinary check
7.1.4. Transfers
7.1.5. Charge on account
7.1.6. Debit card
7.2. CREATE AND DEMAND SPECIAL CHECKS
7.2.1. Non-negotiable checks
7.2.2. Crossed checks 397
7.2.3. Checks for credit into account 398
7.2.4. Certified checks 399
7.2.5. Checks with guaranteed provision 402
7.2.6. Cashier's or cashier's check 403
7.2.7. Travelers checks 404
7.3. REVOCATE YOUR PAYMENT ORDER 405
7.3.1. Legislative systems 405
7.3.2. Revocation and opposition 407
8. TERMINATION OF THE CONTRACT 408
8.1. ODDS 408
8.2. CA USALES... 409
8.2.1. Death of the owner 409
8.2.2. Bankruptcy or competition 409
8.2.3. Bad driving 409
8.2.4. Extinguishment or mobilization of the balance
Chapter VI
TERM DEPOSITS
1. NOTION
1.1. CHAPTER CONTENT 413
1.2. SIMILARITY WITH THE MUTUAL 413
1.3. ECONOMIC FUNCTION
2. CLASSES 415
2.1. TERM 416
2.2. WITH PREA VISO 416
2.3. SUPPLETORY TERMS 417
3. DOCUMENTS 417
3.1. SIMPLE RECEIPT 417
3.2. TITLE VALUE 418
3.3. DIFFERENCE WITH BONDS OR OBLIGATIONS 419
Chapter VII
SAVINGS DEPOSITS
1. NOTION 421
1.1. SOCIOECONOMIC CONTEXT
1.2. CHARACTERISTICS 421
1.2.1. Multiplicity of clients 421
1.2.2. Deposit permanence
1.2.3. Limitation on maximum amounts
1.2.4. Non-monetary incentives 423
2. CLASSES 423
2.1. SIMPLE AND CONSIDERATE 424
2.2. ON SIGHT AND IN DEADLINE 424
2.3. CONTRACTUAL OR PERIODIC SAVINGS 425
3. REPRESENTATIVE DOCUMENT 426
3.1. NOTEPAD 426
3.1.1. Its reason for being 426
3.1.2. Legal nature
3.2. SAVINGS STAMPS 428
4. PRIVILEGES THAT THEY USUALLY ENJOY 428
4.1. NON-EMBARGABILITY 429
4.2. DELIVERY OF BALANCES TO HEIRS 429
4.3. SPECIAL TAX TREATMENT 430
4.4. PRIVILEGED CREDITS 430
Chapter VIII ISSUANCE OF OBLIGATIONS AND OTHER TITLES
1. CHAPTER CONTENT 431
1.1. BONDS OR OBLIGATIONS 431
1.2. OTHER TITLES 433
2. NOTION OF OBLIGATIONS, BONDS OR DEBENTURES
3. ISSUANCE OF OBLIGATIONS BY COMMERCIAL COMPANIES...
3.1. ISSUE LIMITED TO CERTAIN TYPES OF COMPANIES....................
3.2. MINIMUM REQUIREMENTS
3.2.1. Subscribed capital fully paid ...........................................
3.2.2. Complete placement of previously issued securities......
3.2.3. Issuance limited to the amount of capital and reserve...............
3.3. ISSUANCE PROCESS ................................................ .................... 3.3.1.
Decision of the competent body ................................................ .
3.3.2. Prospectus or issuance project ........................................................... .
3.3.3. Contract or act of issuance ........................................................... ...........
3.3.4. Advertising .............
3.4. SPECIAL STATE INTERVENTION .......................................
3.4.1. Reason to be ............................................... ..................................
3.4.2. Content and powers
3.4.2.1. Prior authorization and subsequent control .......................
3.4.2.2. Faculties .....
a) Demand guarantees ................................................ .....
b) Ensure the destination of the loan ...................
e) Monitor compliance with obligations
derived from the titles d) Witness the draws ........................................... e) Send
observers to the general assembly!.....
f) Call the general assembly...................................
g) Impose sanctions
3.5. TITLES
3.5.1. Form of creation
3.5.1.1. Due to its traffic law.................................................
3.5.1.2. For the series and values
3.5.1.3. Content
3.5.2. Qualification
3.6. OBLIGATIONS OF THE ISSUING COMPANY ................................
3.6.1. Repay the loan
3.6.2. Pay remuneration................................................. ................
3.6.3. Publish the financial statements ................................................ ....
3.6.4. Provide eventual information...................................................
3.6.5. Pay the legal representative and the expenses of the assemblies......
3.6.6. Maintain social identity................................................ .......
3.6.7. Establish a code of good governance ...........................................
3.7. OF THE BONDHOLDERS AND THEIR REPRESENTATIVE...
3.7.1. Appointment by the issuing company 449
3.7.2. Duties of the common representative 449
3.7.2.1. Preliminary features449
3.7.2.2. Permanent functions 449
3.7.3. Individual powers of bondholders450
3.7.3.1. Those of the holders of a security 450
3.7.3.2. Take legal action 451
3.7.4. General Assembly 451
3.7.4.1. Announcement 451
3.7.4.2. Quorum and decisions 452
3.7.4.3. Faculties 452
3.8. BONDS CONVERTIBLE INTO SHARES ...........................................
3.8.1. Facultative ... .....
3.8.2. Mandatory... ... ...............
4. ISSUANCE OF OBLIGATIONS BY AN ENTITY
CREDITI CIA .. 454
4.1. ISSUE LIMITED TO CERTAIN TYPES OF ENTITIES
BANKING ... ... 454
4.2. APPLICATION OF THE GENERAL PRINCIPLES ............................
4.3. ISSUANCE OF OBLIGATIONS SUCH AS 456
4.3.1. Mortgage securities 456
4.3.2. Financial securities 458
4.4. ACCESS TO INTERNATIONAL MARKETS .........................
4.5. OBLIGATIONS OF THE ISSUING COMPANY 460
5. ISSUE OF OTHER SECURITIES BY AN ENTITY
BANKING ................................................. .................................................. ........
5.1. CONTENT 460
5.2. TICKETS 461
5.3. TRAVELERS CHECKS 461
5.4. CHECKS WITH GUARANTEED PROVISION 462
5.5. SAVINGS STAMPS 463
Chapter IX REDISCOUNT
1. WARNING. 465
2. AS A SOURCE OF RESOURCES AND POLICY INSTRUMENT
MONETARY 465
2.1. QUANTITATIVE CONTROL 467
2.2. QUALITATIVE CONTROL 468
2.3. RATE, MARGIN AND PERCENTAGE OF COUNT NETWORKS
469
3. REQUIREMENTS REQUIRED BY THE CENTRAL BANK 471
3.1. NATURE OF ACCOUNTING DEGREES 471
3.2. TERM 471
3.3. GUARANTEE 472
3.4. TYPE OF INTEREST 472
3.5. PURPOSE OF THE LOAN 472
THIRD PART AGAINST TOS PRECEDING THE CARRYING OUT OF
ACTIVE OPERATIONS
INTRODUCTION 475
Chapter X MUTUAL
1. PRELIMINARY WARNING 477
2. NOTION ... ... 478
2.1. MERCHANDISE
2.2. REMUNERATION 479
3. LEGAL NATURE 480
4. LEGAL CHARACTERISTICS " 481
5. OBLIGATIONS OF THE MUTANT 482
6. MUTUAL OBLIGATIONS 483
6.1. PAY THE INTEREST

6.1.1. Limitations to the interest agreement
6.1.1.1. Rate ................................................. .................................
6.1.1.2. Capitalization ................................................. ..............
6.1.2. Presumptions arising from receipt
6.2. RESTITUTE THE GOOD OR THE SUM RECEIVED.................................
6.2.1. Time of restitution ................................................ .................
6.2.2. Payment for installations ................................................. ...............
6.2.3. Payment currency
6.2.4. Adjustment clauses
7. MODALITIES OR
CLASSES ................................................... ..................................
7.1. BY ITS INSTRUMENTATION ................................................ .................
7.1.1. Exchange loan ................................................ ....................
7.1.2. Account credit ................................................. .........................
7.1.3. Overdraft or overdraft ........................................... ..............
7.2. FOR ITS TERM................................................. ............................................
7.2.1. Short term ................................................ ...................................
7.2.2. Medium and long term .............................................. ..................
7.2.3. Rotary................................................. ....................................
7.3. FOR ITS
GUARANTEES ................................................ .................................
7.3.1. General principles ....................
7.3.1.1. Types of guarantees............................................... ........
a) Bail................................................. ....................
b) Garment ................................................. ....................
c) Mortgage ............................................................
d) Antichresis................................................. ...............
e) Trust as guarantee ...........................................................
f) First demand guarantees ...........................
7.3.1.2. Types of credit ................................................. ...........
a) Personal credit................................................ ....
b) Co-signer credit "................................
c) Pledge credit "........................................
d) Mortgage credit "..............................
e) Anticretic credit ................................................ .
f) Trust credit ................................................ ..
7.4. FOR YOUR DESTINY 508

7.4.1. Consumer credit 509
7.4.2. Production credit 510
7.4.3. Qualification or equipment and spare parts credits 510
7.4.3.1. Habilitation or avio credit 510
7.4.3.2. spare parts credit 511
7.5. FOR ITS
PURPOSE............................................... ............................................
7.5.1. Of titles................................................. .......................................
8. SIGNATURE CREDIT 513
8.1. CONCEPT ................................................. ................................................
8.2. A VOUCHER and
GUARANTEES ................................................ ...........................
8.3 . ACCEPTANCES ................................................. .......................................
8.4. CREDIT ORDERS LETTERS ........................................................... ...........
8.4.1. Notion... .........................................................
8.4.2. Interveners.. ... ... ... ... ... ... ...........
8.4.2.1. Giver................................................. ............................
8.4.2.2. Taker................................................. .......................
8.4.2.3. Addressee ................................................. .................
Chapter XI
CREDIT OPENING
1. NOTION .............................
1.1. DOUBLE ACCEPTION .............
1.2. DEFINITION AND OBJECT....................
1.3. MOMENTS OF THE CONTRACT ................................................ ...............
2. ELEMENTS ............
2.1. AMOUNT...
2.2. DEADLINE... ... ... ...
2.3. METHOD OF USE................................................... .......................
2.4. REMUNERATION
2.5. GUARANTEE. ............
2.6. CAUSES OF UNILATERAL TERMINATION
3. LEGAL NATURE ................................................ ................................ 3.1.
THEORY OF MUTUAL ................................................ ..................................
3.2. PRELIMINARY CONTRACT THEORY..............................................
3.3. THEORY OF THE DEFINITIVE
CONTRACT ...........................................................
4. LEGAL
CHARACTERISTICS ................................................... .................................
5. OPENING
CLASSES ................................................... ........................................
5.1. FOR THE OBJECT......
5.1.1. Of money ..........
5.1.2. Signature ...........
5.2. BY THE FORM OF DISPOSITION......
5.2.1. Sim foot...........
5.2.2. Rotary .......
6. OBLIGATIONS OF THE BANK .........
6.1. AVAILABILITY 532
6.1.1. For delivery of money 533
6.1.2. By credit into bank current account 533
6.1.3. For overdrafts or overdrafts 533
6.1.4. By acceptances 534
6.1.5. For guarantees 534
6.2. THIRD PARTY EMBARGOES................................................. ....................
7. OBLIGATIONS OF THE
CUSTOMER ........................................................... ....................
7.1. PAY THE COMMISSION OR COMMISSIONS AND
INTEREST .................
7.2. REFUND THE AMOUNTS USED ...........................................
8. TERMINATION OF THE
CONTRACT ........................................................... ..................
8.1. GENERAL PRINCIPLE REGARDING THE
TERM................................................
8.2. SOME FORMS OF TERMINATION 538
8.2.1. Because the credit was used 538
8.2.2. By unilateral decision in fixed-term contracts 538
8.2.3. Because either of the parties is in a state of bankruptcy,
administrative or judicial liquidation, or bankruptcy 539
8.2.4. Due to the death of the borrower or the dissolution of the company
respective
9. CREDIT CARDS................................................... ...........................
9.1. HIS MENTION IN THIS CHAPTER..
9.1.1. Description of the contract ................................................. .............
9.2. ELEMENTS OF THE CONTRACT ................................................ ..............
9.2.1. Amount................................................. ............................................
9.2.2. Term................................................. ..................................................
9.2.3. How to use the credit ........................................... ..........
9.2.4. Remuneration................................................ .........................
9.204.1. The Commission ................................................ ..................
9.204.2. The interests................................................ .................
Chapter XII
LETTER OF CREDIT
1. NOTION
1.1. BACKGROUND 545
1.2. UNIFORM RULES AND USES 547
1.3. DEFINITION 549
the. CLASSIFICATION AS AN ACTIVE OPERATION 550
2. PARTS INVOLVED 551
2.1. ORDER 552
2.2. ISSUING BANK 553
2.3. NOTIFYING BANK and CONFIRMING BANK 554
204. PAYING BANK 555
2.5. NEGOTIATING BANK 555
2.6. REIMBURSEMENT BANK 557
2.7. BENEFICIARY 558
2.8. RELATIONSHIPS BETWEEN THE PARTIES 558
2.8.1. Relations between debtor and creditor 558
2.8.2. Relations between the issuing bank and its correspondents
3. LEGAL NATURE ................................................ ................................
3.1. MANDATE THEORY
3.2. THEORY OF ASSIGNMENT OF CREDIT
3.3. THEORY OF STIPULATION IN FAVOR OF A THIRD PARTY.....
3.4. THEORY OF IMPERFECT DELEGATION
OR ACCUMULATE TIV AP AS IV
A.............................................. .........................
3.5. THEORY OF TITLE V ALUE................................................... ...................
3.6. COMPLEX LEGAL BUSINESS THEORY .................................
4. LEGAL
CHARACTERISTICS ................................................... ................................. 5.
THE LETTER OF CREDIT ................................................ ..................................
5.1. TYPICAL DOCUMENT ................................................ .................................
5.2. CHARACTERISTICS ... ........
5.3. CONTENT ..........
5.3.1. Name of the banks and the payer or payer ................
5.3.2. Beneficiary name
5.3.3. Object of the credit....
5.3.4. Sum to be delivered or negotiated for
titles to the beneficiary ................................................ ...................
5.3.4.1. Rules on quantity and price .................................
a) Precise quantity ................................................ ....
b) Quantity without qualification ...................................
c) Quantity or price ............................................ ...
5.3.4.2. Payment opportunity ................................................. ...
5.3.5. Deadline for credit utilization ...........................................
5.3.5.1. Determination of expiration .................................
5.3.5.2. Difference with the deadline for shipment......
5.3.6. Documents to be submitted
5.3.6.1. International buying and selling....................................
5.3.6.2. The Vienna Convention ...........................................
a) International Sales ...........................
b) The Limitation of the Contracting State...............
c) Goods..
d) Sales
e) Temporary application.................................................
f) Exclusions by the parties ...................................
g) Aspects not covered by the Convention...............
5.3.6.3. Incoterms ... ..
a) FAS................................................. .........................
b) FOB .......
c) d)
CFR................................................. .......................
CIF................................................. .......................
5.3.6.4. Transport documents ...........................................
to date ............................................... ....................
b) Freight................................................. ....................
c) "Clean" document ...........................................
d) Bill of lading ................................
e) Combined transport document
or multimodal ................................................ .........
f) Other shipping documents ............................
Insurance documents ................................................
Commercial bills
. a) Expedition in the name of the ordering party....................
b) Description of the goods ...........................
c) Invoices for higher value ...................................
5.3.6.7. Other documents ................................................ ........
a) Consular invoices ...........................................
b) Weighing documents ...........................................
c) Certificates of origin ...........................................
d) Quality certificates .......................................
e) Packing lists ........................................................... ...
f) Phytosanitary certificates ...................................
5.3.7. Other formal elements contained in the letter....................
5.3.6.5.
5.3.6.6.
5.3.7.1.
5.3.7.2.
5.3.7.3.
5.3.7.4.
5.3.7.5.
5.3.7.6.
5.3.7.7.
5.3.7.8.
Credit number and date ...........................................
Provisions on irrevocability, transshipment,
partial shipments, transfers, etc. ..................
Refund method................................................. .....
Notices to some of the parties or third parties...............
Authorization of debit from current account ................
Guarantee constitution ................................................
Ports of embarkation and destination ................................
Subjection to the "Uniform Rules and Practices"...................
6. CREDIT CLASSES..
6.1.
6.2.
REVOCABLE.................................................... ............................................
IRREVOCABLE ................................................. ............................................
6.3.
OTHER CLASSES OR MODALITIES ................................................ .......
6.3.1. Divisible and indivisible.
6.3.2. Rotary ....................................................................
6.3.3. Transferable................................................. ..................................
6.3.4. Circular................................................. ........................................
6.3.5. At sight or in term ............................................ .........................
6.3.6. With red clause or green clause ...........................................
6.3.7. Back to back ............................................... ..................................
6.3.8. Standby................................................. ............................................
7. OBLIGATIONS OF THE ISSUING
BANK................................................... .........
7.1. ESTABLISH THE LETTER OF CREDIT ...........................................
7.2. VERIFY COMPLIANCE WITH THE BENEFICIARY'S OBLIGATIONS.
7.2.1. Formal verification................................................ .....................
7.2.2. Rejection of the documents by the bank that studies them....
7.2.2.1. Irregular documents .................................................
7.2.2.2. Delayed documents ................................................
7.2.3. Rejection of documents by the issuing bank....................
7.2.3.1. Rating upon receipt ...........................................
7.2.3.2. Return of documents ...................................
7.2.4. Improper classification of documents...................................
7 .3. PAY
7.3.1. A sum of money ................................................ ....................
7.3.2. Securities................................................ .................................
7.3.2.1. Latin American bank acceptances
(ABLAS) ... ... ... ...
7.3.3. Directly or through a correspondent..........................
7.3.4. I do not pay for reasons other than credit....................................
7.4. SEND THE DOCUMENTS TO THE ORDER.
7.5. TRANSFER CREDIT
7.6. REFUND THE PAYER
8. ACCESSORY COVENANTS
8.1. DOMAIN RESERVATION AGREEMENT
8.2. RETURN AGREEMENT
8.3. BEST BUYER AGREEMENT
9. BUY SPECIAL SALES
9.1. ABOUT SAMPLES OR QUALITIES
9.2. TO TEST OR TEST
9.3. AGAINST DOCUMENTS
10. APPLICATIONS OF PURCHASE AND SALE IN BANKING
OPERATIONS
10.1. PURCHASE OF GOLD AND PRECIOUS METALS
10.2. PURCHASE OF FOREIGN CURRENCY
10.3. PURCHASE OF TITLES
10.4. STOCKS BUYSELLING
10.5. PURCHASE AND SALE OF REAL ESTATE AND OTHER
ASSETS
10.6. SALE OF CHECK BOOKS and OTHER FORMS
Chapter XXI
SAFETY BOXES
1. NOTION
1.1. OPERATION DESCRIPTION
2. LEGAL NATURE
2.1. DEPOSIT THEORY
2.2. LEASE THEORY
2.3. MIXED THEORIES
2.4. UNITARY CONTRACT THEORY
3. LEGAL CHARACTERISTICS
4.1. DELIVERY THE KEY AND MAINTAIN FREE ACCESS
4.2. PROHIBIT THE ENTRY OF STRANGERS.
4.3. KEEP A DUPLICATE OF THE KEY
4.4. BE RESPONSIBLE FOR THE INTEGRITY AND SUITABILITY OF
THE BOXES
4.4.1. Custody and conservation of the box
4.4.2. Custody and security of the premises
4.4.3. Assumption of exceptional conduct in case of risk
4.5. BE RESPONSIBLE FOR DAMAGES SUFFERED BY CUSTOMERS
5.1. PAY THE AGREED AMOUNT
5.2. USE THE BOX IN ACCORDANCE WITH THE REGULATIONS
5.3. REFRAIN FROM STORING PROPERTY THAT PUT THE BOX IN
DANGER
5.4. RETURN THE KEY AT THE TERMINATION OF THE CONTRACT
6. PLURALITY OF OWNERS
7. TERMINATION OF THE CONTRACT

7.1. DURATION
7.2. TACIT EXTENSION OF THE CONTRACT.
7.3. OPENING BY THE BANK
7.4. OPENING IN CASE OF LIQUIDATION OF THE BANK
Chapter XXII
ESCROW
1. FRAME OF REFERENCE
1.1. DISTINCTION BETWEEN VARIOUS FIGURES
1.1.1. Trust property
1.1.2. Fiduciary executorship
1.1.3. Trust
1.1.4. Trust business
1.1.5. Fiduciary or trust assignments
1.1.6. Trusts or commercial trust.
1.2. TRUST BUSINESSES
1.2.1. Historical origins: Roman Law
1.2.1.1. Fideicommisum
1.2.1.2. Pactum fiduciae
1.2.2. Concept and definition
1.2.3. Items
1.2.3.1. Real.
1.2.3.2. Personal or obligatory
1.2.3.3. Relationships,
1.2.4. Location
1.2.4.1. Causal or abstract
1.2.4.2. Indirect
1.2.4.3. Simulated
1.2.4.4. Interposition of people
1.2.5. Reason to be
1.3. THE TRUST
1.3.1. Historical Origins: the two jurisdictions
a) From the appearance of the "uses" until the beginning of the 15th
century.
b) From the beginning of the 15th century to the promulgation of the
Law of
Uses.
c) From the Law of Uses (16th century) at the end of the century XVIII
d) From the end of the 18th century to contemporary times
1.3.3. Items.
1.3.3.1. Personal
a) Constituent or settlor.
b) Trustee.
c) Cestui que trust or beneficiary..
1.3.3.2. Patrimonial
1.3.4. Classes...
1.3.4.1. Volunteer .
1.3.4.2. By ministry of law..
1.3.4.3. Simple or special...
1.3.4.4. Public or private.
1.4. RELATIONSHIPS BETWEEN THE TRUST AND THE TRUST
BUSINESS.
2. TRUST OR COMMERCIAL TRUST

2.1.1. Classification from a banking point of view
2.2. LEGAL NATURE
2.2.1. Irrevocable mandate theory
2.2.2. Affectation heritage theory
2.2.3. Trust business theory
2.7.
2.3. LEGAL CHARACTERISTICS
2.4. PARTS INVOLVED
2.4.1. Trustor or trustor
2.4.2. Trust.
2.4.3. Trustee
2.5. OBJECT OF THE CONTRACT
2.5.1. One or more assets
2.5.2. Autonomous heritage...
2.5.2.1. Assets separated from the rest of the assets..
2.5.2.2. Excluded from the general guarantee of the creditors of the
trust
trustor
trustee
2.5.2.5. They guarantee the obligations contracted to fulfill the
end.....
2.5.3. They must return to the trustor
2.6. PROHIBITED BUSINESSES
2.6.1. Secret trust business
2.6.2. Successive trusts
2.6.3. Those celebrated over a certain period of time
2.6.4. Those who grant profits to the trustee other than the
fee
2.6.5. Those carried out in fraud of the law.
2.7. OBLIGATIONS OF THE TRUSTEE

2.7.1. Manage assets in the established manner
2.7.1.1.Carry out the necessary acts to achieve the
purpose
2.7.1.2. Invest them................................................. ....................
2.7.1.3. Respond for its handling.................................................
2.7.2. Take inventory and provide security ...........................................
2.7.3. Keep assets separate from the rest of your assets......
2.7.4. Carry the legal status for the protection of assets..........
2.7.5. Be accountable for your management.................................................
.........
2.7.6. Transfer the assets to whomever corresponds.................................
2.7.7. Consult the jurisdictional or administrative authority...
2.7.8. keep secret
2.8. RIGHTS OF THE TRUSTOR OR TRUSTOR.

2.8.1. Those that have been reserved.
2.8.2. Revoke the trust.
2.8.3. Demand accountability.
2.8.4. Exercise liability action against the fiduciary.....
2.8.5. Request the removal of the trustee and appoint a new one......
2.8.6. Obtain the return of the goods.
2.9. OBLIGATIONS OF THE TRUSTOR
2.9.1. Remuneration.
2.9.2. Reimburse expenses.
2.9.3. Sanitation by eviction..
2.10. RIGHTS OF THE BENEFICIARY..
2.10.1. Demand compliance from the fiduciary and exercise the actions
of
responsibility
2.10.2. Oppose preventive measures against property
2.10.3. Challenge voidable acts..
2.10.4 Request the removal of the trustee..
2.10.5. Review the financial statements.
2.11. AUTHORITY INTERVENTION.
2.11.1. Authorization from the bank or company..
2.11.2. Authorization of the resignation of the trustee..
2.11.3. Absolution of queries..
2.11.4. Imposition of certain obligations.
2.11.5. Removal of trustee and appointment of interim administrator
2.11.6. Indication of rates
2.12. CAUSES FOR EXTINCTION OF THE TRUST BUSINESS .................
2.12.1. Fully realize its purposes.................................................
2.12.2. Absolute impossibility of realization .......................................
2.12.3. Expiration of the term or the maximum has elapsed......
2.12.4. Compliance with the resolutory condition ...........................
2.12.5. The suspensive condition becomes impossible or is not fulfilled
in a timely manner.
2.12.6. Death of the trustor or beneficiary
2.12.7. Dissolution of the trust entity
2.12.8. Action of creditors prior to the celebration of the
business.
2.12.9. Declaration of nullity of the constitutive act.
2.12.10. Revocation of the trustor
2.12.11. Mutual agreement of trustor and beneficiary.
2.12.12. Failure of the trustee
2.12.13. Renunciation of beneficiaries
2.12.14. Confusion of the status of sole trustee with that of sole trustee
2.13. TRUST MODALITIES IN BANKING OPERATIONS

2.13.1. Management Trust
2.13.2. Investment trust
2.13.2.1. Individual Trusts
2.13.2.2. Collective administration trusts.
a) Ordinary common funds.
b) Special common funds.
c) Benefit trusts or insurance funds
pension
d) Trusts in foreign currency..
e) Other Funds.
2.13.3. Guarantee trust.
2.13.4. Testamentary trust..
2.13.5. Insurance trust.
2.13.6. Development Trusts.
2.13.7. Real estate trusts.
2.13.8. Government trusts
2.13.9. Nationalization and privatization trusts
Chapter XXIII
SECURITY
1.1. THE VARIOUS REGIMES
1.2. THE ENVIRONMENT
1.3. NOTION
2. PARTIES INVOLVED
2.1. ORIGINATOR OR CONSTITUENT
2.2. MANAGING AGENT OR ISSUER
2.3. THE ADMINISTRATOR
2.4. THE PLACER
2.5. THE STRUCTURER
2.6. THE RISK RATER
2.7. THE INVESTORS
3. INSTRUMENTS
3.1. FIDUCIARY MECHANISMS
3.2. STOCK FUNDS
4. TITLES
5. MOBILABLE ASSETS
5.1. PORTFOLIO AND DEBT SECURITIES
5.2. PUBLIC DEBT
5.3. ESTATE
5.4. CASH FLOWS
5.5. LEASING CONTRACTS
5.6. MONEY RESOURCES
5.7. OTHERS AUTHORIZED BY THE CONTROL ENTITY
6. PROCEDURES AND EFFECTS
7. PORTFOLIO SECURITIZATION
7.1. BANKING QUALIFICATION CRITERIA, THE BASEL COMMITTEE
7.2. COVERAGE MECHANISMS
7.2.1. Internal mechanisms
7.2.1.1. Subordination of the issue
7.2.1.2. Portfolio overcollateralization
7.2.1.3. Excess cash flow
7.2.1.4. Wallet replacement
7 .2.1.5. Originator endorsement..
7.2.2. External Mechanisms
7.2.2.1. Vouchers or guarantees from financial institutions
7.2.2.2. Credit lines or openings
7.2.2.3. Credit insurance
7.2.2.4. Deposit of money as guarantee
7.2.2.5. Irrevocable guarantee trust contract
8. REAL ESTATE SECURITY
8.1. THE CLASSIC REAL ESTATE TRUST
8.2. REAL ESTATE GUARANTEE SECURITY
8.3. REAL ESTATE SECURITIZATION OF PARTICIPATION
8.4. SECURITY OF CONSTRUCTION PROJECTS
8.5. SECURITY THROUGH REAL ESTATE FUNDS
9. SECURITY IN CONCESSIONS
ANALYTICAL INDEX
BIBLIOGRAPHY
ABBREVIATIONS.
SOURCE TABLE
YO. LATIN AMERICAN LEGISLATION
n. CONVENTIONS AND MODEL LAWS
CD-ROM ANNEX
I. INSTRUCTIONS FOR THE USER
PRESENTATION TO THE FIFTH EDITION
Twelve years later, when so much has changed in the environment and in reality,
we present completely renewed the fifth edition of the work "Banking Contracts"
that reflects the transformation of a world in rapid change. The reader who has
become familiar with previous editions will quickly perceive the new features
that I anticipate. New chapters and sections on electronic banking, plastic money,
securitization and fiduciary products will highlight the approach that we
suggested since the last edition with the cover of the work, to indicate that the
fundamental banking service of cash, to ensure the community the Making your
payments and collecting those you receive is and will increasingly be supported
by electronic means of registration and transfer of funds. But, in addition, you
will find material necessarily updated by reflections as important as those
suggested by modern consumer protection law, topics on general contracting
regulations, "habeas data" and abusive clauses, to mention a few. And, finally,
you will also notice a change in the very order of the presentation of the contracts
that precede the execution of active operations, to accommodate a classification
that we have added to the traditional one of operations, with the purpose of
introducing enriching criteria. in understanding the bank-client relationship.
For all this, we hope that the new edition, which will be as much as saying, the
new book, given the substantial increase in its content, will receive the
benevolent reception and make the useful contribution that for a period of 25
years has allowed us to travel. Latin America and the entire world, with this
academic message, accompanied by FELABAN and now in the good hands of
LEGIS, as editor of the fifth edition.
In the preparation of this edition we had the valuable help of many friends from
Latin America and Colombia to validate, in recent months, the current
regulations that appear cited in the work, as well as some common aspects.
complexes that are introduced in the book. I do not mention them so as not to run
the risk of unjustifiably omitting any of them, but I express my gratitude to all of
them. In another way and directly I have let you know how I now reiterate it
generically in public. In addition, I have had the valuable assistance of the entire
team of lawyers at "Rodríguez-Azuero Asociados", an advisory and consulting
entity that I have had the honor of directing for many years. Their contribution
and that of my students have allowed us to permanently enrich and renew the
work over the years, which not only commits my gratitude but also makes them,
in many ways, co-participants in the result. In the past I received valuable
recommendations from Andrés López V. and Andrés Tobón E. and more
recently, with different levels of participation, Juliana Navas, María Carolina
Suárez, Luisa Fernanda Torres, Álvaro Andrés González, Luis Fernando Navia
and Juan Camilo Rodríguez worked, but most especially, César Prado Villegas,
with whom we spent many hours discussing the book in general and whose
advice and contributions were particularly valuable to me.
Finally, a very special mention for my dear wife Pilar Salazar Camacho and for
our children, who have combined their ability to stimulate and support my
academic work in all fields.
Bogotá, April 2002
PRESENTATION TO THE FIRST EDITION

The honorable commission with which the Latin American Federation of Banks,
FELABAN, distinguished me by entrusting me with the preparation of a work on
banking contracts and the warm manner with which the idea was received by the
Institute for the Integration of Latin America, INT AL, commit indefinitely. My
gratitude.
This endeavor would not have been possible without the generous words of
encouragement from the Secretary General of the Federation, Doctor Fernando
Londoño Hoyos, and the collaboration of dedicated friends, among whom, first
and foremost, the group of lawyers made up of doctors Juan Manuel Botero ,
Rosa Giralda from Laguado and Maricielo Glen from Tobón, whose assistance
was definitive for the preparation of the files on doctrine and legislation and the
discussion of numerous problems that arose throughout the investigation.
To all, institutions, collaborators and friends, I want to express my deep
appreciation for the preparation of a work, whose only merit lies in constituting a
first effort of systematization and reflection on a matter of such great importance
for Latin American banking and the geographical area in which general.
Of course, like almost every first endeavor, it will have gaps that must be filled in
the future, by the author and by all those who are interested in these matters. In
this last case, having made a contribution to new and better research will always
constitute the most pleasant satisfaction.
Bogotá, DE, June 1977
PRESENTATION TO THE SECOND EDITION
A reception that exceeded the most optimistic estimates meant that the first
edition sold out in just over a year. Generous reward for the effort made, which
allowed ratifying - if necessary - the growing interest that the subject arouses and
that the author has been able to collect first-hand after participating in recent
months in highly qualified forums held in Lima, Buenos Aires, Mexico and
several Colombian cities.
Therefore, without time yet to begin a comprehensive in-depth review, but after
introducing some corrections suggested by the careful review of the
work, we proudly present this second edition that aspires - like the previous one -
to serve bankers and jurists equally well. Both have proven with their response
that the efforts carried out were not fruitless.
Bogotá, DE, January 1979
PRESENTATION TO THE THIRD EDITION
Once the work was out of stock again, more than two years ago, we have decided
to present this third edition, taking advantage of it to introduce some adjustments
in all the contracts but, especially, in the "Issue of debentures and other titles", by
virtue of recent provisions incorporated in Colombian legislation; in
"Documentary Credit", due to the forced reference to the modifications recently
introduced by the International Chamber of Commerce and which came into
effect as of October 10, 1984; in that of "leasing" or "Financial Leasing", on
which an important literature has been produced in recent years, but with special
reference to the provisions of Ecuador and Mexico, which must serve, without a
doubt, as an interesting point of reference for other countries in the area and,
finally, with new references to the broad and always exciting topic of the
"Commercial Trust" or "Trust", in relation to which we have had the opportunity
to participate in many debates and collect new reflections of interest.
Bogotá, DE, March 1985
PRESENTATION TO THE FOURTH EDITION
The normal development of business, the issuance of new laws and market
demand have led us to prepare this Fourth Edition, completely revised, in which,
in addition to the numerous editorial adjustments and the appreciable increase in
the notes of footnote, we want to highlight the new approaches that will be found
in factoring or portfolio purchase contracts, leasing or financial leasing, with
respect to which the UNIDROIT convention on international leasing provides
new elements, documentary credit and trust; chapters that reflect the greatest
modifications.
Bogotá, DE, April 1990
AS A PROLOGUE TO THE FIFTH EDITION

Not many days ago, a bitter debate arose in Colombia about the ruling of the
Constitutional Court that buried in life the housing financing system, which with
a tradition of almost forty years had allowed the country to be built - literally -
and generated hundreds of thousands of jobs that largely responded to the social
peace of those decades. A stampede in interest rates, as always generated by
excessive State spending, and a poorly recognized economic recession, had
become a death trap for the system's debtors: the more they paid, the more they
owed and the less their home was worth. The "injustice" was evident, but of
course not from the poor Constant Value Unit, but from the economic
environment that made it so cruel.
and the Court's ruling came out. And he did not undertake it against State
spending or against the other economic deformations that made the Colombian
interest rate the highest in the world, but rather, enshrining as a constitutional
principle the right of debtors to pay little for their mortgage credit, he ordered the
reliquidation all the old operations, relieving those who owed and sacrificing
those who received. With which a few property owners were very happy, the
savers were defeated, the housing financial entities were bankrupt and the
Government was forced to rescue them, with everyone's money, including that of
the beneficiaries of the saving ruling.
When the Court was rebuked for the inconsequences of its ruling, for which we
continue to pay with blood, it responded very proudly that the matter did not
concern it because its responsibility was not economic, but legal.
A better example could not be found to underline the dividing line that certain
exalted jurists still draw between the vital historical reality and the Law they
practice. It is the Napoleonic preaching that followed that apotheosis of
intelligence that was the French Civil Code of 1804. They interpret my code, my
code is lost, it is claimed that Bonaparte said when he learned of the
hermeneutical effort that was made to apply some of his articles. Dura lex, sed
lex, the judges continue to repeat who dictate any absurd sentence and still
Those words of the old professor would be valid before restless disciples: "I don't
teach Civil Law. I teach the Code of Napoleon."
This way of understanding legal matters was mortally wounded when the
German historical school, that of Savigny, Puchta and Stahlle, launched its first
deadly darts. Since the Law springs from the well of the conscience of a people,
the very words of the law mean something very different in Germany than in
France. Years later, Ihering with his jurisprudence of interests introduced the
notion of the end as an essential constitutive element of the legal norm. And a
few years later it was a wise French jurist, Francois Geny, who completed the
demolition of the old building. On the one hand, when to all the resources then
known by hermeneutics, he added, through the general principles of law, the
requirement that the legal interpretation be reasonable, in accordance with the
meaning of its structural mission, that of serving the human coexistence. But
also, highlighting as an unavoidable task of lawyers and judges the integrating
function of legal norms, always condemned by the richness of life to show gaps,
which were unthinkable in the hermetic concept of Law. Ironies of life. Portalis,
the author of the Preliminary Speech with which the commission drafting the
Code of 1804 presented its work to the world, was right in his humility. That
wise law, with so many centuries of legal experience in its favor, was destined to
fall short of future reality. It was the arrogance of the Emperor, the servility of
his subjects and the limited vision of the world of the exegetes that allowed the
omniscient power of the law to be sustained, the tyranny of the text, the wisdom
of the legislator and the other dogmas that sought to separate the kingdom from
the Right of life that governs.
).
The philosophy of the 20th century did not have the slightest problem in
completing the work that was already so advanced. When life could be placed at
the center of philosophical reality, and not the thing in itself nor the clear and
distinct idea that explains everything, Law completed its change of vision and its
turn of one hundred and eighty degrees with respect to its own formal object. .
Perhaps it has earned the Argentine egological school, and Carlos Cossio in
particular, the honor of having issued the last sentence: the object of Law is not
the norm, and even less the law, but human behavior in intersubjective
interference.
Unfortunately, many remained in that distant half of the 19th century, pretending
that there is a real, existing, full, finished world, which is that of legal concepts -
whose heaven Rudolf Ihering had so finely mocked - distinct and separated from
that other one. poor world, that of social reality and that of the desires of man on
earth. They are the ones who, at this point, by God!, are still capable of talking
about legal analysis that has no responsibility, no ties, and no accounts to render
to economic analysis.
I know that I am running the risk of extending this prologue more than I should,
and of making the reader wonder what these pages have to do with the new
edition of the book by Sergio Rodríguez Azuero, who 25 years ago came to light
with the name of "Bank Contracts". But it does not matter. The thing is that I stop
to study it in the fundamentals of its philosophical structure, which is how its
success and its ability to survive as a reference work for Spanish-speaking
bankers are explained. But this is also how the need for its revision is understood,
as it is brought to light today, with the intention of lasting at least another 25
years as a crowning piece of modern law made in Colombia, despite the outdated
exegetes that They prevail in the high courts and even in the best-known
academic centers.
25 years ago we announced this book as the consummate work of a revolution in
the field. Because "Banking Contracts" is not focused on one paragraph, although
it takes them all into account, but rather aimed at the core of the problem it deals
with. What is the banking operation to which the contract refers, what is it for,
what economic needs does it serve, what technical means is it carried out, what is
its field of application in space, the possibilities of its universalization or perhaps
the essential need of it, that is the core of the analysis, the heart of the problem
that arises in each case. Once the institution has been mastered, the task of
evaluating arises, that formidable intellectual and axiological adventure that
consists of the expression of a judgment about what should be, about an existing
and living social reality.
"
When things are understood as they are, they are easily understood as they should
be. Habitual, persistent, well-known and durable practices are rarely bad
practices. The jurist often has the heroic task of confronting and initiating a revolt
against them to impose the factual power of the normative, in the happy
expression of German legal philosophy. But that is the exception. The normal
thing is that universal practices are only such when they find the moral support
that makes them possible and justifies them. Wherever it appears that in the
global village in which we live, business is done as it should be done and when
its conditions of effectiveness change, it is when they demand a change in the
legal approach that has been accompanying them.
No one will be surprised, now, to see that this is a great work on modern
banking, as was the one that Sergio Rodríguez proposed to the literate public of
Latin America a quarter of a century ago. And that the distance between the two
is marked by that which separates the bank from then, with its stammering
realities and its embarrassing expectations, with the one that is in force today,
with its surprising changes.
dents, ITS new missions, its extraordinary means of support and, of course, its
correlative problems.
As we could foresee then, and as anticipated in this work, contemporary banking
has been marked by factors of extraordinary magnitude: its exponential growth,
to meet the gigantic demands of a world much richer than it ever was and of a
clientele much vaster than ever imagined; the incessant multiplication of its
operations, both in volume and quality; the progressive increase in its risks; the
massification of its operational systems and the internationalization of its
services, its language and its Law.
Nor will it be surprising that the much that this book adds to its previous editions,
and that they make it in substance a new and different book, bears the imprint of
those realities that have come to attack a traditional bank, which prompted
spectacular changes or destroyed mercilessly whenever he found her poorly
equipped for the transformation he demanded. It will be very painful to notice
that our banking system, to which so many strong warnings were given on this
matter, and not a few since Sergio Rodríguez's book, did not show the ductility
nor did it exhibit the capacity for adaptation that was necessary for it, and more
than stumbles, he endured bitter hours from which many of them will never
recover.
Among all the novelties that this capital work brings with it, I highlight the one
that refers to the law of electronic banking. It is a right that goes beyond the one
that revolved around paper culture and that could survive for several centuries.
But it is dying along with the role that gave it life, unnoticed by many. Let us
open our eyes to the inciting shores of these new continents, so as not to mourn
catastrophic sentences whose authors barely manage to defend them by
maintaining that their problem is neither commercial, nor technological, nor
economic, but only "legal."
This book, dear reader, is not suitable for aging souls. That is why he enjoyed full
health during the last quarter of a century and that is why he appears healthy and
fresh to sustain the onslaught of the exciting and challenging era that we have
been fortunate to LIVE.
FERNANDO LONDOÑO Hoyos
Bogotá, March 2002
PROLOGUE TO PREVIOUS EDITIONS

"
Under the pretext of presenting a book, it is often said, how it would have been
written if one were the author. Sometimes one cannot resist the temptation to
summarize it in those lines, while in others nothing comes out of them other than
clouds of incense for the writer and for the work. None of those things are about
now. It seems completely superfluous to tell the reader who the young
Colombian lawyer and banker Sergio Rodríguez Azuero is, when he will have
such clear news when he finishes these pages. Because there is no human work
that collects the vibrations of the spirit more deeply than a book. Someone said
that style is the man and I would add that man, style and book make up the most
perfect unity known. There is also no point in trying to tell you in a few bad
pages what the work took so many to say well. And this prologue is mine
because I was not able to make the work, which sufficiently explains why I did
not venture to tell the reader how it would have come out of my hands.
JEE!
I decided to accept the assignment that Dr. Rodríguez gave me with bold
insistence, to write the prologue to his book, only because it occurred to me to
explain it to the Latin American bankers, to their clients, to the jurists who deal
with banking, to the Law professors and students, why it seemed to this Latin
American Federation of Banks that its technical library should begin with a work
dedicated to the study of Banking Contracts. The simplest ones might believe
that it does not take so much effort to explain how to do what is done so
repeatedly without problems. And certain specialists would say that it is
intolerable disrespect to attempt the dissemination, or vulgarization, of a subject
that is reserved for the cenacle that they make up with some of their peers.
The traditional system of Law, the one that starts from the Napoleonic Code, has
definitively entered into crisis and it is extremely serious that many have not
warned. In the last fifty years, life has become so surprisingly rich in
manifestations, so variable and so fast, that the attempt to understand it in
advance in order to regulate it, which is ultimately what Law consists of, is naive.
The experiential realities are and will continue to be, at least
us within our century, infinitely richer than the legislated realities. This lack of
coincidence between reality and the Law can in fact be resolved in two ways,
which both involve dangers and irremediable inconsistencies. The old-fashioned
jurists, those accustomed to searching in texts for the word that resolves all
conflicts, will insist on accommodating what is left over from life, by force,
among them tables of the Law. In this case the poor life is condemned to suffer
the torture of its mutilation in Procrustes' bed. As a very understandable and to
some extent necessary reaction, those with a more positive mentality, who
believe a lot in the realities of life and little or nothing in the operation of a
system of duty that is so contradictory, outdated and harmful, will turn their
backs and They will set up a system of facts of such solid consistency that it
leaves no room for evaluative problems. The former take away all of life's grace
and its creative capacity by organizing a Law that Ortega said was
. only valid for paralytic realities. The others, in order to save her life from the
clutches of logic, end up condemning her to anarchy. Slow Law is paralysis,
reality without Law is institutionalized disorder. Here are two paths open to
disaster.
The very serious picture of contradictions raised by the unnoticed crisis of
traditional Law is perhaps more evident in the structure and functioning of banks
than in any other field of contemporary activity. For the simple reason that there
is no organized task that shows greater and faster innovation than banking. In the
case of institutions that are still young - in America the oldest ones are only a
century old - the mental categories under which they were created, the realities to
which they obey and the forms of their operation, today have hardly any kinship
with those that were fully in force ago. Two decades. And it happens that this
immense and very rapid evolution covers the largest number of mass events that
are celebrated in an organized society. It is therefore not possible to manage
banks with the old formalities, which suffocate them, nor to ignore them by
relegating them to the headquarters of an esoteric specialty: they involve too
many things and too many people to be given that destiny.
The formidable development of banking has not ceased to come up against the
criteria of anachronistic jurists. Latin American jurisprudence, except for
extraordinary and exalting exceptions, is a self-directed process against jurists for
their incompetence to adapt the Law to the demands of life. But the contrary
claim must also be met resolutely. Because the fate of the community in which
we live, in such an important aspect of its structure and development, cannot be
left to the eloquence with which the facts impose their criteria. That things should
be as they really are is a contradiction.
tion in the terms that dissolve societies between the harshest tensions and the
cruelest injustices.
There is no other remedy than the heroic middle ground. The life of banking, like
all forms of human life in relation, will cry out for a Right. But for an active and
effective Law, which, built on the values of security and justice, stimulates and
guides it instead of being reduced to impotence. It is then essential to celebrate
the nuptials of life and legal matters. It is the only adequate solution, even if it is
also the most difficult.
Very often bankers appear to be acting illegally when they are only giving the
social body the satisfaction of a pressing need or are opening the horizon towards
a new possibility of development. and this occurs because a value judgment is
tested on a new reality with an old criterion. If even in many Latin American
countries the control and surveillance authorities prohibit banks from entering
into contracts and carrying out operations that are necessary for them, and in
other parts perfectly common and known, only because there is no text that
expressly provides for the activity What is it about. This is how our economic life
is subjected, at the most critical point of its development, which is its financial
manifestations, to the terrible condition of being foreseen in order to be. Well, it
is against those absurd pretensions that are made in the name of an anachronistic
system, that it seemed interesting to start a crusade to try a banking law, which,
starting from the knowledge of that splendid reality in which contemporary
banking consists, structures an order of duty to be balanced and just. An
explanation of banking contracts that satisfies jurists for the values it entails and
offers clarity to bankers, businessmen, and all people about the way in which
banking practice must be carried out efficiently, that is the purpose that animates
this book. .
Many conditions were necessary to carry out such an undertaking. A splendid
training as a jurist, an enormous investigative capacity to reduce the
inexhaustible variety of expressions of banking technique to a scientific unit, a
magnificent style and at the same time with all that, knowledge, experience and
passion of banking technique as an effective reality. I have recalled many times
that Calamandrei defined the ideal Judge as a faithful interpreter of the historical
currents of his time. Judge or jurist, ignorant and foreign to the history he lives,
the human environment where he moves, the society he serves, he is a renegade
of his mission and a parasite of the community. What are we going to do if the
jurist of our time had to face a human organization that is more difficult to grasp?
and richer and more fruitful than it ever was. His destiny is to know it and
encompass it all, but no matter how hard it is, he is rewarded by the glory of
serving with his science to create a better life for men.
The Latin American Federation of Banks sincerely believes that this book breaks
down that incomprehensible antinomy that has been created between law and life
by inexperienced jurists and audacious practitioners. This work responds to the
aspiration of filling the serious void in which the Law has left one of the most
important manifestations of the social life of our time. The company could not
have been better, since it was decided who to entrust it to until now when it is
handed over to what Carrara called the dangers of advertising. The effort has
culminated and the hopes placed on its success are very high. But he presents
himself to the broad stage of Latin America without any vanity. It is therefore as
open to criticism as it is to recognition of its merit. Both manifestations will be
welcome because every human work that aspires to be better and more useful is
equally nourished by them.
FERNANDO LONDOÑO Hoyos
Introduction
A better understanding of the book will be possible in light of the following

premlsas:
1. CONTENT OF THE BOOK
Designating the book with the title "Banking Contracts" implies specifying the
meaning of the terms and, consequently, the scope of the topics that have been
discussed in it. What, in effect, one may ask, is the content of the expression
"Banking Contracts"? What contracts does it cover and which banks does it refer
to? Let's try an approximation.
1.1. COMMERCIAL BANK CONTRACTS
The development of banking in the second half of the 20th century made it
possible to distinguish various types of banks, generally individualized by their
specialty or function. Deposit banks, development banks, agricultural and
livestock banks, popular banks, rediscount banks, etc. All of them, as long as
they professionally carried out the function of financial intermediaries, could be
called and in fact are classified as "banking entities or institutions."
The current trend, as we will see, has been eliminating borders and outlining a
multifunctional bank, although, in some cases, specialized entities that played an
important role in the provision of financial services have been sacrificed. One
might ask, however, if the expression "banking" in our title implies that the work
studies the contracts entered into by all those institutions called or classified as
banking. Because, although many of these contracts are common to the majority
and there is no difficulty in relation to them, there are others with substantial
differences in their essential elements, in their legal development and in their
practical purpose. Contracts resulting from an evolution that identified them with
a specific class of banking or financial entities, as they carried out their most
characteristic operations based on them. With the aggravating factor that
contracts reserved for one type of bank in any country could be the domain of
banks of another type in the neighboring country, such as mortgage credit
contracts developed in a country by deposit banks or their specialized sections. ,
while in others by mortgage banks, that is, created specifically for this purpose
and different, of course, from commercial ones. Or the issuance of obligations or
bonds, previously reserved in Colombia to financial Corporations, with respect to
commercial banks, which were prohibited from raising resources in the market
using said instrument, unlike other countries.
Difficulties of this kind would have to be resolved by arguing "ad absurdum." In

fact, if the positive option had been chosen, in the sense of making the decision
to refer to all the contracts signed by banking entities that could be identified in
Latin America, the risk of carrying out a work that would quickly become
obsolete due to this aspect would have been faced. , since the assignment in any
country to one of those entities of an additional function or the creation of a new
type of entity, would impose the need to carry out the study of new topics. But, in
addition, the different magnitudes would have made the design of the work
unmanageable.
There are contracts that, due to their development and specialty, would deserve a
study and presentation of such length and depth that they could well compete
with the rest of the work. Others, however, who without being perfectly
autonomous, technically speaking, would have had to be mentioned within that
"universalist" ambition that the aforementioned option would imply. To which
we could add, in order not to make this point any longer, the difficult
classification of certain entities as banks since, except for those countries in
which there is an exhaustive legislative list, the classification in all of them is not
univocal and, on the contrary, , doctrine and jurisprudence usually hesitate about
the inclusion of certain types of entities as properly banking. All drawbacks that,
if we had opted for this solution, would have caused us to simultaneously err on
the side of excess and defect without contributing anything to the better
understanding of the issues of greatest depth and interest.
Therefore, adopting a solution that could seem simplistic, we have been inclined
to include only those contracts that are generally carried out by the so-called
commercial banks or deposit banks, recognized as belonging to their activity
unanimously by law, doctrine and jurisprudence and that, due to its long
evolutionary development; They have usually reached a high degree of perfection
in relation to their definition, their management and the operations to which they
give rise. To which we have added, due to their evident scientific and practical
interest, the mention of some new contracts in many of our countries, but
sufficiently known in others and which, in any case, fit well due to their nature
and purposes to the corporate purpose. of said deposit banks. Examples include
factoring, leasing or financial leasing and trust contracts, including securitization.
1.2. CONTRACTS THAT DEVELOP THE CORPORATE OBJECT
Now, having defined in principle the banks whose functions allowed us to

determine which contracts should be the subject of this book, it is unnecessary to
make another clarification, even if it seems obvious. When talking about the
contracts of these entities, we are not referring to all those that, as moral or legal
persons, they are in a position to carry out, such as those they enter into with their
workers so that they can carry out their work or with their suppliers to obtain the
goods and services that the institutions need, but only those that they carry out in
the immediate development of their corporate purpose and that precede the
operations that they carry out professionally, as intermediaries, credit or service
entities, to meet a series of requirements. of their clientele, using their own
structure. Those through which banks capture and place resources in the market
by carrying out credit operations that some authors call typical and these through
which they usually intervene in collections or payments or in the provision of
some services in which, practically without exception , manage the patrimonial
interests of their clients.
To make the point a little more specific, allow us to bring up some examples:
said credit operations are usually classified, in turn, as active or passive,
depending on whether they place or raise resources. Among the first, we can
point out the loan, the discount and the opening of credit. The first is a contract
known immemorially and regulated in detail by Civil and Commercial Rights.
The others are contracts whose profiles and characteristics have come to be
established as a result of the evolution of banking operations. That is concluded
daily between individuals, without the intervention of a credit establishment
appearing to modify its legal content in any way, especially when, in the first
case, one or both of the individuals are merchants; These are characterized and
have their meaning with the intervention, almost all the time, of a banking
establishment.
Passive operations can include deposits (on demand, current, term or savings
account) and the issuance of banknotes and debentures. The issuance of the latter
is usually subject to the general law applicable to other commercial companies;
banknotes are reserved, practically without exception, to the Central Bank, while
irregular money deposits find all their legislative and doctrinal content in their
reception by banking institutions. The other operations, called by the authors
atypical or neutral or complementary, include, among others, the rental of safe
deposit boxes, the trust and all those carried out as a consequence of the
execution of a mandate contract, a legal transaction also well known by the Civil
and Commercial Rights. The other contracts seem to be, however, naturally
banking and it is in their evolution as such that they have found their own
characteristics.
Now, should the study focus on banking contracts that constitute a novelty
compared to common law? Or also mention and treat all those that correspond to
the corporate purpose in order to have a valid and universal vision? Was it a
waste of effort to deal with concepts that had been repeatedly studied and almost
common domain, or did a methodological simplification applicable to all
contracts allow them to be studied without exceptions, in this regard, thereby
presenting a complete and integrated panorama? Taking into account the purpose
of the work and its recipients, we categorically lean towards the second
possibility, that is, to treat both those contracts that are new compared to
common law, and the others that, without being new, constitute a conceptual
antecedent of numerous operations. carried out by the banks.
2. RECIPIENTS
What is the purpose of the work? This is the second aspect on which we consider
it appropriate to reflect. Was it about doing an in-depth study on banking
contracts that exhaustively analyzed the background, nature, theories and legal
problems that they suggest? Or perhaps simply analyze the operational part,
describing it in detail as a manual? Neither, in our opinion. The first possibility
would have led to writing a book for scholars, that is, for jurists specialized in
banking law, while the second would add just another book on banking
techniques, very familiar to those who work on these topics. Thus, the answer is
based on the idea that it is about providing Latin American bankers and lawyers
who are interested in these matters with an instrument that allows them to have a
global vision of banking contracts, serious from the point of view of legal view,
but clear enough to be assimilated by readers without specific legal training.
Vision that facilitates and stimulates exchange and uniformity through contact
with legal mechanisms and concepts corresponding to operations that have
always been known to bankers, but whose differences in each country, even if
they are minimal, tend to surround neighboring realities with uncertainty, each
time closer due to the imperative of integration. Of course, and it must be noted,
this is not a study of those incorrectly called comparative law, in which the
respective provisions of all countries are transcribed and commented on in
relation to one or several aspects, but rather a presentation of a general, with
permanent reference, of course, to the different countries, as we will see later.
For this reason, it aims to be an abstract work, in terms that are universally valid,
but at the same time touching on the Latin American reality in order to enrich its
presentation.
In short, the work is legal and encourages the hope of contributing to the purpose
of improving the channels laid in the search for a legislative unity, but without
stopping at abstruse and esoteric ramblings that would make it difficult and
sometimes useless to consult it by the bankers. to whom it is naturally intended.
Therefore, we add, it has wanted to be systematically presented and conclusive in
the good pedagogical sense, that is, that it leads or allows us to reach useful and
precise conclusions.
3. METHODOLOGY
To conclude, it is necessary to talk a little about the methodology or, perhaps

better, the structure that has been adopted, for a clear presentation of the work
and better use by its readers.
To prepare the work, several of the most prominent Latin American authors on
law and banking operations have been consulted, and hopefully well interpreted,
and the legislations of the different countries that were possible to obtain have
been taken into account, as a result of a survey carried out by the Latin American
Federation of Banks among the different associations that comprise it and which
has been repeated periodically. Even though it has not been possible to always
obtain them in their entirety or verify their validity in all cases, the greatest
number has been gathered, among which, of course, those that, due to their
legislative development, constitute the most outstanding points of reference in
the concert. Latin American. In any case, a true network of book friends
throughout Latin America has allowed us to validate as much as possible, the
relevance of the quotes.
The work consists of four parts, the first of which, which could be described as
introductory, includes in its first chapter a series of fundamental notions
mental concepts about the Law, its classification, its elements, its object and its
sources.
tes, as well as a set of basic principles on obligations and contracts. The second
chapter refers to Law and the banking system, the latter conceived with the
participation of a central bank, financial intermediaries and control systems. It
also analyzes the principles on the operations carried out by banks and banking
contracts, considered precisely as causal antecedents of said operations. The third
and last, of this first part, focuses on what we could describe as the Latin
American panorama. The other three parts of the book refer, in order, to the
contracts that precede the execution of active, passive and neutral operations. In
them, each contract is studied in particular and in its development simple
marginal annotations are made to the internal legislation of each country, when it
has really seemed appropriate to bring them into account, such as when different
theories are presented on a point and the way in which the countries host one or
the other. Or when there is an exceptional solution in relation to any aspect,
accepted by one or more of the countries, in which case, for example, a mention
is made in the text itself or through a footnote. These quotes are made for
illustrative purposes and do not always include all countries.
In this way, the reading of the first part hopes to provide introductory notions
from the legal point of view and a global vision of the operations and their
implementation in Latin America.
The following allow us to detail the various contracts in the simple way that was
already stated, studying their definition and nature, the elements of that contract,
their mode of operation, the parties involved, the rights and obligations of each of
them, the most important advances and the most serious difficulties encountered
in carrying out the contract, the restrictions on its use, etc.
Finally, given that there are contracts that have been extensively studied in
different latitudes, including in Latin America, an effort has been made to
synthesize and systematize the topics, so that each one can be presented under
similar conditions of depth and simplicity at the same time, taking into account
its importance and development.
First part
Fundamental notions
Chapter I
GENERAL PRINCIPLES
1. LAW
1.1. NOTION
If an elementary method were used to investigate the notion of Law, it

would be enough to ask about the content and scope that such an expression has
for the common people. Law is presented, first of all, as a set of regulatory norms
that, coming from authority, are coercively imposed on the social group.
Mandatory provisions that are essential to guarantee the normal development of
legal relations between individuals and the adequate resolution of their conflicts
of interest. But, on the other hand, it is conceived as the faculty or power to act
attributed to a person regarding a thing or towards others, a faculty to which
corresponds, in the latter case, the duty to act on the part of another or others in
the form desired by the holder of the power. From there arises the conception of
Law through a traditionally recognized double manifestation, that of objective
law and that of subjective law. The first is understood, consequently, as the set of
provisions as they are regulated by the formal sources to which we will refer later
and, by the second, the faculty, attribution or power by virtue of which it is
possible for a person demand a certain behavior from others and of course,
demand the guarantee of social power so that said behavior is carried out fully
and completely or maintain a certain relationship regarding a thing and in front of
the community, in a relevant manner from a legal point of view.
It is not, of course, that there are two Rights. It is only a double aspect of the
same Law, the objective, if you will, abstract and static; and the subjective, on
the other hand, concrete and acting. As soon as the law has made a provision and
the hypothesis contemplated in it is carried out, the relationships arising from
said situation entitle an individual to demand, from another or others, the
adoption of a certain conduct, to which this or these will be subject. constrained
by social power. 1
Of course, the recognition of the Law in force at a given time, of the existence of
a certain number of legal norms, that is, the verification of the existence of
positive Law, leads to the question whether before the specific provisions
adopted by the State , there is a fundamental notion that precedes, supports or
conditions in a certain way, the issuance of the aforementioned regulations. Or,
in other words, if faced with this positive Law, mutable in time and space, in a
constant process of adaptation to the different social realities to which the force
of its normative power is directed, there exists an immutable and universal, in
relation to which positive Law would have to limit itself to reproducing and
concretizing the higher orders, in the face of the different circumstances of time
and place. Given the affirmative answer, the notion of so-called Natural Law
arises, conceived as the reflection of the ordering will of the Creator in his
creatures, giving them a permanent standard of conduct in accordance with their
rational nature for the due fulfillment of their purposes. Although the concept of
Natural Law has been hotly controversial, bitterly criticized by some and
enthusiastically defended by others, it is no less true that it is impossible not to
accept the tendency of human beings to recognize a series of higher imperatives
that, although they are not enshrined in positive law, they are considered supreme
norms of morality, in terms that a regulation that violates them usually produces
rejection and conflict.2
1.2. PUBLIC RIGHT AND PRIVATE RIGHT

There are numerous classifications of Law or forms of presentation of it that we
will touch on throughout this first part. It seems convenient to us, however, we
will stop now at the useful classification that divides Law between Public Law
and Private Law.
1.2.1. Public Law
Public Law is understood as the set of rules that regulate the

structure of the State, the relations of its organs and agencies and, in principle,
the relations of the State with individuals, that is, the concert of provisions that
contribute to forming a general theory. of the State. Examples of Public Law are
some well-known branches such as the so-called Constitutional Law,
Administrative Law, Procedural Rights and Criminal Law, to name a few. The
norms that make up Public Law are imperative, that is, conceptions and needs of
social order prevail in their structuring; Its reason for being is inspired by
community needs, rather than individual ones, and in that order of ideas it is not
possible for individuals to modify the content and scope of such provisions.3
1.2.2. Private right
This being the case, we then have that Private Law is understood as the set of
rules that regulate the relationships between individuals and, exceptionally, the
relationships between individuals and the State when the latter, devoid of its
primary functions and the prerogatives that are its own. , acts in the world of Law
as a simple individual would do. Of course, there is no place to stop in the study
of the multiple theories that have tried to explain how and when the actions of the
State are subject to Public Law and in what events, by exception, it can be
regulated by norms of Private Law. It is enough, for the purposes of this work, to
highlight how sometimes the State, before commanding or imposing itself,
usually carries out activities in which it acts as a simple individual and submits to
the consequences of the expression of its will within said framework. .
In relation to Private Law, it can be stated that, in contrast to what happens with
Public Law, its rules are predominantly private, that is, susceptible to being
modified by the will of individuals. In other words, in relation to them it is up to
free individual initiative to temper, extend or modify them, thereby recognizing
the creative role that the autonomy of private will has. Which does not mean that
in some cases, provisions of order are not found in Private Law.
public or, as we will see later, mandatory provisions, in the sense that, because
public order is involved in them, that is, the general interest, the social interest
before the particular, they are of mandatory application in relations between
individuals. But then, it can be stated that in the case of Private Law, the rules of
public order are exceptional, although they increase every day as a consequence
of what we could classify, of course, as the "publication" of Private Law, to
which we will refer further. forward.
The most representative form of Private Law is the so-called Civil Law,
considered as that which regulates the person in its primary manifestations that
are considered indispensable for his subsistence as a social being and that
fundamentally say, in our system, with its family organization and his heritage.
In other words, it can be said that Civil Law is the fundamental Law within
Private Law that, as a common trunk, serves as support for the numerous
branches that have emerged from it and that find their reason for being in it. It
can, then, be considered "as an ordinary general right that looks at man as such,
as a human person, who then forms a family that needs, as economic support to
survive, a patrimony and in which those members of the family that he
founded".4 The norms of Civil Law, consequently, are those related to people,
property and the family.
1.3. COMMERCIAL LAW
1.3.1. As part of Private Law

Another of the constituent branches of Private Law is the so-called
Commercial or Mercantile Law. Well, for a satisfactory understanding of this
concept it is necessary to stop, however quickly, at the historical and economic
concept of commerce, as the fundamental core of Commercial Law.
Losing ourselves in the history of time and to the extent that man abandoned his
primitive individual and isolationist condition to integrate himself into a
community organization, it can be assumed that profound modifications were
made in him by what he says with his production capacity and especially with the
way in which, from that moment on, he used that capacity. In fact, it can be
conceived without difficulty that, at first, the individual, considered insularly,
allocated all his productive capacity to satisfy the primary needs that were
essential for subsistence. But as soon as he integrated into the community, and
became part of a social group, starting with his own family organization, he had
to verify without difficulty that his productive capacity, sometimes excessive in
relation to some of the goods obtained, could be combined advantageously with
that of the others to achieve a productive balance through the exchange of goods,
those produced by him that were excessive for his own needs and those produced
by others, which, in turn, were lacking in order to satisfy some.
This is, ultimately, the principle that explains the so-called division of labor and
which is nothing other than the intelligent distribution of efforts so that, each
individual meeting the requirements of the group and knowing that the others do
the same, It is possible that the community satisfies not only the primary needs
but also others that are added to the extent that new stages of satisfaction are
reached and unknown appetites and desires are awakened, within the process of
evolutionary development that characterizes the group as such. . and if we take a
dizzying leap in that process, with the license that is permissible when it comes
to making the general presentation of a topic, we find a socially organized man,
whose production of goods and services increases to the extent that they become
more the more complex the forms of life, the more numerous the individual and
social requirements and the more subtle the ways in which that individual and
that group are invited to consume and satisfy their needs that are no longer
primary but accessory, but equally important within the current state of things.
Well, this permanent process of exchange of goods and services is not possible
for individuals as such, since each of them is unable in practice to directly
demand from others those that they need and, therefore, offer them the that you
do not need in an indispensable way or have excess. Thus the figure of the
intermediary arises, one who, placing himself halfway between producers and
consumers, manages, manages and stimulates the exchange, as a professional
activity to which he dedicates himself. Typical function of the merchant,
intermediary and administrator of goods and services in exchange for a profit in
the intermediation of some or remuneration for the provision of others.
It is, therefore, the definition of that merchant, of the peculiar nature of the acts
he performs and of the consequences of his activity, which in the first place
constitutes the subject matter of the so-called Commercial Law. Matter to which
are added, by extension, the study and regulation of these same acts, no longer
celebrated exclusively by merchants but by individuals with merchants and even
simply between them, when positive legislation, in response to the characteristics
of such acts , considers that their implementation should give them the
classification of commercial and, consequently, subjects them to the rule of the
rules of this branch of Law.
Commercial Law can thus be conceived as a part of Private Law and, if desired,
as a special Law in relation to Civil Law, not in the sense that it fundamentally
and categorically departs from it, but insofar as it regulates different hypotheses,
novel and changing, which are not specifically contemplated by it and which, due
to their conditions of mobility and dynamism, require particular principles that,
adapting to said circumstances, allow them to satisfactorily meet the
requirements of the individuals who participate in them and those of the same
acts and contracts that are celebrated in the development of such relationships.
But even its rules may have an exceptional character to the extent that, not
limiting themselves to extending the general principles to unforeseen hypotheses,
they introduce provisions and solutions that contradict and, in this sense, separate
themselves from the fundamental provisions of common law. .
Now, taking into account that within the current context. socio-economic
activities carried out by merchants are increasing, on the one hand, and that, on
the other, the group of individuals who carry out acts classified as commercial by
positive legislation is becoming more numerous every day, it is easy to
understand the notable development of the Commercial Law in recent times and
its particular preponderance within Private Law. It is in this sense that the authors
speak of the "commercialization of Private Law." In fact, if for centuries Civil
Law was presented as the summum of Private Law and its provisions were
sufficient to fully regulate relationships between individuals, today it is clear that
there are increasingly more daily activities that, far from being regulated in a
directly by Civil Law, are susceptible to serIo through the application of
Commercial Law. That is to say, that Law, a common and fundamental norm,
applicable in principle and which only left scope, as an exception, for
Commercial Law, now becomes, by virtue of the above, an exceptional Law, the
basis of Commercial Law, but each less and less directly applicable in
relationships between individuals.
All of the above is reflected, from the point of view of positive Law, in an
oscillating movement that could be described as follows: at first a Civil Law,
common and sufficient law. Later, and as soon as the exception rules,
commercial rules, were acquiring maturity, from the verification and regulation
of commercial activities, a trend that translated into legislative statutes,
independent and autonomous, in the form of commercial codes or laws. . And
finally, and to the extent that Commercial Law has been gaining ground over
Civil Law within the field of Private Law, a tendency to reunify legislation and
specifically codes, to return to a unified law but on the basis of a preponderance
indisputable part of Commercial Law. This is not the time, of course, to stop and
analyze the benefits of one solution or another; It is enough just to highlight how,
in the current state of things, Commercial Law is recognized with characteristics
that individualize it and that allow, from a scientific point of view, to be treated,
by some, as an autonomous branch within Private Law.
From the above, it can be said with Rocc05 that the science of Commercial Law
"is that branch of law that studies the precepts that regulate commerce and the
activities assimilated to it and the legal relationships that derive from these
norms."
Now, it should be noted that in English Law the distinction between Civil and
Commercial Law, existing for centuries, disappeared with the assimilation of the
lex mercatoria by the Common Law, thanks largely to the work of LORD
MANsFlELD in the 18th century. Consequently, there is no special regime to
regulate transactions between merchants other than that which governs relations
between those who are not merchants. However, there are many statutes or
written laws that regulate aspects of a commercial nature. Likewise, and more
importantly, English law recognizes the differences that exist when at least one
of the parties is not a trader, through consumer protection legislation, both in
hermeneutical rules developed by the Common Law and at the level of written
legislation (v. gr. Unfair Contracts Terms Act. 1977).6
The distinction between a civil and commercial contract can be of enormous

importance in practice for certain matters. For example, when it comes to
arbitration, some countries only recognize as susceptible to being defined in this
way, disputes arising from a contract of a commercial nature. This occurs in
international arbitration with the so-called "commercial reservation" by virtue of
which a contracting State can declare that the New York Convention (art. /.3),
will only be applicable to differences arising from a legal relationship,
contractual or not, considered commercial in accordance with the national law of
said country.?
1.3.2. Content
It is now necessary to specifically define what the content of Commercial Law is.
In this regard, there is a double system or criterion to determine the
commerciality of an act. For a long time, the activities carried out by merchants
were considered commercial, that is, by those who were registered as such in the
books provided for by local legislation or provisions for this purpose. It was then
a typical subjective criterion in that, when classifying a person as a merchant,
their acts and activities had to also be classified as commercial. But, on the other
hand, the repetition over time of certain acts and the adoption of certain
conclusions suggested the presence of more or less constant behaviors that
suggested the presence of a commercial activity and that, consequently, allowed
them to be attributed the character of commercial activity. , even if they were
carried out by a non-merchant person. The so-called objective criterion then
appeared, in accordance with which there are acts, activities or companies, as we
will see later, that, because they are considered commercial, imply that said
classification can be predicated of all those that in one way or another are legally
linked to their realization.
From the combination of both criteria and starting, of course, from the
determination of the commercial matter that corresponds to each legislation, the
so-called commercial acts appear with two very specific possibilities: the so-
called absolute commercial acts, those intrinsically commercial, whose
qualification is unchangeable and decisive, without consideration of the qualities
of the parties, and the relative commercial acts, which derive their commerciality
from the presence of a merchant in which case, according to the different
legislations, the act will be considered commercial for both parties. or only for
those that have said quality. This classification or these distinction criteria, rather,
have particular importance in those countries in which the existence of a dual
jurisdiction implies previously defining, before the courts, whether the act that
gives rise to the controversy submitted to the jurisdictional decision is a
commercial or civil act. . But it is also important because, from its classification
as one or the other, results the application by the judge of the principles of Civil
Law or commercial law specifically applicable to the case, a factor of great
consideration, even in the countries in which there is a single jurisdiction that
hears disputes raised about problems raised by both rights. But what's more, the
distinction must be highlighted because it allows us, of course, to note how in
most countries banking companies are expressly listed between commercial acts
and several of their most typical operations, such as, for example, the receipt of
money within the modalities of deposit in a bank current account or the purchase
and sale of bills, promissory notes or other securities, are classified as absolute
acts of commerce.8
A final note on the content and notion of Commercial Law allows us to

remember that modernly, both doctrine and legislation have been inclined to find
in this Commercial or, rather, economic Law, that of mass acts carried out in
professional. On the one hand, because being a Law that regulates above all the
circulation of wealth, that is, the exchange of goods and services, it does not
seem to find its greatest development in what we could classify as isolated acts of
commerce, but rather in the function repetitive nature that characterizes, by the
way, the activities of merchants. Activities carried out professionally, through the
structuring of an economic organization aimed at achieving the purposes of each
of them, that is, through a business organization. This development of activities
in a massive and professional manner produces, among other things, the so-called
dehumanization of Commercial Law, in the sense that in its formulation the
specific estimation of the personal qualities of the contracting parties loses
importance, to be replaced by considerations of general order that translates into
uniform contracting conditions, as we will have occasion to see throughout the
study of banking contracts. The multiplicity of contractual relationships based on
the same legal scheme produces, in practice, the impossibility for those who
acquire the goods or demand the services to discuss the specific terms that
regulate the particular relationship and submit, rather, to the general provisions
previously established by the service provider and which, in this way, are
practically unchangeable.
1.3.3. Characteristics
From all of the above we will list some characteristics of commercial law,
applicable to banking contracts.
1.3.3.1. Customary character
Unlike Civil Law which, as a result of a long decantation, has been expressed for
centuries in general and abstract principles, universally recognized and which can
be studied, consequently, through the application of deductive principles,
Commercial Law has been characterized and continues to distinguish itself
because in its training process and in its permanent evolution it reflects the reality
of commercial activities, to adapt the standards so that they specifically
correspond to the needs of its recipients. Or what is the same, Commercial Law is
characterized by being a law of inductive formation where, although there are
general principles that allow presenting a systematized, logical and general law,
it does not abandon its daily contact with reality, it is informed in it and derives
from it the vital richness that constitutes its permanent relevance. That is to say,
just as in its origins Commercial Law arose from the compilation and aggregation
of commercial customs, today those same uses and customs continue to inform
its development and make custom one of its most prominent sources, as we will
have occasion vedo at the time.
1.3.3.2. Professional
The professionalism of which we have spoken not only accommodates the so-
called business organization, but implies for merchants and their actions a set of
prerogatives indicated by law and, for them, the existence of special obligations
to which they are subject. their status as such, unlike other non-merchant people.
In this regard, it must be remembered that the classification of the merchant as a

professional meant, in its origins, that only those who were recognized in that
capacity and as such enjoyed the corresponding privileges were considered as
such, although they had to bear the burdens derived from such circumstance.
With the French Revolution and with its natural influence on the Code of
Commerce, objective criteria were introduced to define certain acts as
commercial and, in this way, open the possibility that those who carried them out
on a regular basis could become recognized as merchants or In any case, if
carried out occasionally, said acts will be regulated by Commercial Law. This
has led to countries influenced by French law enshrining a mixed system under
which subjective and objective criteria coexist, but, in addition, increasingly and
more frequently the professional statutes of the merchant are applied to those
who are not. , with which the objective criterion gains evident participation.9
Nowadays the "professional" voice has been enriched. There is no univocal
notion of who can be considered as such. His first approach in the world of Law
continues to be with the merchant and more precisely with the businessman. In
search of its identification, the habitual and generally lucrative performance of an
activity, the organization to carry it out and the particular and expert knowledge
about the activities it develops and the products it offers are recognized. 10
Probably one of the most significant aspects is the legislative and jurisprudential
development of the liability derived from defective compliance or non-
compliance with its obligations, to which we will return later. 11
1.3.3.3. Trend towards internationalization
This principle is perfectly logical if it is noted that the commercial dynamics

involved not only the multiplicity of exchange and intermediation activities
within the small family group, later local and then national, but that, as a
consequence of the same principles that we stated previously, It quickly
transcended regional and national limits to become international activities,
breaking barriers and connecting people. If any instrument has had significant
importance in the integrationist tendencies of contemporary man, it has been
commerce. This commercial exchange beyond borders initially translated into
agreements between individuals, later reached the level of international
agreements promoted by States and produced, finally, a tendency to design
norms and rules of conduct, increasingly universal. , which allow commercial
traffic to develop within the best conditions of security and certainty for all
parties.
Just as local commercial problems and activities have generated the birth of legal
institutions aimed at regulating and satisfying the needs that arise from them,
international trade has also produced truly surprising results in matters of
Commercial Law for which it is enough to highlight, among others , institutions
as important as Documentary Credit, an instrument designed to satisfy the needs
of merchants located in different places, usually in different countries, so that
through a mechanism, in which banking intervention is decisive, both parties can
negotiate under the best conditions of reciprocal protection. And if it were
necessary to mention an older institution, let us remember that the bill of
exchange, at least in its medieval origins, was born among money changers to
satisfy the needs of merchants who, being obligated in a market, nevertheless
required to satisfy the payment in the market. different, usually that of the
beneficiary's place of origin or domicile. These institutions not only satisfy
regulatory needs through the adoption of provisions, initially at a contractual
level, but quickly extended to all countries and incorporated, most of the time,
into the particular legislation of each of them. Consider, for example, the
importance that for European law and certainly for Latin American law can arise
from the so-called Geneva laws on bills of exchange and checks of 1930 and
1931, respectively, and to bring to mind a closer example, Remember the project
on Securities developed at the request of the Institute for the Integration of Latin
America, INT AL, by the Mexican professor RAÚL CERV ANTES
AHUMADA, whose conception constituted clear evidence of the close legal
position in which our countries operate, in where differences, generally small,
will be easily overcome with a serious and sincere effort in this matter.
Two of the entities that have worked persistently at a global level with a unifying
purpose have been UNCITRAL (United Nations Commission on International
Trade Law) and UNIDROIT, an international institute dedicated exclusively to
unification. of Private Law.1z Based on the work of both entities, draft
Conventions and Model Laws have been proposed to the international
community, the progressive adoption of which constitutes an evident contribution
to uniform regulation and implies, obviously, a prior process of harmonization in
the sources and doctrinal positions that, by that single means, generates a
beneficial approximation of positions, especially valuable when thinking about
the differences between Common Law countries and Civil Law countries.
Among the most notable recent achievements we can mention the Vienna
Convention on the Sale of Goods of 1980, which came into force in January
1988.13 Likewise the United Nations Convention on Bills of Exchange and
Promissory Notes, of December 1988;14 Ottawa Conventions on International
Financial Leasing15 and International Factoring16 of May 1988 and the United
Nations Convention on Guarantees and Standby Letters of Credit.17
Among the Model Laws that interest us we can highlight those of UNCITRAL
on Insolvency, of December 1997; International Credit Transfer of 1992 and
Electronic Commerce of 1996. \8
1.3.3.4. Lucrative
Even though it seems to flow from an analysis, the simplest, on the conception
and origin of Commercial Law, it is necessary to repeat that one of its
characteristic notes lies in the fact that commercial acts are naturally remunerated
and that, consequently, it is fair profit. , derived from its activity, where the
reason for its development by merchants can be found. This point of contrast
with Civil Law, whose contracts are usually free in principle and which often
marks the difference between practically identical institutions, as can happen
with the civil and commercial deposit, both structured on the same principles or,
better, this one. The latter is based on the principles of the former, but
differentiated by the circumstance that while the first is in principle free, the
second is lucrative in itself.
1.3.3.5. Particular content of formalism
With this misleading statement we want to cover two aspects in relation to which
formalism or informalism in Commercial Law seems to lend characteristic notes.
On the one hand, it should be noted that for a long time Commercial Law has
marked the tendency to separate itself from Civil Law in the sense of authorizing
the broadest freedom of contractual forms, thereby facilitating the use of
evidentiary instruments. By separating itself from forms and solemnities,
Commercial Law has reiterated individual initiative to the maximum, by
allowing the parties to freely choose the way to express their volitional
manifestation, without having to submit to solemn or formal requirements for
this.
But, on the other hand, it is necessary to warn that if from the previous aspect we
can speak of a non-formalism in Commercial Law, the analysis of other aspects
suggests a marked formalism, superior, without a doubt, to that which is
frequently presented in the field of Civil Law. In effect, Commercial Law
dominated by the imperative to contribute effectively to the development of
commercial activities, that is, impelled to provide security, speed and certainty to
legal transactions between merchants, has been forced, in turn, to establish forms
jealously guarded whose compliance is essential, that is, whose omission
produces the nonexistence or nullity of the act or contract. Sometimes legitimate
rights are even sacrificed in order to safeguard those rights derived from external
appearance. Consider, for example, to illustrate the assertion, in securities,
commercial assets that come into life
already after the full essential and exhaustive requirements indicated by the law
and that in their circulation process are adjusted to strict forms so that, many
times, the Law of who would be the true owner of the title gives way to whoever
formally appears as such, or the debtor is constrained to pay having already
satisfied the original or fundamental obligation that gave rise to the title, because
a third party, a holder in good faith, exercises against him the exchange action
derived from the legitimacy conferred by his position. as the last endorsee on a
security to order. That is why we say that formalism sometimes disappears or
decreases its importance in Commercial Law, compared to Civil Law, while in
others it increases, as in the example we have just given.
1.3.3.6. Publication trend
This phenomenon or characteristic, which could rather be predicated of Private

Law, in general, is based on two considerations. Recognize how the Fundamental
Charters of the States can displace activities and functions that had traditionally
been left to individual initiative, to consecrate them, instead, as functions of the
State, assigned to one or some of the bodies of public power. And even when this
does not happen, it is almost axiomatic to find that particular activities are subject
to the expectation of state intervention, when there are community interests that
must be protected and by fulfilling certain requirements. Consequently, the
greater interference of the State in the activities of the community is a general
phenomenon that can be predicated of all branches of Law. Now, we had already
noted the progress that Commercial Law has had within Private Law and the way
in which it has even seemed to relegate traditional Civil Law to second place. It
is not difficult then to conclude that, if the general orbit of Private Law is more
influenced by principles or norms of Public Law, this implies that Commercial
Law has had to largely support the aforementioned "publication."
Now, strictly speaking, the influences are reciprocal, since Private Law in a
pendular process influences, in turn, the institutions of Public Law in very
different ways. On its political basis, with the contemporary tendency to reduce
the size of the State and return to individuals the management of activities that
are supposed to be better managed by them, but, especially, in the very rich field
of state responsibility in which well-defined principles of civil liability have been
progressively incorporated into its conception.
1.3.3.7. Law of acts carried out massively
We already mentioned this characteristic which translates, due to its most notable
aspect, into the existence of the so-called "general contracting conditions". In
practice, these lead to individuals who contract with certain specialized, business-
organized merchants, limiting their voluntary expression to whether or not to
accept the pre-established proposal prepared by the merchant, if they want to
conclude the respective contract.19 We must return to the point. particular when
dealing with the characteristics of Banking Law, especially due to the influence
that has been resulting from the development of the so-called Consumer Law.
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1. CARBONNIER Jean, "Civil Law." Ed. Bosch, Barcelona, 1960, TI, Vol. 1,
pp. 105 And ff. And pp. 176 And ff.
2. CASTAN. "About Natural Law." University N" 2, Zaragoza, 1940. DEL
VECCHIO, Giorgio. "Philosophy of Law", 8th edition. Ed. Bosch, Barcelona,
1964. GARCIA MAYNEZ. "Introduction to the Study of Law", 17th edition,
Porrúa, Mexico, 1970.
3. DUVERGER. Maurice. "Eléments de droit Publique". Ed. Presses
Universitaires de France. Paris, 1974.
4. DE CASSOY ROMERO, Ignacio; CERVERA and JIMÉNEZ-ALFARO,
Francisco. "Dictionary of Private Law". Ed. Work. Barcelona, 1967, pp. 1453-
1454.
5. ROCCO. Alfred. "Principles of Commercial Law. General Part". Translation
by Joaquín Garrigues. Ed. National, Mexico City, 1966, p. 5.
6. GOODE, Roy. "Commercial Law". 2nd Edition. Penguin Books. London.
1995, pp. 3 And ff.
7. REDFERN, Alan and HUNTER, Martin. "Law and practice of international
commercial arbitration." Ed. Sweet & Maxwell. London. 1999, p. 18. Colombia.
It is interesting to note that the Council of State considered that the performance
of activities classified as civil, for example, the provision of services inherent to
the liberal professions, in a professional and massive manner, either through
companies or through commercial establishments, does not converted said
activity into a commercial activity, contrary to the position of the
Superintendence of Companies (Section One. Judgment of May 16, 1991- Exp.
1,323 M. Q. Libardo Rodríguez Rodríguez) Since Law 222 of 1995, civil
companies are subject for all purposes to the regime of commercial companies,
with which the discussion has been overcome, at least if this associative form is
used to develop activities. civilians.
8. Colombia, art. 20, C. Co.
9. CASTRO DE CIFUENTES, Marcela. "The Reforms to the Commercial Code
and the Deprofessionalization of the Subjective Statute of the Merchant." Private
Law Magazine, N" 18. University of the Andes. Bogota. 1996.
10. LE TOURNEAU, Philippe. CADIET, Lóic. "Droit de la Responsabilité". Ed.
Dalloz. Paris. 1998, p. 498.
11. infra Chap. 111. 2.3.
12. UNIDROIT currently has 58 member countries, including Argentina, Bolivia,
Brazil, Chile, Colombia, Mexico, Nicaragua, Paraguay, Uruguay and Venezuela.
13. It has been ratified and approved by Argentina, where it entered into force on
January 11, 1988; Chile, where it came into force on March 1, 1991; Colombia,
where it will come into force as of August 10, 2002; Ecuador, where it came into
force on February 10, 1993; Mexico, where it entered into force on January 1,
1989; Peru, where it came into force on June 11, 1996 and Venezuela, where it
has not yet come into effect.
14.V. in this regard HERRMAN, Gerold, "Innovations with respect to the
Uniform Law of Geneva", RODRIGUEZ OLlVERA, Nuri. "The convention of
the international bill of exchange and promissory note. Regional Legislation on
bills of exchange., in the Magazine of the Latin American Federation of Banks,
No. 75, 1989, Bogotá. As of October 30, 2001, it had only been ratified in Latin
America by Honduras and Mexico.
15. Panama is the only country in the region that has ratified the Convention,
which entered into force for it on October 11, 1997.
16. As of February 2001, it had not been signed by any Latin American country.
Ecuador, El Salvador and Panama. In all three it came into force on January 1,
2000.
17. The latter served as a background for the elaboration of Law 527 of 1999 in
Colombia.
2. ELEMENTS OF LAW
Returning to the evolution of the Law, it is convenient that we now analyze the
so-called elements of the Law, which are none other than its subjects and the
object on which they fall.
2.1. SUBJECTS
It can be said that the subject is one of the generating elements of the Law and
more specifically one of the elements of the legal relationship.2O
2.1.1. Active subject and passive subject

This element of the legal relationship is divided into two concepts: active subject
and passive subject. The active subject is understood to be the holder of the
subjective right and the passive subject is the holder of the legal duty
corresponding to said right. Reciprocal relationship that, as we see, is
fundamental for the proper notion of the concept of obligation, the analysis of its
structure and the relationships that have arisen between both parties.
Well, the first statement on the matter is that only people can be subjects of law.
Therefore, a person is understood as any being capable of acquiring rights and
contracting obligations. Now, this notion includes both the natural or physical
person itself and the legal or moral person and, consequently, the aforementioned
capacity must necessarily be predicated on both.
2.1.2. Natural person
In contemporary Law, a natural person is understood as any individual of the

human species, without any restriction. And we qualify the concept as modern,
simply to express that the indicated scope has not always been predicated on it.
Think, for example, of the legislation that accepted slavery, in which the slave
was considered a man but was not considered, on the other hand, as a person by
the world of Law and, consequently, was devoid of the attributes that gave him
would have corresponded if it had been classified as such. Now, if only people
can acquire rights and contract obligations, that is, only they have "personality",
it is necessary to determine at what moment the legal existence of people begins
and at what moment it ends, in order to be able to determine in time the scope of
said aptitude.
Regarding the beginning of people, there are different theories linked to specific
biological moments or to capricious circumstances added to them, at a given
moment, by one legislation or another. It is admitted, apparently without
discussion, that the biological existence of people begins with conception, that is,
with fertilization that occurs in the egg, due to the presence in it of a sperm.
There are then legislations that recognize the existence of the person from that
moment on. Others that take into consideration the moment of birth itself, that is,
the expulsion of the fetus by the mother, demanding that it be alive and
sometimes adding the need for a complete separation to occur, that is, cutting of
the umbilical cord is carried out. There are also laws that, in addition to requiring
the aforementioned vitality, that is, the circumstance that the creature is born
alive, demand some additional conditions aimed at specifying that the creature is
in a position to survive, for which they require, for example, that survives, in
effect, a certain number of hours. This is the so-called theory of viability. Finally,
there are others, so as not to expand unnecessarily on the point, that require the
presence of certain intrinsic conditions, without which it is considered that the
living creature would not be in a position to develop the level of
essential intelligence to be recognized as a person. Think, for example, of an
infant born without a brain or with brain trauma... such that not even a minimum
degree of intelligence could be predicted from it, which is essential for survival
and, above all, for social integration. Of course, legislation tends to mix the two,
but we could maintain that the most widespread theory is that of vitality which,
as we said, implies that the child is born alive and, as a general rule, is
completely separated from the mother.21
However, and even in legislation that enshrines the theory of viability, there are
provisions aimed at protecting the rights of the unborn, that is, of the entity
conceived not yet born, so that in the event that it is born, they are attributed to it.
the rights and obligations that would have corresponded to him if he had been
born on the date on which these rights and obligations could be established in his
head.
When, on the other hand, does the legal existence of that person end? Firstly, by
real death, that is, the cessation of life that occurs "when biological or organic
functions stop operating, resulting in the extinction of physiological life in the
human being."22 Death is classified as real for distinguish it from civil death, in
accordance with which a person was considered dead in certain circumstances,
either by their decision, such as when they entered a convent making solemn
vows or when for the commission of heinous crimes the criminal sentence
included the civil penalty. of death thus qualified, which marginalized him as a
legal entity for the State. We can affirm that the institution is anachronistic today.
But in addition to real death, which can be proven effectively and unequivocally,
there are cases in which it can be inferred. It is what is called, by doctrine and
legislation, presumed death. It usually results from a judicial decision, after the
corresponding process has been carried out, on the factual assumption consisting
of the disappearance of the person, without having any information about their
whereabouts and without responding to the appeals that are made to them in
different ways. Therefore, and in order to maintain adequate legal security for the
community, the law considers the person dead, with all the consequences derived
from such circumstance.
Upon the death of the natural person and within our systems, succession is
opened, a peculiar way of acquiring the assets of the deceased, which confers on
those called to succeed him a real and universal Right, at the same time, over all
of them or a quota of the same, depending on whether it is one or more heirs or
legatees. In the recognition of the Right of Succession, the fiction of prolonging
the legal personality of the deceased plays, above all, that is, that upon his
physical disappearance those people who, by virtue of the law or by decision of
the deceased, are called, take his place. to acquire their rights and assume their
obligations. In this way, not only do assets tend to be distributed following the
order that arises from family ties, which encourages their maintenance, but a
solution of continuity due to the simple fact of death is avoided, since the heirs
pass to fulfill their role as such since it is produced.
The simple notion discussed leaves out, of course, all the doctrinal discussion on
the reason for being and the justification of the succession and the right that the
State may have, eventually, to limit the possibility of disposing of the assets due
to death; complex topic that escapes the purpose of the chapter.23
2.1.3. Legal person
2.1.3.1. Notion
The recognition and existence of legal entities have been long

controversial. It has not been easy to admit the existence of organizations that,
beyond being simple appendices or instruments of management of natural
persons, can themselves have conditions such that they legitimize and explain
their own conceptual autonomy and their recognition as subjects of law. What's
more, it can be said that in practice there are at least three groups of theories on
the matter, the negative ones, those of fiction and those of reality.24 Let's look at
them.
a) Negative theories
They do not admit the existence of moral or legal persons and consider their
recognition as such unnecessary, since they believe that the purposes that, in the
opinion of other schools, justify their receipt as subjects of law, can be obtained
through other mechanisms or legal institutions.
b) Fiction theories
They also do not recognize the real existence of legal entities but admit that it is
up to the legislator to make a fiction and grant attributes and prerogatives to some
forms of organization, which meet certain requirements, so that they serve to
achieve the objectives expected by their inspirers.
c) Theories of reality
They affirm that legal entities are real entities, different from the natural persons
who create them or who participate in their development in their capacity as
partners or associates and that, as such, they have the right, so to speak, to enjoy
the attributes of personality compatible with his nature and peculiarity.
Within the theories and legislation that accept, by fiction or reality, the legal
existence of these people, their reason for being is rooted in the individual's need
to commit themselves to the search for higher and more lasting endeavors than
those they themselves could carry out, For which he generally requires the help
of other individuals who agree with him on the same concerns and want to
participate in the company. Not limited, however, by the mutability of its
members or its managers, the entity has a "personality" different from those of its
constituents or components, as the case may be.
Today it can be stated, in any case, that the concept of a moral, legal or social
person, as it is also known, is widely extended and practically universal! 25
Legal entities are classified first and following the traditional classification of
Law into legal entities of Public Law and legal entities of Private Law. Those are
conceived as the collective entities created to attend to the supreme purposes of
the State, whether they are political persons corresponding to the central
organization, or whether they are entities created specifically to attend to part of
those functions and carry out certain purposes, within more or less decentralized
schemes and with more or less autonomous functions. In any case, it is about
carrying out, as stated, functions that have been assigned to the different bodies
of public power, as they correspond to the high purposes whose achievement is
the responsibility of the State or, simply, those in which it participates by acting
as It would be done by individuals or in collaboration with them. Legal entities
under Private Law are collective entities that arise from individual initiative
within the canons established by law.
Private Law legal entities are classified, in turn, as non-profit legal entities, that
is, institutions of common utility or for certain cultural or recreational purposes,
where it is the achievement of these extra-patrimonial purposes and not the
obtaining of a benefit which drives its constitution and, on the other hand, for-
profit persons, generically called companies and which correspond precisely to
the modality chosen by merchants, to the extent that they are not willing,
interested or able to carry out their operations and activities as individual entities.
Within the latter, societies of people are called, in turn, those in which the
primary and determining element for the contribution of efforts, assets and
interests is the consideration of the individuals who are going to be part of it.
Capital companies, on the other hand, are those in which the realization of the
corporate purpose implies having a certain volume of resources to obtain which it
is necessary to invite a generally high number of shareholders; important and
considered necessary for society as long as they have the required patrimonial
capacity, but where their estimation as people is secondary. In other words, if in
both cases there is a contribution of capital or efforts to obtain a lucrative
purpose, in partnerships this purpose is expected to be realized fully in
consideration of the personal conditions of those who have come to celebrate the
social contract, while in In capital companies, this achievement is considered
possible by virtue of the resources contributed by the shareholders, regardless of
the qualities of each of them.
Of course, this distinction implies a set of very important legal consequences that
characterize each other more precisely and of which we could cite some
examples. Due to the form of administration, first of all, partnerships are usually
managed by each and every one of their partners, although they may delegate this
power to a third party, partner or stranger; Capital companies, on the other hand,
are usually represented by social bodies established by law or statutes to which
the administration of the company corresponds directly, not to the partners.
Regarding the patrimonial responsibility towards third parties, the indefinite
obligation of the partners with the acts of the company is usually predicated in
partnerships, that is, the need to respond with all of their assets to third parties. ,
for the obligations contracted by the company, to the extent that its equity
resources are insufficient. In capital companies, on the contrary, the liability of
the partners is limited to the amount of the amounts contributed. That is, in the
event of the company's eventual failure to meet its current obligations, the
shareholders will only have the possibility of seeing their equity interest in the
company disappear, to the extent that all of the resources must be allocated to
attend to the rights and debts of third parties, without any amount remaining to
reimburse them for their contributions.
Capital companies are usually subject to stricter controls by the State, among
other things, because given their specific structure, partnerships are usually
intended to carry out small businesses, sometimes family businesses but, in any
case, with the participation of a small number of people, which, in principle, at
least, does not allow them to undertake companies of the same magnitude as
those in which large capital companies can undertake. By linking the latter to a
large number of savers, through the mechanics of shares placed on the market,
the legislator finds it necessary to protect this general interest through greater
restrictions on their creation and more severe controls on the execution of their
actions, among others. possibilities.26
The birth of legal entities under Private Law has more or less strict conditions in
the different legislative systems, which in turn grade them taking into account the
nature of the entity, its corporate purpose, the interest it may have for the
community, their more or less close contact with public service activities, etc.
Based on the fact that, by definition, the creation of legal entities under Private
Law corresponds to individual initiative, let us quickly analyze some systems
established for the recognition of their personality:
a) The simple participation of private will, expressed in the manner provided by

law, is sufficient for the company to be born into legal life.
b) In order to exist or be able to function, it is necessary, in addition to being

established in accordance with the provisions of the law, to fulfill a set of
additional requirements, such as being registered in the so-called Public Registry
of Commerce with the aim, in addition, of providing it with publicity in front of
to third parties, and
c) In order to exist or operate, it is necessary that, in addition to having been

established in the established manner and fulfilling the additional requirements,
such as the one mentioned above, the company obtains express authorization
from the State.
In the latter case, the system is established so that the state authority verifies
whether individuals have met the different requirements provided for by the
positive normji. If so, the corresponding authorization will be granted. If not, it is
up to individuals to introduce the modifications that are pertinent, in accordance
with the glosses formulated by the administrative entity, or to challenge its
decision before the jurisdiction, in order to challenge its reasoning and its
conclusion. This aspect has particular relevance in the case of Banking Law and,
more specifically, the birth of credit establishments, since in those countries in
which they are subject to special protection, due to their importance in economic
life or because the provision of the service to the State and delegated, through
temporary concession, to individuals, the authorization generally has the
character of essential. This means, then, that the company or credit establishment
cannot come into legal life except to the extent that there is a specific
authorization from the State, unlike other companies in relation to which
authorization is a requirement to operate, but not properly to exist. With an
aggravating factor, consisting of the fact that in these cases the state decision
usually does not have to be subject to higher standards so that, ultimately, it
constitutes a discretionary decision that cannot be discussed by individuals or
contested before any court AND
From which it can be deduced that the birth of companies, that is, their
recognition as legal entities and the consequent possibility of carrying out all acts
and contracts related to their object, depends on a different and wide range of
possibilities, diverse according to the countries and in attention to the factors that
we stated above, which oscillates between the full recognition of the autonomy of
the private will as sufficient to bring it into being, to the essential intervention of
the State, without whose acquiescence this birth is impossible.
Legal entities called companies are organized in accordance with the law and are
structured in accordance with the law and with the statutes that have been
established by the partners who appear at their constitution. In its structure there
may be different bodies to which functions are assigned, either by law or by the
statutes and for the execution of acts and contracts that allow the corporate
purpose to be fully developed. They act through legal representatives in the event
of physical impossibility. of being able to act on their own in a different way.
Just as companies are born through their constitution in the manner provided for
by law and within the more or less complex possibilities that we had the
opportunity to analyze above, it is foreseen that they may end, that is, that their
legal personality may be extinguished for different reasons. . Among them we
can mention, always within the law and the statutes, the will of the partners to put
an end to it; the decrease in their number when the law requires a specific
number in order to survive or when the plural number disappears to concentrate
the social interest or the capital shares in a single head; when the period provided
for by the statutes is met without the partners providing timely provision for its
extension; when the object for which they were created disappears or when this
object becomes impossible to achieve; and, finally, when there is a judicial
decision that imposes it. In all these cases, or in the others that may be conceived,
once the company is dissolved, it is necessary to proceed to its liquidation, just as
the death of natural persons causes the opening of the succession. Only in this
case the liquidation has an exclusively patrimonial content and no longer has that
meta-economic purpose of prolonging the personality of the deceased. The
liquidation then seeks to distribute the assets, prior to the realization of the assets
and the cancellation of the external liabilities, reimbursing the partners for the
verified contributions with the increases, not distributed until then, that result
from the development of the social businesses.
It should be noted that, in the case of financial entities, forced liquidation

processes, that is, those resulting from a situation of failure or transgression of
the law that imposes it, are usually assigned to the same control entity or to a
specialized one that has that faculty. 28
2.1.4. Personality attributes
A set of attributes or qualities are predicated on the personality of legal subjects

that accompany them from birth to death, that is, as far as legal entities are
concerned, from their constitution to their extinction. Not all authors recognize
that these are natural derivatives of personality, but, without discussing the
different theories, we will mention those that are traditionally considered the
most important and significant.
2.1.4.1. Name
By name is understood the attribute of personality that allows a subject of law to

identify himself individually in a way that is unequivocally distinguished from
others. In other words, the name makes an indeterminate individual become "one
and unmistakable" among his fellow human beings and, by externalizing his
personality, indicates an undisputed point of reference that allows him to
establish himself in a subject of law, specifically named, the total of rights and
obligations that may be acquired or contracted, as a consequence of their ability
to do so.
From what it says with natural persons and within our legislative systems,
inspired by European continental law, the name is a compound formed by the
name or prenomen, on the one hand, and the surname or nomen itself, on the
other hand. Unlike what may have happened in other times, currently the
regulation of the name itself or surname is normally controlled and regulated by
the legislator, through provisions that determine the imposition of the surname as
a consequence of blood or family ties. More generically, if they wanted to
present themselves that way, they relate it to the family framework within which
the individual is born. Logical regulation if it is also noted that the links
externalized by that surname are decisive in specifying the rights and obligations
that family relationships impose and, most especially, the rights that through
succession may correspond to the deceased of a deceased person. The
determination or choice of the prename, on the other hand, is left to the simple
will of the parents as a general rule, with the reservation, however, that in most
legislations it is possible that the owner of that prename can obtain its
modification. through a procedure established by law.
The name of legal entities, on the other hand, and, specifically, that of
companies, obeys the free determination made by the constituents in the
respective act, with some restrictions. There are laws that usually require or only
allow, depending on the case, the use of the name of the natural person in a
company when it concerns partnerships or better, those in which the partners, but
especially those whose
name appears in that of the company, must respond indefinitely with their assets
for the obligations contracted by the legal entity. But, in addition, it is commonly
established that the name assigned to the legal entity, when it is a company, is
accompanied by some expressions that indicate its legal nature, such as a public
limited company or limited partnership, for example. In this way, the law seeks
to ensure that third parties who contract with them have information, by the
simple enunciation of the name, of the legal nature of the entity and, as a
consequence, of the peculiar characteristics that distinguish a company from the
point of view of its structure, its operational mechanics, the existence of certain
bodies, its legal restrictions, etc. It should be noted, however, that the freedom of
choice and name of the company is eventually restricted in commercial
companies, when the name chosen corresponds to a pre-existing legal entity,
especially when it has the same or similar corporate purpose. We will return to
this aspect when talking about intellectual rights.
In relation to companies, a distinction is usually made between reason and

company name, with the former being understood as indicating the name and
surname or the surname alone of one or more partners and the latter being
understood as a reference to the object developed by the company. One or the
other constitutes the commercial name of the companies. Now, if some identify it
only with the designation used by the merchant in the ordinary course of his
business, commercial name in the subjective sense, others consider that it also
serves to identify the establishment, commercial name in the objective sense
called the latter in some legislations. teaches. For this aspect, it can be different
from the company name or name and multiple, that is, a legal entity can have
several commercial names, in an objective sense, to distinguish, for example, its
different commercial establishments.29
Finally, it is not unnecessary to make some brief reference to the differences

between the civil name, which we could call, and the commercial or commercial
name. They can be summarized like this, as it says with the most important ones:
a) The civil name is distinctive of the person in all their legal activities, while the
commercial name only distinguishes its owner as a subject of commercial
activities.
b) The civil name is eminently subjective, while the commercial name tends
more and more to become objective and, as a consequence, today not only
distinguishes its owner, the merchant, but also his company, his establishment,
possibly his products, etc. , and may remain linked to them even if the owner,
legal or natural person, changes to another.
c) The civil name does not have patrimonial content. That is why, in the face of
conflicting theses, the one generally held is that according to which it is an
emanation of the personality that we have welcomed. The commercial name, on
the other hand, usually has an economic content and in this way is part of the
assets of its owner or the business organization. Consequently, it is transferable
like any other asset, either by inter vivos act or mortis causa.
2.1.4.2. Nationality
Nationality is understood as the attribute of personality that establishes for a

subject of law a link with a specific State, producing, as an immediate
consequence, submission to its authority and its laws. It allows, then, to
distinguish national people from foreign people.
Nationality is acquired, according to different legislations, for causes or

circumstances that are of diverse nature. We know, first of all, the so-called
"nationality of origin", which is commonly attributed to the existence of one of
two factors: birth in the respective State or birth in a different place, but to
parents or a father or mother from the State. that nationality provides. The so-
called "voluntary nationality" is also accepted, for those who, not having the one
of origin, request and obtain it from a certain State. And, finally, the so-called
"forced nationality" is also conceived, which comes to be imposed on the
individual who already enjoys a nationality, as a consequence of external events
that are foreign to him, such as, for example, conquest or annexation in cases of
war, the legal transfer of a portion as a result of border treaties, etc.30
Nationality has significant importance for people, not only because it initially
subjects them to the authority and legislation of a State, to the extent that they
remain there, but also because, in relation to certain matters, it usually projects
onto them the provisions legal, subjecting them to its empire, even in the event
that they are not found or live within the territory of said State. Such, for
example, usually happens with the rules on the Civil Status of people.
2.1.4.3. Home
The domicile is conceived, simply, as the place of habitual or permanent

residence of a person. From the legal point of view, it is the place in which it is
presumed that he exercises his rights and is responsible for his obligations and,
consequently, it is the place where the person is geographically located and
where it is presumed by third parties and for the law, which can be found. Since
every person must have a domicile, the law generally establishes that, if the
substantive requirements established to have it as such are not met, the domicile
is considered to be simple residence, that is, the place where the person is
physically located at a given time. These background requirements or, better, the
signs that show the existence of a domicile, are usually linked to the place where
the person lives established and accompanied by his family or has the main seat
of his professional or commercial activity. In the latter case, both for natural
persons and legal entities.
The domicile has various modalities, but its most simplified scheme divides it
into "voluntary domicile", which is one that the person can freely choose and
determine, establishing themselves in a place or making decisions that express
their intention to remain there, as already stated. We said, and "legal domicile",
which is that which is imposed on certain people in consideration of their
particular circumstances. Such is the case, for example, in many countries, of the
domicile of a married woman following that of her husband, the domicile of
children, wards, servants or domestic servants, following that of their parents,
guardians. or patterns, etc. Apart from these, the so-called "special domicile" is
also known, which is one that, generally by contractual means, the parties
establish for the fulfillment of certain obligations or the satisfaction of certain
rights.
The domicile of legal entities is the one established in their statutes and, failing
this, in most legislations, the one in which they have the main headquarters of
their businesses or social administration.
This link of the individual with a determined portion of the territory, this specific
location of a place where the law presumes that he is permanently located to
exercise rights or contract obligations, has its most relevant importance in matters
of jurisdiction because, as a general rule, the Controversies that are brought
against an individual must be carried out before one of the judges of his domicile.
2.1.4.4. Civil status
Marital status is understood as the attribute of personality that defines the legal
status of the person in the family and in society; position from which, naturally, a
series of rights and obligations derive. In other words, it is the position that the
person occupies between birth and death in the field of Private Law, conceived as
part of a family.
Birth, marriage and death are the three determining moments of civil status, from
when it is assigned for the first time to a person until it disappears with its
extinction and they are recorded in the records of civil status, which are public
documents drawn up before certain officials, established by legislation, within
certain deadlines and, usually, at the initiative of the persons responsible for the
event, such as the parents, in the case of birth, or participants in the act, such as
the spouses, in the case of marriage. .
In relation to civil status, it is necessary to note that, unlike the other attributes of
personality, which are common to all, this is only predicated on natural persons
because, logically, legal persons lack family. , a determining factor, as we saw, of
marital status.
2.1.4.5. Heritage
Heritage is understood as the "set of active and passive legal relationships

belonging to a person that have an economic utility and are susceptible to
pecuniary estimation." 32
Regarding heritage, there are two main theories that seem convenient to review
quickly. On the one hand, the classical subjective theory that sees in heritage a
direct reflection of personality and that, considering it as an abstract notion,
allows us to understand in it both the rights and obligations of a subject existing
at a given moment, as well as the aptitude to acquire the former or contract the
latter. It is considered, then, as a legal universality directly emanating from the
personality whose content, more than real, is potential. As a consequence of this
theory, every person has assets and only people can have it. No one has more
than one patrimony and it is inseparable and inalienable. New obligations may be
contracted, new rights may be acquired or some may be assigned, but the
property as a personal attribute will continue to be linked indefinitely to the
individual as long as it subsists as such.
But alongside this theory or against it, in certain aspects, there is the so-called
objective or economic theory, which recognizes heritage as having its own legal
individuality and conceives it as an allocation of a certain amount of wealth to a
specific purpose, recognized by society and legally protected.33 This explains the
so-called special assets held by a person and which coexist with their general
assets, which is why they would constitute an undoubted exception to the
statement according to which the person cannot have more than one asset and the
so-called autonomous or separate that have legal relevance in themselves,
without therefore requiring the personal support of classical doctrine. This notion
of autonomous assets has undoubted importance in modern law to explain certain
legal situations in which the traditional theory encountered some difficulties. In
particular, and to refer to the object of our study, we can bring as an interesting
example, from now on, that of the notion of autonomous assets, adopted by some
Latin American legislation to legally classify the assets transferred in trust that,
although they appear in the head of the fiduciary , are usually considered an
integral part of a separate estate for many purposes.34
The concept of heritage excludes all those rights that do not have a pecuniary
content, such as certain very personal rights, the right to life, honor, etc., some
family rights and political rights, such as the right to vote. On the contrary, all
pecuniary content rights are included in their most significant traditional
classification, to which we will refer more in space in the next point.
2.1.4.6. Ability
Even though capacity is one of the essential assumptions of the legal act and we
will return to it when studying contracts, it is worth making a quick mention of
the institution in order to have a global vision of the attributes of personality.
Capacity is understood as the possibility of intervening as an active or passive

subject in a legal relationship. The notion of capacity actually includes two
concepts: legal or enjoyment capacity and exercise capacity.
The legal or enjoyment capacity corresponds to all men by virtue of being serious
and in this sense it is almost confused with the notion of personality. Every
natural or legal person, by being recognized as such, has the capacity to acquire
rights and contract obligations, that is, for both to appear as an integral part of
their assets.
The capacity to exercise, on the other hand, refers no longer to that faculty
typical of all beings in the world of law, but to the possibility of being able to
directly exercise those rights, that is, to acquire them for oneself or contract, in
the same way, obligations. This capacity to exercise is the general rule and
suggests, then, through the study of exceptions, the notion of incapacity. As the
doctrine correctly expresses, incapacity "is not the lack of right but rather the
imperfection in action: the right exists but may be limited due to lack of
aptitude...".35
Incapacity is classified by the authors as absolute or relative, depending on

whether the law denies people any ability to exercise their rights or recognizes,
instead, a principle of capacity, legally relevant in certain circumstances.
Disabilities are usually linked to certain conditions of age, reason or mental state,
physical situation and even, eventually, marital status, when, by mandate of law,
this circumstance can be translated into a form of disability. We will return to the
topic in more detail when dealing with the essential elements of contracts and the
ineffectiveness of legal acts.
2.2. OBJECT OF THE LAW
We already talked initially about the concept of Law as a set of mandatory rules
that are imposed, therefore, on the individual, to regulate the relationships that
guarantee their permanence as a member of a society. We study how this Law
can be Public or Private, depending on the nature of the protected interests. Let's
return to the topic to study how the object of Law is usually treated through four
main parts, in order to be able to stop at the last one, of particular interest for our
study.
In general it can be said that the object of Law is, firstly, with the organization of
the State, secondly with social guarantees, later with family relations and, finally,
with property relations.
Let's do a quick overview of the first three areas and focus a little more precisely
on the last one.
2.2.1. State Organization
The existence of man in society presupposes, by definition, that of a state

organization to which he must submit, by virtue of the power attributed to the
latter to dictate rules and coercively impose them. It then says the organization of
the State with the definition of its structure, the fundamental principles that
govern it, the assignment of functions between the different branches of public
power, the way of appointing rulers and their authority relations with the
governed, etc. The rules that apply to this organization are, as we have already
said, of public order, that is, they are not susceptible to modification as a result of
the autonomy of private will and their content is absolutely extra-patrimonial.
2.2.2. Social guarantees
In a certain way, social guarantees could be considered part of the fundamental

principles that inform the general theory of the State. Whether they are
considered that way or whether they are treated separately, the truth is that they
enshrine a set of rights that the State considers fundamental, at a given moment,
in relation to those who make up the Nation and that regulate the rights to life,
honor, work; that guarantee that subjects subject to their rule cannot be judged
except for reasons previously established in the law, respecting the principles of
due process and specifically, the so-called right of defense; that enshrine the
freedoms of education and of choosing a profession or trade; that establish rules
protecting people's privacy, the inviolability of their correspondence, respect for
their residence, etc. Naturally, although in relation to these social guarantees
there is a high percentage of coincidences in all Western States, whose structural
organization has been informed, to a greater or lesser extent, by the principles
that inspired the French Revolution, it is no less It is true that in its consecration,
resulting from the sovereign will of the constituent, there are some variations
between countries, both in its conceptual enunciation and in the concrete
developments that are based on them.36
The rights that derive from the consecration of said guarantees are also extra-
patrimonial, which does not exclude the possibility, in practice, that, in the event
of their violation, the damage caused by such disturbance could translate into the
possibility of demanding compensation, this last expressed in pecuman terms.
2.2.3. Family relationships
Recognizing the family's function as the primary cell of social organization, the
relationships that derive from its constitution constitute another of the large
sectors regulated by Law. The recognition of these relationships is nothing other
than that of the individual's primary right to procreation; which organized by the
State within canons compatible with the same social demands, leads to the
constitution, maintenance and defense of a family. Therefore, the norms that refer
to this particular matter, with the celebration of marriage or the stable
organization of intersexual or couple relationships, its termination, the
relationships between the different members of the family group and, even, the
regime of the assets that are linked to the so-called family society.
Consequently, since derived extra-property rights are, in principle, they can only
have a pecuniary nature in situations similar to the one considered in the case of
social guarantees. This does not prevent family relationships from being
regulated at the same time with typically patrimonial rights, such as those
regarding the assets that are part of the so-called, in many countries, "marital
partnership" or property regime applicable to organized couples, under the forms
recognized by law.
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19. RODRÍGUEZ R., Joaquín. "Commercial Law". Eleventh edition reviewed by
José V. Rodríguez del Castillo. Ed. Porrúa, México DF, 1974, pp, 12-13.
20. SÁNCHEZ ROMÁN, cited by the "Dictionary of Private Law." Ed. Labor,
Barcelona, 1967, p. 3727.
21. The topic will have to be reviewed in depth taking into account the surprising
advances in genetics, the presence of technical resources such as DNA tests, the
knowledge of the human genome itself and the risks of gene manipulation, to cite
a few examples. . Contemporary phenomena such as so-called "in vitro"
fertilization and surrogacy have transformed the notion, which seemed
immutable, that fertilization only fits in the mother's womb and generate new and
complex debates that escape the simple pedagogical presentation, compatible
with the structure of the book.
22. ANGARITA GÓMEZ, Jorge. "Personal Civil Law". Ed. Rosaristas, Bogotá,
2nd edition, 1974, p. twenty-one.
23. Common law countries, unlike those called "Civil Law", do not have a legal
regime for forced heirs, which is why the testator can freely dispose of his assets
after death.
24. DE CASSO and ROMERO, l.; CERVERA and JIMÉNEZ-ALFARO, F., Op.
cyl. p. 2970.
25. To the existence of legal entities, strictly speaking, various forms of business
organization should be added, such as those that could be subsumed in the so-
called "joint venture" of Anglo-Saxon Law. In the same way, it must be
remembered that there are forms of patrimonial organization that would allow the
achievement of collective purposes such as certain "special or autonomous
assets", recognized as such in the legislation on Trust or Commercial Trust or the
so-called "one-person companies", by virtue of which a A person separates a part
of his or her assets to link it to certain activities.
26. Colombia. The control criterion, in a broad sense, was substantially modified
as of Law 222 of 1995. He recognizes, in practice, three levels of different
progressive intensity, as powers of the Superintendency of Companies applicable
to all companies, with the exception of those subject to a particular inspection, as
occurs with financial entities that are subject to the Banking Superintendence. .
Inspection as a generic possibility; the surveillance that involves interference by
the closest and most necessary Superintendency of Companies and that will
result from factors such as the amount of capital, the participation in it of other
supervised companies, their nature as branches of foreign companies or EMAS
and their corporate purpose, in the case of administrators of commercial
consortia, agricultural product exchanges, technical and administrative services
companies and livestock funds and/or control, in the strict sense, as the exclusive
function of the Superintendent, whose exercise must be expressed through the
issuance of an administrative act of a particular nature and that applies to
companies that are in serious difficulties. Consult REYES VILLAMIZAR,
Francisco, for this purpose. "Reform to the corporate and bankruptcy regime."
Ed. Chamber of Commerce of Bogotá, 1996.
27. MARTINEZ, Néstor Humberto. "Financial Systems". Felaban Library.
Bogota. 1994, pp. 226 And ff. Colombia transformed this power into regulation
starting with Law 45 of 1990, as enshrined in article 53 of the Organic Statute of
the Financial System.
28. Colombia, The liquidation process is initiated by the Banking
Superintendence with the takeover but is carried out by the Financial Institutions
Guarantee Fund, FOGAFIN. Art. 14. d. 2757/91. Venezuela. A similar solution
is established for the Superintendence of Banks and Other Financial Institutions
and for the Deposit Guarantee and Bank Protection Fund. Arts. 235, 255 AND
281, D. 1526/01, reform of the General Law of Banks and other Financial
Institutions.
29. PACHÓN, Manuel. "Industrial Property in the Cartagena Agreement." Ed.
Temis, Bogotá, 1975, p. 105.
30. DE CASSO and ROMERO, L; CERVERA and JIMÉNEZ-ALFARO, F., Op.
cyl. p. 2726.
31. ANGARITA GÓMEZ, J., Op. cit., p. 94.
32. RUGGIERO, cited by the "Dictionary of Private Law." Ed. Labor, Barcelona,
1967, p. 2940.
33. DUGUIT, cited by the "Dictionary of Private Law." Ed. Labor, Barcelona,
1967, pp. 2940-1.
34. In due course it will be seen how it could be better described as "special
heritage". See chapter XXII on the Trust.
35. ANGARITA, Jorge. Op. cit., p. 174.
36. In contrast to the French-inspired constitutional structure that conceived
guarantees as a form of fundamental protection of the individual - contemporary
trends tend to strengthen the effective coverage of the community and translate
into the consecration of various forms of collective protection. When referring to
Colombia, it has been argued that (the 1991 Constitution) "... describes our
country as a Social State of Law, thereby accepting the same criterion
contemplated, among others, in the constitutions of Federal Germany, of 1949. ,
from Spain in 1978 and France in 1958. -This integration of social and legal, ... is
a true synthesis of nineteenth-century liberalism and the social forces that erupted
in the twentieth century." PLAZAS VEGA, Mauricio A. "Liberalism and the
theory of Taxes." Ed. Temis, Bogotá. 1995, p. 164.
2.2.4. Property relations
The regulation by law of these relationships implies the recognition of all those
individual rights whose content is eminently pecuniary, directly or indirectly.
These are, then, rights that form part of people's assets and that, as such, are
susceptible to alienation, encumbrance, that is, economic disposition of the same,
by their owner. The rights that result from this type of relationship are usually
classified by the authors into two large groups: real rights and personal rights, to
which are added, by some, universal rights and intellectual rights.37
2.2.4.1. Real and personal rights
First of all, it is necessary to start from the difference between real and personal
rights. 38 Real rights, according to classical theory, impose, in principle, a direct
and immediate relationship of power or lordship between a subject of law and a
thing. Personal law, on the other hand, implies a relationship from person to
person. It is also called credit and is defined as the right that one person, creditor,
has to demand from another person, debtor, a benefit or service consisting of
giving, doing or not doing something. The concept of personal right suggests, as
a logical consequence, the reciprocal notion of obligation, defined as the legal
bond, by virtue of which, the debtor is constrained9 with respect to the creditor
and under state control, to adopt a certain behavior; that, precisely, that
corresponds to what is expected by the holder of the personal right. We will
dwell on obligations in the fourth point of this chapter.
In order to better specify the concepts, let's study some differences that exist
between real and personal rights, which flow naturally from the respective
definitions:
a) In personal rights there is a specific passive subject and in real rights there is
not.
b) Real rights fall on a material thing, which constitutes its object, while the
object of personal rights is a benefit (give, do or not do).
c) Real rights are established by law, without it being possible for the autonomy
of private will to create new real rights. On the other hand, personal rights arise,
in principle, from the individual will, although there is the possibility that they
arise, at times, directly from the law.
d) Real rights are extinguished upon perishing with the thing that is their object,
while personal rights are extinguished with their exercise, that is, with the
correlative satisfaction on the part of the debtor, when payment is made or by
other means consecrated by the laws. laws such as set-off, confusion and
prescription, to mention a few.
e) The real right generates the so-called real action, which allows it to be directed
against anyone who is in possession of the property or attempts to disturb the
exercise of the owner's powers over it. For its part, personal law only confers
action against the debtor or his successors, universally or individually, and
f) Finally, and this is a very important characteristic of real rights, which derives
from the previous difference, only the holders of real rights and consequently of
actions of the same nature, have the so-called rights of pursuit and preference.
The first is understood as the power that corresponds to the holder of a real right,
to pursue the good on which his right rests, in the hands of whoever he is in and,
in this sense, as we see, it is practically identified with the notion that we have
real action die. The right of preference, in turn, highlights the privileged position
of its holder. As, for example, happens in the case of security rights, where the
creditor has the right to be paid preferentially with the proceeds of the asset that
is the subject of the security in relation to other creditors.
Now, given that real rights fall on things and that there are different species of
them, the existence of different species or modalities of real rights occurs,
depending on the things that are the object of them. These, which in the legal
world are called assets, due to the pecuniary and patrimonial content they
inherently have, are classified, first of all, into corporeal and incorporeal things.
Corporeal things are those that have a real and concrete entity and are perceptible
by the senses. Incorporeal things configure their existence in an abstract way and
by virtue of a fiction of law, because of the economic value that man confers on
them. They are, in other words, those that consist of mere rights that, of course,
are neither concrete nor perceptible by the senses, but are intangible and abstract.
Corporeal things are divided, in turn, into movable and immovable property.
Naturally, movables are things that can be moved from one place to another, and
artificially, or by virtue of law, personal rights or credit rights. The products of
the real estate and the things accessory to them are called, in turn, movable by
advance, even before their separation, when a right is established over them in
favor of a third party. Real estate, on the other hand, is things that cannot be
moved from one place to another, to which are added, generally, by law, those
that are physically incorporated into real estate or those that are permanently
assigned to them.
Movable things are divided, in turn, into consumables and non-consumables,

fungible and non-fungible. Consumable things are those that are destroyed or
consumed by the simple normal use that is made of them. Non-consumable, on
the contrary, those that, despite being used or used normally, are not consumed in
themselves and can remain, more or less unchanged, for a long time. The notion
of fungible things is eminently legal and, even though fungible things tend to be
at the same time consumable, the concept suggests, above all, the possibility that
some things can be replaced by others of the same kind and quality, without
detriment. of the creditor's position Non-fungible things, on the other hand, are
those that, given their individual characteristics, cannot be replaced by others.
From which it follows that a consumable thing can be non-fungible, as long as
the parties, in a specific case, have decided that the thing cannot be replaced by
another and, consequently, whoever receives it and must return it, cannot make
the normal use that its nature suggests, but must preserve the property unaltered.
On the contrary, it may be the case that a non-consumable good is instead
fungible because if a fountain pen is owed, for example, it can be replaced with
another of identical type and quality.
Taking into account the direct use of things or their use in the second degree or as
a guarantee, real rights are classified into main and accessory real rights. Among
the first are the real right par excellence, called property right; the right of
inheritance; the dismembered rights of property, usufruct, use and habitation and
active easements. Among the main accessory real rights, the mortgage and the
pledge can be noted. Let us study them briefly.
The right of ownership or property, which we described as a real right par
excellence, consists of being able to enjoy and dispose of a thing absolutely, of
course, not being against the law or against the rights of others. In the same way,
three attributes are predicated: on the one hand, being able to use the thing;
secondly, to be able to enjoy it, benefiting from its fruits or results and, finally, to
be able to dispose of it, legally, by transferring or alienating it, and physically,
through its consumption or destruction.
Although the right of domain or property has been considered by classical

doctrine as the prototype of the real right and confers on its holder the set of
powers or attributions that we have just reviewed, its absolute nature has been
limited in different ways, especially by the contemporary law and jurisprudence.
Firstly, as a consequence of the evolution of the theory of the State that has
replaced individualistic criteria, informing the law, with criteria of collective or
social convenience. Within this context, the Constitutions have been
incorporating, with increasing vigor in Western countries, the so-called principle
of the social function of property, in accordance with which, framing this right
within community interests, the law sanctions its non-exercise, when it results
from harmful negligence or its uneconomic exercise, compared to the state
postulates in this matter. Which, in the field of subjective rights or the theories
that study them, has led to the elaboration by the doctrine, the recognition by
jurisprudence and the specific incorporation in some legislations, of the theory of
"abuse of the right." 39 In accordance with this, the owner cannot legitimize his
conduct or his omission, in the simple circumstance that his status as lord and
owner allows him to fully and unrestrictedly dispose of the right or to refrain
from doing so, if with that attitude he causes damage. to others. Or, in other
words, the theory assumes that the right of property must be exercised, normally,
in accordance with the purposes or economic or social destiny of the subjective
right. If, by action or omission, damage is caused and there is no legitimate
reason that justifies the exercise or non-exercise of the property right, it is
considered, then, that it has been abused and that, in that sense, the conduct of the
holder is reprehensible and subject to sanctions from a legal point of view.
The rights of usufruct, use and habitation, unlike that of ownership which is
perpetual, in principle, in the sense that it is not intended to be extinguished
during the life of the owner, are eminently temporary and imply their coexistence
with the right of ownership in the head. of a holder (unknown owner), from
whom one or some of the corresponding powers have been temporarily
separated, which confer on the holder of the latter the powers derived from the
real right of ownership except, in any case, that of disposing of the assets over
which relapse. The usufructuary can then use and enjoy the thing, that is, use it
according to its nature and benefit from its fruits. The user and the holder of the
right of habitation must limit themselves, however, to the simple use of the thing
which, for the latter of the two, is necessarily a home. Everyone bears the
obligatory burden of preserving the property and returning it in a timely manner
to the sole owner or his successors.
Active easements are perpetual real rights that consist of the imposition of a lien
on a property in favor of another or others of a different owner, empowering the
latter, consequently, to derive certain prerogatives and exercise them in relation
to a foreign property.
The rights of pledge and mortgage, in turn, are real rights of guarantee and as
such accessories, unlike the previous ones. This means that rights are only
conceived to the extent that there is a primary right whose fulfillment is
guaranteed by the constitution of a lien on an asset. We will have the opportunity
to study, when talking about the mutual contract, the way in which banks can
guarantee themselves with respect to their client's obligation to pay the sum of
money that has been given to them as a loan. For now, it is enough to remember
that these rights are accessory, in that their legal existence depends on that of the
main obligation and consequently, once this is extinguished, they disappear
simultaneously.
The right of pledge arises from the delivery made by the debtor to the creditor of
a movable property as security or guarantee of his credit. Mortgage, in turn,
involves the constitution of a lien on real estate, which otherwise remains in the
possession of the debtor. The nature of the asset that is the object of the lien
explains the possibility of it being kept in the hands of the debtor in the mortgage
and the need to be delivered to the hands of the creditor, in the case of the pledge.
In fact, the acts of disposition or encumbrance on real estate, in our systems,
generally imply the need to submit them to notarial forms, making them
recorded, therefore, in instruments granted before the official in charge of giving
public attestation to the acts and contracts. concluded by individuals, to which is
usually added the need for registration that provides them with adequate
publicity, so that third parties cannot, legally speaking, ignore the existence of
the transfer of the right or the constitution of a lien.
In the case of movable property, on the other hand, the simple possession and
even the holding thereof, presumes its ownership and, consequently, of
remaining in the hands of the debtor and being, for example, disposed of in bad
faith by him. This circumstance would not be enforceable against a holder in
good faith. However, this difference, logically explainable in legal terms, has
disappeared in many legislations to the extent that these have established the so-
called pledge without possession of the creditor or pledge without dispossession
of the debtor. From where the pledge is conceived and this is especially marked
in the field of Commercial Law, through two forms: the traditional one, that is,
the one in which the creditor keeps the asset in his possession and the pledge
without possession of the latter. , in which the debtor keeps the asset on behalf of
the creditor, a case in which, of course, a form of registration is usually
established that allows third parties to know the said affectation.
Pledge and mortgage are not only accessory, to the extent that they exist as long
as the main obligation is not extinguished, but the possibility of exercising the
right only arises at the moment in which the main guaranteed obligation is
breached. And in this case, the exercise of the real right does not entitle its
owners to directly appropriate the assets received as collateral, but rather it is
necessary, as a general rule, to carry out a process before the competent
jurisdiction in which, proven non-compliance with the obligation, the judge must
order the auction of the property to satisfy with its proceeds the pecuniary
equivalent of the unfulfilled obligation or, failing that, award it to it in total or
partial payment of the main obligations. That is, the powers derived from these
rights do not allow the direct disposition of the things on which they fall, but
rather only authorize their holders to request the disposition by the judge.40
2.2.4.2. Universal rights
One part of the doctrine independently studies universal rights characterized by

falling, no longer on concrete and determined things, but on a patrimony or set of
rights and obligations, to which we have already had the opportunity to refer.
That is to say, and from this they derive their name, that rights fall on a legal
universality whose particular content may not be known and may still be
indifferent.
Examples are cited: hereditary rights, rights over the assets of dissolved legal
entities, and community property of the conjugal partnership formed upon
marriage. In all these cases, the people who have the right, such as heirs, partners
or the spouse or spouses, as the case may be, express their power, not in relation
to specific assets, but with a set of assets and obligations of which The real and
personal rights, these specific ones, that correspond to them by virtue of the
partition or liquidation will naturally be deducted.41
It should be noted, of course, that simultaneously one could speak, for example,
of the real right of inheritance, to indicate that it is not a personal right, but rather
that it is exercised with respect to a set of assets, even if they are not determined
from a specific point of view. beginning.
2.2.4.3. Intellectual rights
Even though there are numerous theories about the legal nature of the so-called
intellectual rights, theories that fluctuate between those that consider them a
derivation of personality and others that think that it is a right of the community,
the truth is that the most acceptable , sees them as real rights over intangible
assets that, due to this circumstance and the peculiar characteristics that
distinguish them, deserve to be studied independently, under the general heading
of intellectual rights. Thus, intellectual rights are classified or refer to two very
specific aspects: on the one hand, the so-called industrial property and, on the
other, the so-called artistic property or copyright. Both refer to property rights
created or produced by the spirit or intellect, from which they derive their name.
In relation to both, the tendency of Commercial Law, which we already
mentioned, towards uniformity and internationalization is confirmed and
therefore there are numerous and important treaties concluded in order to apply,
in the most general and homogeneous way, the provisions in the different
countries.
Industrial property includes a series of rights related to the industrial or

commercial activity of a person, as long as they grant the owner the exclusive
right to be exploited for a certain time, as happens with someone who has created
an invention with practical application in the industry; or an industrial design or
model that increases the attractiveness of an industrial product without modifying
its technical effect; or insofar as they are a means of identifying the merchant in
the exercise of commerce (commercial name in the subjective sense) or identify
his establishment (commercial name in the objective sense or brand) or the
products or services he provides (product or service brand). . Some legislation
regulates the so-called utility models, which refer to the form of the product
insofar as it involves technical effects. Finally, industrial property includes the
regulation of unfair competition that tends to combat excesses in competition
with the purpose of not allowing unjustified deviations of clientele.42
From what it says with artistic property or, as we said, with copyright, these are
understood to be the rights to exploit and dispose of a scientific, literary or
artistic work, of which one is the author. Like all economic rights, copyright is
alienable and economically exploitable, and is usually characterized by three
powers recognized by its owner:
a) That of keeping his work unpublished.
b) To demand its full reproduction, whenever a third party is authorized to

publish it, generally by virtue of the execution of a publishing contract, and
c) That of deriving a total or partial economic benefit from the publication of his
work, also during the term in which the law recognizes the possibility of
maintaining the right in his head absolutely. On this last point, perhaps it is not
enough to remember how copyright, although it is transmissible intervivos and
by cause of death, usually has a maximum period established by law, after which
the right, so to speak, passes to the community. , which can freely reproduce the
works without recognizing any pecuniary compensation.
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37. VALENCIA ZEA, Arturo. "Civil Law - General Part and Persons". Ed.
Temis, Bogotá, 1963, IT pp. 258 And ff. 38. CARBONNIER, op. cit., TI Vol. 1,
pp. 176 And ff.
This distinction has lost relevance in common law countries, through the
development of real rights in "equity", in particular, through the figure of the
trust, in cases where the simple title to transfer an asset can reach to be
considered as a transfer actually made.
39. Colombia establishes it by saying that "Whoever abuses his rights will be
obliged to compensate for the damages he causes", art. 830 C. Co.
40. A frequent exception is usually established in favor of banks and other credit
institutions by allowing them to resort to direct and more expeditious forms of
liquidation of the assets received as collateral, such as the use of hammers or
professional - that is, non-judicial - auctions. or the permission to directly charge
sums in favor of its clientele to the payment of debts.
41. VALENCIA ZEA, Op. cit., p. 261.
3. SOURCES OF LAW
The sources of Law have traditionally been studied through two meanings: the
so-called real sources of Law and the so-called formal sources. Those, remote
sources and these immediate or close sources.
The real sources, in turn, obey a double conception synthesizing the different
positions, which could be expressed as follows: for idealist theories, the real
sources of the Law, that is, the ultimate reasons that legitimize or morally justify
the existence of the Law. positive principles are constituted by those principles
superior to man, eternal and immutable, that is, by the so-called Natural Law1.43
For positive theory and, more specifically, for the so-called sociological
positivism, the ultimate sources of legal norms are constituted by the social facts
that enliven and inform these norms, that is, by the set of historical, cultural and
religious factors prevailing in a certain State and at a precise moment in its
history. From this point of view, real sources would be eminently dynamic, as
these factors evolve over time. In any case, and adopting an eclectic position, it
can be admitted that both those imperatives superior to man, as well as the set of
social realities that the legislator must take into account to dictate the rules,
constitute sources or ultimate reasons justifying the Law.
Formal sources, for their part, are understood to be the norms that directly and
immediately reflect the legal principles coercively applicable to a community and
that from this point of view come to be confused with the so-called Objective
Law.44
Formal sources, generally recognized as such in the so-called Civil Law
countries, are constituted by law, custom, doctrine and jurisprudence, although
some authors consider the latter two as criteria of authority, rather than as formal
sources. themselves.45
From another point of view and taking formalism as a criterion of expression, it
is. It has to be said that the formal sources, strictly speaking, would be
constituted by law and jurisprudence in some systems, insofar as they are made
up of decisions of authority. And at the bottom of them are the so-called
improper formal sources, whose support is not found directly in the
aforementioned criterion of authority but in the habitual behavior of individuals
or in the studies of scholars. They would be custom and doctrine.
3.1. THE LAW
3.1.1. Notion
By law, the most visible concretion of the Law, the legal norm can be
understood, this is mandatory, which comes from the sovereign will of the State
and is issued in the manner provided for by the same state organization. It is
therefore a decision of a competent authority that is expressed in keeping with a
series of pre-established formalities.46
3.1.2.
Characteristics
The law is said to emanate from authority, in the manner provided for by the state
ordinance itself and to be general, mandatory, permanent and precise, as we will
see shortly.
3.1.2.1.
Emanation of authority
Within the modern structure of the State, the legal norms are organized in the
form of a pyramid, at the top of which is the Constitution that includes, as we
have already seen, the fundamental principles of its organization, the different
branches of public power and the functions that they perform. compete, etc. Well,
the issuance of the Constitution, which can be done either by the primary
constituent, directly, or through the system of indirect representation, conditions
from itself the totality of the laws, in the sense that such provisions must
accommodate both the cardinal principles enshrined in the Charter and the
procedures or formal requirements provided for the issuance of laws. Among
these, first of all, the law must come from a competent authority, as a general rule
the branch of public power to which the function of making laws has been
specifically assigned.
In our system, this power is usually conferred on the Congress or Assembly, as a
typical body of the so-called representative democracies, where the legislators,
vested with the authority conferred on them by their popular election, are
legitimized to dictate the regulatory norms that the community requires. Now,
given this hierarchical scale of the norms, it is essential that they respect the
superior postulates and, if this does not happen, there are theoretically two
possibilities: firstly, the so-called action of unenforceability aimed, precisely, at
contesting before the competent court, according to the respective country, the
validity of the law, insofar as it is considered, at a given moment, that it exceeds
or contradicts the principles of the Constitution. And, secondly, the so-called
exception of unconstitutionality, which allows, in principle, to propose as a
defense before the courts, against the alleged application of a law, its alleged
non-conformity with the higher norm.
Insofar as the law emanates from an authority and, ultimately, from the sovereign
will of the State, it is stated that it differs from custom which, rather than will, is
simply instinct. Sovereign will, of course, which ultimately depends on the
organization of each State. Of the monarch in legal regimes of this type or in the
decision of the majority of voters, which invests
56 SERGIO RODRIGUEZ AZUERO

the parliamentarians of that sovereign power by way of delegation; general rule
that also applies in so-called constitutional monarchies.47
3.1.2.2.
Generality
The law is said to be general and, more precisely, abstract, in that it is issued in
an impersonal manner without intending to particularly benefit any of the
individuals who are part of the community. This generality, which due to its
abstract nature guarantees impartiality, does not mean, however, that all laws are
addressed to all members of the social community. In practice it can happen, and
it happens very frequently, that laws, due to their content, refer to specific
matters, ultimately limiting themselves to regulating the activities of a specific
sector of the conglomerate. This, however, does not modify the principle of
generality in any way because, within that targeted sector, the law or laws
continue to be impersonal and, furthermore, such laws are opposable to the rest
of the members of the community, subject to the rule of law. a specific
legislation.
Now, for a better understanding of this characteristic of generality, it is essential
to take into account that laws are divided, according to their meaning, into formal
laws and material laws, without always presenting in relation to a given law the
coincidence of enjoy both conditions. It is a law in the formal sense, one that has
been issued by the public power body competent to issue laws. But a law, in a
material sense, is one that, precisely, meets the underlying requirements that
constitute the characteristics of all laws. Consequently, it can happen, and in fact
it does happen, that a law is simply a law in the formal sense because, although it
emanates from the competent authority, its content restricts some of the
characteristics that we have predicated as belonging to the law and that we are
studying.
Such would be the case, for example, of a law of honors in which the memory of
an illustrious citizen is highlighted because, it is evident that, in this case, one
cannot truly speak of generality or abstraction. But, likewise, it may happen that,
in certain circumstances provided for by the Constitution, the regulatory power
assigned to one branch of public power and to a specific organization is
temporarily transferred to another of them, so that the provisions it dictates
cannot be be considered laws in the formal sense, although their own content and
their characteristics of generality and obligatory nature, above all, will allow
them to be classified as laws in the material sense. Of course, most laws, under
normal conditions, have the double aspect of being formally and materially at the
same time.
3.1.2.3.
Mandatory
Mandatory laws, that is, their application and compliance are coercively
supported by state powers. There is no sound logic in assuming that individuals
can escape from its rule and its violation implies, as a necessary consequence, the
application of the corresponding sanction provided for by law. In other words,
with the State having the monopoly of force, it can impose the law coercively,
either directly, such as when it inhibits certain conduct until certain requirements
are met (banking operations cannot be carried out without prior state
authorization) or indirectly. , such as when, in the face of reprehensible conduct,
it provides for a specific penalty (the bank that does not maintain a certain
reserve or liquidity reserve must pay as a penalty a certain percentage of the
amount of the defect) or, finally, empowering the interested parties and even to
the same community, in general, to demand that public powers annul a certain
legal act.
However, and from what he says with this statement that laws are mandatory, it
is necessary to distinguish between mandatory laws and those that are not. The
provisions whose eventual modification by individuals is prohibited and which,
in this sense, are non-derogable by them, are imperative, as we have mentioned
several times. The eventual violation of the mandatory norm will affect the act or
contract, if it involves volitional manifestations of individuals. At the bottom of
the imperative or public order norms, there are the so-called dispositive norms,
simply enunciative, such as those that define fundamental notions or divide or
classify them. But, in addition, there are the so-called supplementary provisions,
whose fundamental characteristic is that they are intended to fill the gaps left by
individuals in the self-regulation of their legal relationships. In other words, these
are rules that regulate aspects whose initial formulation is left to the simple
initiative of individuals, so that, only in the event that they refrain from
specifically providing for any solution for their particular relationship, will they
allow the application , by alternative means, of the legal consequences provided
for therein.

This distinction is of enormous importance in the field of Commercial Law
because, as we have already seen, mandatory norms or public order are
exceptional compared to supplementary ones, thus recognizing the general
autonomy of private will. Which does not prevent us from having to remember
that, in contractual Banking Law, there are more mandatory provisions than in
other branches of Commercial Law.
3.1.2.4.
Permanence
The law is permanent in time, that is, it has the ability to be applied to the
hypotheses contemplated in it indefinitely. The above, of course, with the
warning that this effectiveness of the law over time must necessarily be framed
within two very precise moments, the one in which the law is born into legal life
and the other in which it is extinguished. its normative force.
As a general rule, the law comes into force after a process that concludes with its
issuance by the competent body and is complemented by promulgation,
publication and deadline. The promulgation usually consists of the sanction of
the executive branch of the law issued by the competent legislative body. The
publication is intended, as its name indicates, to allow the recipients of the
standard, that is, the community in general, to be informed of its content and,
consequently, not to be able to validly argue ignorance of its text. And the term,
finally, tends to enshrine a period of time, generally small, between the moment
of publication of the law and that from which it begins to be applicable. Of
course, this period is not essential and, more often than is assumed, the law
comes into force upon its publication. Once this process is completed, the law
begins to be applied and its knowledge is presumed from then on.
But the effectiveness of the law can disappear for two reasons. One, that, its
constitutionality being disputed, it is declared unenforceable by the competent
jurisdictional body and another, that it is subsequently repealed by another
provision of equal higher hierarchy. It is said, then, that there is express repeal
when the subsequent norm explicitly warns this, stating that by virtue of its
issuance certain laws are rendered ineffective. And there is tacit repeal when,
without expressly mentioning the repeal, the content of the new law makes the
regulation of the previous one inoperative, as happens, for example, when a law
regulates in an integral and complete manner a matter that was regulated by
previous provisions. . It should be noted, however, that this repeal is only
possible to the extent that it concerns laws of the
~
GENERAL PRINCIPLES 59
same specialty, since, in principle, a special law is not tacitly repealed by the
subsequent issuance of a general law on the subject, but it does not regulate the
specific aspects contemplated in it.
It is said, then, that the law is permanent and precise to express that this
permanence has an indisputable temporal location, which arises from its birth and
which is extinguished with its death.
The previous approach, which ultimately deals with the application of the law in
time, necessarily leads us to study the phenomenon of retroactivity of the law, if
the norm that we have mentioned implies that the law only binds from its
promulgation, The logical consequence is that the laws are not retroactive and,
therefore, when applying the new law, judges must keep in mind that it cannot
violate defined situations or rights acquired prior to its validity.
Acquired right is understood, for some authors, as that which has actually entered
a person's assets and which is therefore different from mere expectations. Others,
with a proceduralist criterion, maintain that an acquired right exists as long as its
owner is endowed with an action to be able to exercise and defend it before
judges.
The retroactive application of the law would consist, then, of immediately
applying it to situations existing on the date on which its validity begins and,
within which, acquired rights have been produced or generated, not susceptible to
subsequent violation. However, it may happen that when the law is issued, legal
situations are found that were born prior to the moment in which it comes into
force, but whose consequences or developments continue to occur at that moment
and will even occur later. In this case, we speak of the retrospective application
of the law that, without affecting the consequences already fulfilled at the
moment in which its validity begins, does apply to previous situations to the
extent that they continue to produce effects after the enactment of the law. the
new law.
Just as the law has an application in time, it also has an application in space. As a
general rule, it is said that the law governs a certain territory for all the people
who are there, a principle that is called the "royal statute." Exceptionally,
however, the law reaches or follows its nationals, even when they are outside the
territory, as happens, for example, with laws on the civil status of people. In any
case, it is worth noting that in recent times there has been a clear trend towards
uniformity.

mity and internationalization of laws, to which Latin America is fortunately no
stranger, with which the territorial division and spatial application of the law
begins to lose its traditional importance.
3.2.
CUSTOM
3.2.1.
Notion
Custom differs from law as a formal source of law in that, while the former is a
voluntary and conscious manifestation, the latter is an unconscious and
instinctive manifestation, it arises then, no longer from an expression or decision
of the state will, at a moment. given, but rather the repetitive and habituating
performance of individuals in relation to a given aspect.48
Two elements are recognized in custom; a material and objective element and
another psychological or subjective one. The first consists of the effective
practice of a certain behavior, in terms that it is general, that is, carried out by the
vast majority of people and is permanent, that is, that the behavior has been
repeated over a long period of time, manifesting always in identical form and in
the same sense. Custom implies, then, the recognition in the face of a certain case
of repetitive and uniform behaviors. The psychological or subjective element of
custom consists of the interested parties having the moral conviction to behave in
a certain way, as everyone has been doing in a similar situation.
3.2.2. Classes
Three types of customs are generally recognized that reflect the existence of
different functions. The so-called secundum legem, the one known as praeter
legem and the one classified as contra legem.
The first, that is, custom according to the law, we could say, that which is
confused with the law itself, insofar as it replaces it with an express mandate or
direct reference made by legal norms. The second, or custom next to the law,
custom properly speaking, is that which, without resulting from an express
reference to the law, arises from the recognition, with respect to a conduct, of the
elements that we have just mentioned and which is going to be applied as law to
the extent that there are no specific provisions to regulate the case in question and
the legislation has not provided for another hierarchical source to be applied
before it. Finally, custom against the law is that which openly contradicts it, so
that its application would imply express ignorance of an imperative legal
provision. In general, it can be argued that most legislations do not recognize
custom against law as a source of law.
Now, from the point of view of classification itself, it is worth highlighting the
local custom, that is, that which is applied in a specific city or region; the general
custom that transcends the regional level to reflect a uniform, public and repeated
conduct throughout the country and, finally, the foreign custom that,
exceptionally, can be invoked as a source of law, given the inapplicability of
those that precede it hierarchically.
The authors, when talking about custom, frequently remember that it takes two
main forms: one, which can result from the practice carried out en masse by
individuals and, another, which could be classified as scholarly, the result of
research and studies of jurists over the years. The latter has been translated into
the well-known general principles and maxims of law.
There is, obviously, no complete and exhaustive enumeration of the general
principles of law. We will mention some simply as an example and in a very
simple way. Firstly, what is known as the principle of "abuse of rights",
mentioned a little earlier and, according to which, the exercise of subjective
rights must correspond to a legitimate reason and be framed within the superior
interests that derive from the collective interest. or social. Another is the principle
of "good faith" which consists of the belief that a person has that he or she does
or possesses something in accordance with a legitimate right and which
translates, in the behavior of people, into an attitude of unpreparedness and of
trust towards the actions of others and in relation to the contracts entered into
with them. In other words, people in their legal relationships have the right to
expect others to act in good faith, that is, not maliciously. This principle has been
translated into the legislative consecration according to which good faith is
presumed and whoever claims that another has acted in bad faith must prove it,
and, furthermore, in numerous provisions in which the law especially protects
those who act in good faith. , even at the cost of having to sacrifice third party
rights.

Finally, and to cite another example, let us mention the so-called principle of
"unjust enrichment" or "unjust enrichment." This principle, of jurisprudential
formation, is applied in cases in which there is an increase in assets for one
person to the detriment of the interests of another, that is, with its correlative
impoverishment, without there being a legal cause because there is no legitimate
title. , derived from law or contract, that supports enrichment. It is maintained
that the enrichment action cannot be exercised to replace another one specifically
provided for a specific case nor, consequently, is it possible if the creditor
allowed it to be extinguished due to his fault. An example of the action of unjust
enrichment would be conceived when a person, without any contractual
relationship or liberality in his attitude, acts as a manager of other people's
interests and, as a consequence of his action, produces a benefit to the third party
who, therefore, must compensate him.49
3.2.3.
Importance of custom in commercial law
The importance of custom as a source of Law acquires its greatest relevance in
the case of Commercial Law. It is enough for us to remember what was stated
above and repeat, if necessary, that the process of creation and maturation of
Commercial Law has been based on the verification of the practices of
merchants, the modalities and peculiarities of the legal transactions carried out by
them. and the permanent innovations that they have been introducing in their
activity. 50 This constant nurturing of custom is what has allowed Commercial
Law to present itself within Private Law with the dynamic features that we have
had the opportunity to study and that imply, deep down, enormous flexibility and
capacity to adapt to new, changing situations. and that require extremely fast
solutions.
That is why modern commercial legislation, faced with the technical need to
establish a hierarchical order of application of the rules, including in this order
commercial legislation, itself, civil legislation, etc., has attributed to custom an
importance as a source of Law comparable to that of the law. To which is added
the obvious interest of custom as an interpretive instrument of contracts,
technical words and the peculiar operations that result as a consequence of the
conclusion of those.
3.2.4.
Test of habit
Even though it has been debated whether it should be proven, since some authors
maintain that it should be known by the judge, there seems no doubt that, in any
case, it is essential to prove to the judge the occurrence of the facts on which it is
based and of which its existence can be inferred. The evidence, however, is
sometimes subject to special conditions such as the attendance of a certain
number of witnesses, if it is testimonial evidence, or the certification of
specialized entities whose functions include collecting it, as could be the case.
happen with the Chambers of Commerce. The same procedure could be used for
foreign customs, obtaining evidence through consular agents, for example.
3.3.
JURISPRUDENCE
We already commented a little further back how doctrine and jurisprudence, for
some authors, are more than sources of law, they are authoritative criteria for the
application of law. However, and with that caveat, we have decided to study
them in this chapter.
3.3.1. Notion
In its simplest sense, jurisprudence is understood as the solution generally
attributed by the courts to a specific legal problem. To the extent, then, that
judges rule in a certain sense, especially when it comes to confusing rules or in
relation to which there are diverse interpretations, an awareness begins to be
created in the legal community about the solution that, because it is considered
the more acceptable, goes on to inform and specify the dubious norm and, in this
sense, contributes to the delimitation

tion on the content of legal provisions. Of course, unlike law and custom, as long
as it is recognized as a formal source of law, jurisprudence is not mandatory but
constitutes a probable doctrine. This makes expectations based on waiting for a
solution in the same sense, on the part of the courts, are reasonably founded. It
should also be noted that although jurisprudence must be studied with this
restriction in countries that, like ours, have their legislation codified, it acquires
greater relevance and a more prominent function as a source, in countries with
customary legal systems where Ultimately, jurisprudence is nothing more than a
custom at the highest level, that is, the uniform and constant repetition of a
certain criterion by the courts. 52
3.4. THE DOCTRINE

The doctrine, which for some authors is nothing more than the manifestation of
an erudite custom, consists, in summary, in the opinion of jurists expressed,
either in their research and in their works, or in their arguments before judges. It
is obvious that to a lesser extent than jurisprudence, doctrine constitutes more of
an interpretative and reference element than a formal source of law. Neither
judges nor individuals have to adhere to it, although it is true that it constitutes a
criterion of authority that in certain cases and in the face of legislative gaps or
interpretive doubts, plays that last defining function that allows it to be classified,
at that moment, as a source of Right.
We already saw in the previous point how scholarly custom is translated, for
some authors, into maxims and general principles of Law.
-------------------------------------------------------------------------------
43.V. supra, Chap. 1, 1.1.
44.V. supra, 1, 1.1.
45. CARBONNIER, J., Op. cit., p. 136. Colombia. The H. The Constitutional
Court has considered that, although no specific reference was made to it in
Article 230 of the Charter, custom has value as a source of Law (Sentence C-
486/93).
46. The definition of Saint Thomas is classic, which considers the law as rationis
ordinatio ad bonum commune ab eo qui curam communitatis habet, solemniter
promulgata.
47. The UNIFORM COMMERCIAL CODE (UCC) of the United States is a
model law on commercial transactions, such as the sale and purchase of goods,
guarantees, and negotiable instruments, to name a few. It has been incorporated
in the majority of States of the Union, so, although it is not universally
applicable, it is, in any case, enormously widespread.
48. CARBONNIER, J., Op. cit., pp. 24 And ff.
49. Colombia, establishes that "No one may enrich himself without just cause at
the expense of another" art. 831 C. Co. However, in one of the few legislative
consecrations to a specific case and in matters of delivery of letters, checks,
promissory notes or other securities with credit content for a previous obligation,
it is concluded that "if the creditor allows the creditor to expire or prescribe the
instrument, the original or fundamental obligation will also be extinguished;
however, it will have action against anyone who has been unjustly enriched as a
result of the expiration or prescription. This action will expire in one year", art.
882, C. Co. Truly unfortunate expression because the event foreseen by the law
supposes an enrichment attributable to the fact of expiration or prescription and it
could not be affirmed, then, that it is without cause.
50.V. supra, Chap. 1, 1.3.
51. This statement is not true in common law countries. On the contrary, in the
Anglo-Saxon system judicial precedent is binding on lower-ranking courts. This
does not mean, of course, that the role of written laws or "statutes" is not
fundamental, since written legislation, even if it has to pass through the
interpretive criteria of authority of a court, has an increasingly important
importance in many areas of law, including, of course, those of interest to the
business community. In fact, many laws are approved by the legislator as a
reaction to the rule established by the judges. In this sense it is not correct to
maintain, as is frequently done by "Civil Law" jurists, that Anglo-Saxon Law is
today customary. In England, at least, custom and commercial uses have great
importance in commercial matters, but they are only recognized as implicit terms
in a contractual relationship, generally, based on a precedent that accepts them.
52. In North American jurisprudence, the reference to "restatements" is frequent.
These are compilations on different topics published by the American Law
Institute that, however, are not binding on judges. Among the most important for
our topic are those of commercial agency, property law, insurance, obligations,
trust and unfair competition. BLACK'S LAW DICTlONARY, 7'h Ed. Bryan A.
GORNER. West Publishing Ca. 1999.
4. OBLIGATIONS
4.1. NOTION
We have seen, when talking about patrimonial rights, how personal right,
unlike real rights, is not exercised directly over a thing but by demanding, on the
part of the owner thereof, a certain conduct from another subject. That is to say,
the aforementioned power corresponds to a legal duty on the part of the so-called
taxable person. Then, naturally, the concept of obligation flows as correlative to
that of personal right and always within a bilateral relationship, at least.
Consequently, the obligatory relationship can be defined as "the legal
relationship between two or more people by which one (or several) have to
perform a special service for the benefit of another (or others)."53
The personal elements of the obligation are, consequently, the active subject, on
the one hand, and the passive subject, on the other. The object of the obligation is
constituted by the provision, borne by the debtor, consisting of giving, doing or
not doing something. The obligations of the issuing bank in the documentary
credit contract can serve to illustrate the content of the provision in terms of
obligations. The bank, in effect, can be obliged to pay a sum of money, that is, to
give it to a third party, upon presentation of a certain number of documents.
Likewise, the bank may be obliged, not to pay a sum of money, but to accept a
bill of exchange upon presentation of the documents provided for in the credit.
That is, to do something in accordance with the contract entered into. And,
finally, although there may be some license in the example, the bank is otherwise
obliged not to do something, that is, not to pay, if the documents are presented to
it after the expiration of the period established for the use of the credit. . From
which, furthermore, it can be concluded that the object of the obligations is not
always exclusive or unique, in relation to the three possibilities stated, but can be
mixed so that, as a consequence of a contract, for example, obligations arise
under the responsibility of the debtor, simultaneously, of giving, doing and not
doing.
4.2. SOURCES
Just as we have studied some sources of Law, it is necessary to study what the
sources of obligations are or better, what would be more logical, where personal
rights and, as a consequence, correlative obligations arise.
The classical French doctrine, included in a good part of our legislation,

established as sources of obligations the contract, the quasi-contract, the crime,
the quasi-delict and the law. Over time, and especially in the last century, this
doctrine was subject to severe criticism for different concepts that would perhaps
be lengthy, but above all unhelpful, to analyze here. Josserand regrouped the
traditional sources, replacing them with four groups as follows: first, legal acts,
including contracts, on the one hand, and unilateral commitments, on the other;
secondly, illicit acts, within which the crimes and quasi-delicts of the traditional
classification; thirdly, unjust enrichment and finally, the law. Modern doctrine,
advancing further in the process of simplification of sources, has reduced them
for some to the legal business, the legal act and the legal fact, even ignoring the
law, considering that in no case is it the law itself. generating source of the
obligation, but it is the fact provided for by the legal hypothesis that is the only
one that can generate the obligatory consequence. This seems to be the
classification followed by modern German doctrine. However, and given the
natural difficulty of defending as perfect a classification among the several
known ones, since all of them have provided insights and progress in this matter,
we have considered it acceptable to accept the modern French theory that
classifies the sources of obligations simply into two, the legal act and the legal
fact, the first corresponding to the legal business in the German concept and the
second being comprehensive of both the legal act and the legal fact in German
doctrine. Finally, we will make a brief reference to the law with the critical
reservation that we outlined above.
4.2.1. Legal act
4.2.1.1. Notion
The legal act is defined as the manifestation of will aimed at the

production of legal effects, that is, at achieving some modification in the legal
system. That is, if we start from the definition of the legal business of the
German doctrine that is identified with this concept, as we said, we would have
that it is the act whose will is directed directly and reflexively to the production
of such effects. 54
Legal acts are classified as unilateral and bilateral. In the former there is
nothing but the manifestation of one will, while the latter involve the
collaboration of two or more wills aimed at achieving legal effects. Examples of
unilateral legal acts are the granting of a will or the creation of a security title for
certain legislations. And a bilateral legal act, especially the contract, which also
constitutes the typical source of obligations in Private Law.
4.2.2. Legal fact
4.2.2.1. Notion
With the French doctrine we can define the legal fact as "any
material event devoid of any voluntary content or of any conduct endowed with a
certain voluntariness and from which legal consequences and modifications in
the order arise without the human will having been directly proposed." their
production (this is the difference with the legal act)". 55
Thus conceived, the legal fact includes the physical fact of nature, to
which legal effects are attributed; the illicit act, whose main representation is
crimes, and unjust enrichment in the sense that the agent's conduct does not
precisely seek to compensate the injured party. That is to say, when someone,
through their actions, produces illicit enrichment in their assets, they do so not
precisely with the aim of obligating themselves to compensate, but rather such
obligation arises as a consequence of the equity imbalance produced by their
inequitable actions.
4.2.3. Law
We have already said that the inclusion of the law, as a direct source of
obligations, has been criticized by many for considering that it is simplistic, in
the sense that, ultimately, all obligations arise by virtue of the fact that the law
authorizes it by enshrining a general theory about them, if it is taken as a general
source or is inaccurate, if it is considered as a direct and specific source of the
obligations. And it is, in this last aspect, because as rightly stated "every legal
norm is essentially 'hypothetical' in the sense that its application necessarily
presupposes the existence of a factual situation called a legal situation and
constituted by one or more legal acts." or by one or more legal facts or by
combinations of both."56 That is why the mention of the law as a source of
obligations must be understood in the sense of expressing that there are legally
regulated legal facts and that they are, consequently , and not the law itself,
which has simply provided for them, which give rise to the corresponding
obligations. 57
Having made these clarifications about the sense in which the law should be
taken as a source, it is enough to add that, in the majority of legislations, this is
attributed to it.
function in the case of family relations, inheritance rights, etc.
4.3. CLASSIFICATION OF OBLIGATIONS
It seems convenient to do a quick review of the main classifications that are

recognized in terms of obligations, since the concepts that emerge from their
study will be very useful in the development of the book.
4.3.1. Positive and negative
This first classification arises from the very definition of obligation and the
precision regarding its object which, as we have seen, is a provision consisting of
giving, doing or not doing something. The obligation will be positive in the first
two cases and negative or abstention in the last.
Positive obligations are divided into obligations to give and to do, due to the
peculiar meaning and scope that in legal matters is given to the first expression
and which consist of transferring an asset as property. The other positive
behaviors other than giving, with this scope, that are required of the debtor, will
be obligations to do. Let's look at some examples: when a bank agrees to a
company to provide the service of paying the salaries of its employees over the
counter, it is acquiring a positive obligation to deliver to them the sums
corresponding to the payroll provided by the company. When, on the other hand,
a bank establishes a line of credit in favor of one of its clients, say for one million
pesos, a line that will be used through the presentation of bills of exchange drawn
by the client in charge of the bank and in favor of a third party, the credit
institution is entering into a positive obligation to do. But, in this same contract,
it is possible that the bank has foreseen that the use of the line cannot be done
through the transfer of bills whose unit value is greater than ten thousand pesos
and has also required that between the transfer of one and another, at least five
business days must pass. Well, in this case, the client is contracting negative
obligations within the credit opening contract, that is, obligations that impose on
him to refrain from drawing the bills of exchange for amounts greater than the
expected one and from drawing them with an interval less than the established by
the bank.
4.3.2. Main or accessories
An obligation is said to be principal when it subsists autonomously and by itself

without relation to any other obligation. It is accessory, on the contrary, when
precisely it depends in its existence and extinction on a main obligation to which
it refers. When, for example, the bank enters into a mutual contract with one of
its clients and consequently gives him a certain sum of money, the obligation that
the latter acquires is principal, it is self-sufficient, it does not require reference to
any other. But it may happen that the bank requires the presence of a third party
to vouch for it as collateral, that is, it demands a guarantor. In this case, the
obligation acquired by the guarantor is accessory, since it finds its meaning and
its reason for being in the existence of the main obligation to which it refers and
will be extinguished, therefore, to the extent that it is extinguished. the main
obligation.
4.3.3. Pure and simple
An obligation is said to be pure and simple when its birth and enforceability arise
immediately when the efficient generating cause of the obligation occurs.
Consider, for example, the case in which, as a consequence of a contract, a
demand acceptance is produced by a financial institution. The entity's obligation
is perfect and enforceable from the moment of its issuance.
4.3.4. Conditional and term
There are obligations called modals that, unlike the previous ones, subject their
birth or extinction or their enforceability to the occurrence of a future event.
When this future fact is certain, we are faced with so-called term obligations and,
when it is uncertain, we are faced with so-called conditional obligations.
Conditional obligations can be, in turn, suspensive or resolutory. The condition is
said to be suspensive if, until it is met, it suspends the birth of the obligation. And
it is resolutory when the occurrence of the future event extinguishes said
obligation, a bank is obligated under a suspensive condition, for example, when
within a tender and at the request of one of its clients it grants a guarantee of
seriousness of the offer. In this case, the bank's obligation will only arise to the
extent that, having chosen to be its client, the latter does not attend to enter into
the contract or does not accredit the additional requirements provided for at that
time. The birth of the bank's obligation depends, then, on the occurrence of this
fact. And it can be obligated under a resolutory condition in the event that it
undertakes to pay a specific sum of money to a third party, provided that it is
accredited through the presentation of the respective documents that, for
example, a set of conditions have been fully and completely complied with.
customs procedures and requirements. The bank's obligation arises from the first
moment but can be resolved to the extent that the study of the documents
presented concludes, without a doubt, that they do not correspond to those
required by the bank or that the requirements established by customs authorities.
In both cases, as can be easily verified, these are future and uncertain events,
which do not depend on the will of the person who is obligated, that is, the bank.
An obligation is term when there is a specific time or date for its fulfillment.
There are multiple examples that can be found in banking activity, just think of
the debtor's obligation, resulting from the execution of a mutual contract that,
naturally, is for a term. In this hypothesis, it may be a single period, that is, a date
on which the full reimbursement of the mutual amount must occur, or several
installments, when the debtor's ability to repay in installments has been
contemplated. In relation to this possibility of payment in several installments, it
is interesting to note, even marginally, the importance that the so-called
acceleration clauses play in banking practice, in accordance with which failure by
the debtor to pay any of the installments , for capital or interest, authorizes the
institution to consider the other terms expired and make the entire obligation
immediately payable.
4.3.5. Of genus or species
An obligation is said to be of a certain type or body when the debtor is obliged to

give or deliver a specific thing, individualized precisely as such. It is, on the
contrary, gender, when the debtor is obliged to deliver one or more generically
designated things so that there is no individualization of them. A bank contracts a
typical obligation of kind or certain substance when it receives a specific asset as
a simple deposit, in which case it is obliged to preserve and guard it and return it
at the opportunity provided by the depositor. The obligation, on the other hand,
that arises under the banks' responsibility for the so-called irregular deposit of
money, as we will see in due course, is a typical gender obligation in that the
receipt, let's say of a thousand pesos, only obliges the bank to deliver a
equivalent amount and not precisely the thousand pesos received in certain
monetary species.
4.3.6. Of means or result
An obligation is considered one of means or means when the person contracting

it undertakes to put all his or her effort into achieving a certain result, but without
guaranteeing or being responsible for the effective obtaining of the result.
same. It is a result, as its name indicates, that obligation in which it is necessary
to obtain it in the planned manner, so that it is duly satisfied. An example of a
medium obligation, in a bank, could be found in a fiduciary investment
assignment in which, following some generic instructions from its client, such as
placing the resources in shares of companies that list their securities on the stock
market, the bank does not guarantee the financial results of the operation. 58 In
other words, the bank must make every effort to study the financial situation of
the chosen companies, the performance of their securities on the stock market,
general market factors, etc., but it cannot guarantee a specific return on the
securities themselves. and, therefore, of its client's investment, nor can it
guarantee that at any given time a collapse in the sector or in the. respective
company does not even produce losses in relation to the initial investment.
Obligation of result, on the other hand, is the one that a bank contracts with its
client when, at the client's request, it undertakes, for example, to transfer a sum
of money from one place to another.
4.3.7. Alternatives or simple object
Alternative obligations are usually studied in contrast to the so-called simple

object obligations, in which the debtor can only be released by satisfying a
precise and determined provision. That and no other, constitutes the object of
your obligation. Alternative obligations contrast with the previous ones in that
the debtor is constrained to satisfy one of several benefits whose choice,
generally, corresponds to him. That is to say, it is not that the debtor owes several
things at the same time, in terms that he has to satisfy them all to comply, it is
simply that he owes one of several possible things, so that, once one is satisfied,
he is freed from The duty. Consider, for example, a transactional agreement
entered into between the bank and one of its clients, in accordance with which
the latter undertakes to deliver to the bank in payment of pre-existing obligations,
either a property with certain characteristics and precisely identified, or a certain
number of shares of a company, at his choice and within a certain period. In this
case, there is a typical alternative obligation borne by the client because it will be
extinguished by the payment or delivery made to the bank, either of the house or
of the shares.
4.3.8. Optional
Alternative obligations should not be confused with so-called optional

obligations, in which a specific and specific benefit is owed but the possibility is
foreseen that, failing this, a different one will be satisfied. It would, of course, be
the same previous example where the client is obliged to deliver the house, but it
has been foreseen that, given the impossibility of complying with this obligation,
he can comply with the delivery of the shares. From a legal point of view, the
difference becomes palpable if we study what happens when faced with the risk
of destruction of the property owed. Let us assume, to put things simply, that the
services in question are, on the one hand, the delivery of a precise and specific
vehicle, of a certain make, model, color, engine number, etc., and, on the other
hand, the transfer of the social rights that the debtor has in a certain company. Let
us imagine that, due to an event not attributable to the debtor, a force majeure,
the vehicle is completely destroyed. Well, in the event that the obligation was
alternative, this physical destruction of the vehicle would necessarily lead to the
debtor having to comply with it through the transfer of the social rights that we
have mentioned. On the other hand, if it is an optional obligation, with the
vehicle being owed first, its destruction would cause the obligation to be
extinguished.
4.3.9. Solidarity or joint
Solidarity constitutes a phenomenon of obligations under the subject and is,

properly speaking, an exception to the general principle of so-called joint
obligations. The latter occur when two or more people are debtors of a divisible
thing, in which case each of them is only obliged to pay the part or fee that
corresponds to them in the debt. Likewise, one could speak of joint credits when
there are two or more creditors of a divisible thing, in which case each of them
could only demand the part that corresponds to them in the resective credit. Well,
solidary obligations consist of the fact that, if there are two or more debtors of a
divisible thing, each one can be obliged to pay the entire debt and, in the opposite
case, that is, when there are two or more creditors of a divisible obligation, each
of them can demand payment of the entire credit. Depending on the position
occupied by the plural party, solidarity obligations are classified as active, when
they are creditors, and passive, when they are debtors. An example of an active
joint obligation in banking contracts may be the case of a current bank or check
account, in which there are two or more holders each authorized to dispose of the
entire of the existing balance in your favor.
and, on the other hand, a passive solidarity frequently occurs, when in the case of
the conclusion of a mutual contract the bank demands from its client the
presentation of a joint guarantor or even, more directly, of a joint co-debtor, a
case in which the credit institution can exercise actions, derived from the
corresponding title, against either of the two or against both for up to the entire
debt.
The importance of solidarity in banking contracts is undoubted and, even though,
as a general rule, solidarity is not presumed but must be derived from contractual
stipulations or from the law, it should be noted that modern theories in
commercial matters tend to enshrine solidarity, by general means, for all debtors
of a commercial obligation1.59
4.3.10. Divisible or indivisible
Divisibility and indivisibility are phenomena of obligations by virtue of the

object, unlike solidarity which, as we saw, is by virtue of the subject. Therefore,
an obligation will be divisible or indivisible depending on whether the object of
the provision is divisible or not. When divisible obligations are involved and
there is a plurality of debtors or creditors, the phenomenon that we mentioned in
the previous point of joint obligations occurs. Indivisibility occurs, first of all,
when the very object of the obligation, even if it is owed by several, is
indivisible, as in the case of two people who have obligated themselves to
another to construct a building. In this case the obligation, due to the very nature
of the object, cannot be divided among the various debtors. But, it may also
happen that said indivisibility arises from the law or the contractual agreement
and even from testamentary impositions, cases in which, even when the object of
the benefit is naturally divisible, it will become, by virtue of one of these causes ,
indivisible, from the legal point of view. As in solidarity, it is possible to speak
of active indivisibility and passive indivisibility depending on whether there are,
with respect to an indivisible object, several creditors or several debtors.
However, the phenomena of solidarity and indivisibility cannot be confused and

their difference can be felt, more precisely, through the following example: let us
imagine two different obligations in favor of the bank, the first with solidary
debtors and the second with solidary and indivisible debtors. . In both cases the
bank can turn against any of the debtors to demand satisfaction in full, but
suppose that, in both, one of the debtors is insolvent and the bank is forced, by
force of circumstances, to turn against the other. If the last one dies, for example,
in the case of the first obligation, it is transmitted to his heirs in a divisible
manner, that is, each of the heirs of the defendant solidary debtor will only be
obliged to satisfy the part or quota that he owes him. corresponds to the debt. On
the other hand, in the case of the second obligation, also solidary but indivisible,
the death of the debtor, against whom the action had been brought, his heirs must
respond, each one for the entire debt, by virtue of the fact that the object of the
same had been considered indivisible by reason of the contract.
4.3.11. Natural
The so-called natural obligations have been conceived, as opposed to those called
civil or recognized as such by civil legislation. In general it can be stated that the
natural obligation lacks action to make it enforceable but that, voluntarily
satisfied by the debtor, it cannot be modified by him, in the sense that he cannot
request the return of what was paid. Likewise, it is accepted that said obligation
can be transformed into a civil obligation by virtue, for example, of novice
agreements and, additionally, that it can be strengthened or guaranteed through
the corresponding accessory mechanisms.
4.4. EFFECTS OF OBLIGATIONS
The doctrine usually classifies the effects of obligations as direct and indirect.
Direct effects are understood as those that relate to the fulfillment of the
obligation and the consequences of non-compliance. All those powers that arise
from the obligation and tend to ensure its compliance are called indirect
effects.60
4.4.1. Direct effects
4.4.1.1. Fulfillment of the obligation
The birth of the obligation produces, as a logical and direct consequence, the
need to satisfy it in accordance with the object of the provision, that is, by giving,
doing or not doing something. As soon as the obligation has a legal act as its
source, the fundamental principle governs, according to which the obligation
must be satisfied by the debtor in the form and terms originally agreed upon.
That is to say, having individualized the obligation through a set of
characteristics that distinguish it, the debtor cannot, in principle, satisfy it before
the expected opportunity, nor is it possible to force the creditor to accept that said
obligation be satisfied in parts. , For example. This general principle has some
very interesting exceptions in terms of Exchange Law - understood as that which
regulates securities - in which there is a marked tendency to accept the possibility
of partial payment, obligatory for the creditor. We will have the opportunity to
explain the reasons that justify the aforementioned exception in this matter.
Compliance involves the study of all normal ways of satisfying obligations and
those that we could call abnormal, which usually boil down to the creditor's
ability to attempt coercive compliance, if necessary.
4.4.1.2. Breach
When the obligation is not fulfilled or is fulfilled improperly and, even, when it is
fulfilled as a consequence of the advancement of a process aimed at coercively
imposing it on the debtor, the obligation arises for the latter to compensate for the
damages and losses that could have been caused to the creditor.
Compensation for damages is only mandatory if the breach is attributable to the
debtor, there are actually damages caused and the obligor is in default. Non-
compliance will not be attributable to the latter, except to the extent that it is due
to his fault or fraud and not when it results or originates from a fortuitous event
or force majeure, nor when it is attributable exclusively to the fault of the
creditor, although in contractual responsibility can be affirmed, as a general rule
and at least by what it says with the so-called obligations of result, that the fact
that the obligation is not fulfilled makes it unnecessary for the dissatisfied
creditor to have to prove any fault, since the debtor supposedly non-compliant
party would have to prove the facts or circumstances exonerating its
responsibility. Fortuitous events and force majeure are understood as events that
are impossible to resist. More precisely, it is about the acts of third parties or
nature that, due to their characteristics of unpredictability and irresistibility, make
the debtor unable to comply.
Compensation for damages includes both consequential damage, that is, the loss
directly suffered due to non-compliance or defective or untimely performance,
and lost profits, that is, the utility or benefit that is no longer obtained as a
consequence of such cases. translates compensation into two modalities: the so-
called compensatory, that is, that intended to replace the main obligation or to
compensate the creditor for the direct damages assumed and the so-called
moratorium, which is produced by the simple delay and therefore, can be added
to the requirement of compliance with the main obligation.
The estimation of damages results from a judicial decision or is established by

law or agreement. In the first case, the damages are proven and estimated in a
judicial process; In the second, the law itself establishes the sanction, as when it
establishes the default interest that is borne by the debtor who fails to fulfill a
monetary obligation and in the last case, the damages are assessed in advance by
the parties, through the so-called clauses. penalties. These penalty clauses can
also be compensatory or simply moratorium, with the scope that we have just
seen.
4.4.2. Indirect effects
As we saw, these are powers that tend to ensure compliance with the obligation
and the doctrine tends to be classified into three groups:
4.4.2.1. Guarantee measures
All those that the creditor requires to reinforce compliance with the obligation
and that may be personal, in the case of the bond, and real in the cases of the
pledge and the mortgage. It is, therefore, about protecting against a possible non-
compliance.
4.4.2.2. Conservative measures
Those that seek to keep the debtor's assets intact or reconstituted. The main
examples are the so-called subrogation actions, where the creditor, in the face of
the debtor's negligence, exercises the rights and actions that correspond to him
and the revocation or Paulian action, which seeks to obtain the annulment of the
acts carried out by the debtor in fraud or damage to his creditors, so that the
assets that, as a consequence, have left his estate, can be returned to it.
Likewise, modern bankruptcy law tends to enshrine so-called revocation actions

with the purpose of undoing the business carried out by the insolvent debtor
within a certain time prior to the default situation, known as the "period of
suspicion", and, therefore, that way, reconstitute the debtor's assets and protect
the rights of creditors.
4.4.2.3. Executive measures
They seek to obtain compliance indirectly, through the forced execution of the
assets that constitute the debtor's assets and translate into preventive measures
aimed at immobilizing and removing them from commerce and in the actual
realization of the assets through judicial means, aimed at obtaining that the
unfulfilled obligation is satisfied with its product; They are a consequence, then,
of non-compliance.
It is interesting to note that, exceptionally, financial entities can enjoy

expeditious instruments for the execution of the guarantees established in their
favor, as would result from being able to auction off the asset with a private
hammer and not through a judicial process. This is based on a double
consideration: the special trust that the State places in them and the convenience
of contributing to maintaining the health of their portfolio, for the benefit of
savers and the system in general. 61
4.5. EXTINCTION OF OBLIGATIONS
The existence of an obligation produces as a direct consequence, as we saw, the

need to fulfill it. Well, both this compliance in the provided manner, and the
presence of another series of causes provided for by law, lead to the extinction of
the obligation. It is understood, then, that obligations can be extinguished by
those legal acts and facts by virtue of which ends the obligatory bond that unites
the debtor and the creditor or is replaced by another or, ultimately, a change
occurs in the intervening parties with the consequence that, at least in relation to
one of the original parties, the obligation disappears. obligation.62
4.5.1. Pay
4.5.1.1. Notion
In its simplest and most fortunate form, payment is understood as

the provision of what is owed. That is to say, based on the content of the benefit,
there will be payment to the extent that the debtor adopts the conduct foreseen at
the time the obligation arose. What is owed is paid when something planned as
obligatory is given, done or not done. Once this conduct has been carried out, the
obligation disappears from the legal world, as its life cycle has been completed
and the legal interest of the creditor has been duly satisfied.
4.5.1.2. Who can pay
An obligation can be satisfied by those who have legal interest and even those
who lack it. The debtor or his representative or his successors have legal interest,
on a singular or universal basis. It is also held by their joint or indivisible co-
debtors, or by the guarantors called to satisfy the obligation as a result of the
default of the main debtor. But there are also third parties outside the legal
relationship and unrelated to the debtor who at a given moment can pay, with the
consequences that we will see shortly.
The payment verified by the debtor is obvious, since he is the one who has
agreed to bear the burden derived from the obligation or, in any case, the person
on whose head it has been imposed, by virtue of non-volitional acts generating
the obligation in his charge. The payments made by the joint or indivisible co-
debtor are explained in the light of what has been seen when studying these types
of obligations. The same happens with the guarantor, called to satisfy the
obligation, since he is nothing more than a guarantor of the fulfillment of the
main benefit and, consequently, if this is not satisfied by the debtor, his vocation
is, precisely, to respond for the payment.
The intervention of a third party is no longer explained by virtue of the legal

interest that could be linked to the satisfaction of the obligation, since this does
not exist, but is based, in general, on a natural tendency of legislation to admit
mechanisms that allow satisfy the obligations, under the consideration that the
world of Law requires a definition of the latent legal situations and there is no
evidence that imposes the need to reject the payment made by a person other than
the main debtor and completely unrelated to the obligation. The solutions vary in
different countries but, in summary, we could say that the intervention of the
third party has three possibilities: firstly, the third party who acts with the
knowledge of the debtor, in which case he is assimilated to an agent and is
subrogated in the totality of the rights that the creditor had in whose favor the
obligation was satisfied.
Secondly, the third party who pays without the knowledge of the main debtor
who, since he cannot in any case be assimilated to the agent, does not intend to
be subrogated to the rights with all the advantages that this would entail, but who
nevertheless has an action for reimbursement entitled to recover the sum that had
been paid or the equivalent of the obligation that had been satisfied. And, lastly,
we would have the third party who pays against the express will of the main
debtor, a possibility not accepted in all legislation and rejected by the doctrine in
many cases, since there could be cases in which the main debtor did not want to
comply, for valid legal reasons, without it appearing evident that, against their
express will, a third party proceeds to do so. In this case, the only applicable
principle, if the legislation does not provide otherwise, would be that of unjust
enrichment, that is, the possibility that the person who paid would have, against
the will of the debtor, to demand compensation for the sums, if he can.
demonstrate that his conduct produced utility for the debtor.
There is an interesting hypothesis in which the payment is made by a person
other than the debtor, although as a decision of the latter. This is the figure called
delegation, normally regulated within the mandate contract.63 It consists of a
debtor (delegate) entrusting a person called delegate (substitute debtor) to assume
the execution of a service in favor of his creditor. As seen here, the delegate is a
simple intermediary between the debtor (delegate) and the creditor (delegate).
Those who criticize the autonomy of this figure and still find it wrongly
structured from Roman Law, consider that its modalities are usually explained
without difficulty through other well-known schemes. Given, however, the
tendency to recognize it as an entity in the field of Banking Law, as we will see
when mentioning the different theories on the legal nature of documentary credit,
it seemed appropriate to make a quick mention of it.
The doctrine classifies delegation as perfect or imperfect. The first is one in

which the delegate accepts the delegate as the new debtor, that is, the assumption
of the debt by the latter releases, as a consequence, the original debtor. There is
then an extinction of the obligations that would be novice due to a change in the
debtor, where the delegator disappears from the legal relationship to be fully
replaced by the delegate. The other possibility, that is, imperfect delegation,
implies the same tripartite structure with the difference that the de1gatee does not
accept the function of the delegate as liberator of the delegator or original debtor.
There would then be a duplication of debtors, one principal and the other by
delegation or on his behalf, which, in a certain way, would constitute a privilege
for the creditor, who could go against the delegate to demand payment, without
thereby renouncing execute the delegator.
4.5.1.3. Recipient, time and place of payment

Payment must be made to the creditor or his representative, the creditor being
understood as both the person who was originally the creditor and the person
who has acquired the credit under a universal title or under a singular title. As far
as it says with the representative, it is enough just to note that it can be the legal
representative, for the incapable, in general and for legal entities that have to
necessarily act through their representative bodies or it can be the conventional
representative, that is, the one authorized to receive the payment, by having
general power from the creditor or having received a specific power to carry out
such an order. There is also the possibility of paying whoever appears as an
apparent creditor, holder of the credit, as long as whoever pays does so in good
faith, with the understanding that it is precisely the creditor. This principle of
appearance plays an increasingly important role in Commercial Law, both for the
purposes of representation itself, and in matters as important as securities.
Regarding representation, for example, whoever has given rise to positive acts or
serious omissions to the belief by others that a person is entitled to act on their
behalf, that is, who has created by his or her conduct , positive or negative, a
margin of appearance of representation, must bear the consequences of the acts
that his apparent representative concludes on his behalf. Therefore, both in the
case of the apparent creditor and in that of the apparent representative, that is,
who is considered, due to certain external circumstances, to act on behalf of the
true creditor, the payment made to one or the other is valid. 64
Obligations, as a general rule, must be satisfied when due. Consequently,

obligations pure and simple can be enforced immediately; those subject to a
deadline, at the moment in which said term is met and those subject to a
suspensive condition, when the future event that until that moment was
considered uncertain occurs.
Regarding the place where the payment must be made, the geryeral principle
indicates that it must be made at the domicile provided for by the convention, if
the source of the obligation is precisely a legal act and, in the absence of
stipulation or in the face of another cause, in the domicile established by law,
which varies in each country. It can be the debtor's domicile; that of the creditor,
especially in commercial obligations; that in which the things or goods that must
be delivered are located and, even, that which results from the nature of the
provision that is the object of the respective obligation. Indeed, if, for example, it
is an obligation to do, consisting of granting a public deed for the sale of a
property, the general rule will be that this is executed in a notary office in the
place where it is located.
4.5.1.4. How it should be done and how payment is allocated

The cardinal principle regarding obligations is that they must be satisfied in the
form and terms originally agreed upon. Several consequences can be deduced
from this, among others, that in obligations whose object falls on tangible assets,
the creditor has the right to have them delivered in full and in conditions that
serve to fulfill the purpose for which they are intended. The problem then arises
of the eventual deterioration of the property, the responsibility of which will
correspond to the debtor as soon as it has occurred due to his act or fault or
during the default. Liability for this reason can only be released if it has arisen
due to force majeure or fortuitous event, or during the creditor's delay in
receiving the property.
Another problem is knowing what happens when the asset is destroyed or

disappears, since the solution is different if it involves obligations of a certain
species or body, or gender obligations. In principle, the loss of the property that
is the object of the obligation of certain body gives rise to the debtor's
responsibility to compensate the damages, unless said loss has occurred due to
force majeure or fortuitous event, or during the creditor's default, as in the case of
deterioration. On the other hand, and even if there has been force majeure or a
fortuitous event, when it comes to gender obligations, the traditional principle
that "kinds do not perish" applies, as a consequence of which, if those that the
debtor had arranged are destroyed To satisfy his obligation, he must provide
himself with as many. If, for example, the obligation consists of delivering ten
unidentified shares of Compañía Mercantil SA and the ones he had are destroyed,
the debtor will have to look for another ten shares of the same company in order
to satisfy his obligation. In any case, we will have to return to this point when
analyzing the extinguishing cause of obligations consisting of the loss of the
thing owed.
From what it says with the imputation of debt, it deals especially with gender
obligations and, in particular, with money obligations. When it is a single
obligation, that is, for which capital and interest are owed, which also frequently
occurs in commercial obligations, the payment of a sum of money by the debtor
has a very precise imputation: first At the end, the interest due is paid and what
remains is charged to capital. If there are several obligations under the
responsibility of the same debtor, he may choose between them, but will require
the express consent of the creditor if he intends to allocate the payment to an
unexpired obligation before the expired ones. The same consent must be obtained
to allocate your payment to a secured debt, when there is another unsecured debt
in your charge. If the debtor, within the limits given by law or convention, does
not specify the form of imputation, it will be up to the creditor to do so and
express it, if applicable, in the receipt issued as a consequence of the payment of
the money.
4.5.1.5. Payment by consignment
Legislation usually enshrines a hypothesis in which non-compliance is not the

debtor's own but, on the contrary, is attributable to the creditor and results in his
refusal to receive payment in the manner and place agreed upon or deduced from
the law. In this case and in the face of such refusal, the debtor is able to force the
creditor to receive payment, following a judicial process aimed at notifying the
creditor, discussing with him the amount and conditions of the payment,
obligated or received, as a consequence of their acceptance of the facts of the
claim or, in the event of non-conformity or new refusal, proceed to submit it to
their orders in the entity indicated by law or by the judge, depending on the
country. In this case, the payment made by consignment is considered perfect for
all legal purposes and discharges the debtor from the corresponding obligation.
We will see when studying banking contracts, how the tendency in some
legislation is to allow an extrajudicial consignment payment in relation to some
commercial debts, such as those that could be incorporated in a bill of exchange.
And, equally, the role that banks play in this process.
4.5.1.6. Settlement
It is not payment itself, among other things because it is separated from the
fundamental principle that we studied when talking about how payment should
be made. Some even study dation in payment as an autonomous way of
extinguishing obligations, based on the fact that dation in payment consists of the
solution of the initial obligation with a benefit other than the one agreed upon.
That is to say, without there being any power or form of obligation that justifies
it, the parties agree that, in substitution of the originally agreed obligation, a
different benefit is satisfied. Such is the case, for example, of the bank that, faced
with the impossibility of obtaining payment from the debtor of the amount that
has been reciprocated, agrees to receive a property of its property in payment of
that obligation. As can be easily observed, not only is the first obligation
extinguished by substitution, but the second is fully satisfied so that, ultimately,
the debtor is freed from any obligation towards the creditor originated in the first.
The exception would be constituted by the dation in payment made with
securities with credit content, in relation to which a conditional scheme is
recognized in that the full release of the debtor only occurs as a consequence of
the effective discharge of the title, delivered in payment of the pre-existing
obligation.
-------------------------------------------------------------------------------
53. DE CASSO and ROMERO, J.; CERVERA and JIMÉNEZ-ALFARO, F, Op,
cit., p. 2785.
54. OSPINA FERNÁNDEZ, Guillermo. "General regime of obligations." Ed.
Temis, Bogotá, 1976. CARBONNIER, J., Op. cit., pp. 187-8.
55. CARBONNIER, Op. cit., p. 188.
56. OSPINA, Op, cit., p. 47.
57. HINESTROSE. Fernando. "Civil law. Obligations". Ed. University extership
of Colombia. Bogotá, 1964, pp. 95, 96.
58.V. Infra Chap. XXII on Trust, where we make a critical analysis of the
unnecessarily broad qualification with which the Banking Superintendency has
maintained that the obligations of the Trustee are of means and not of result.
Although this is logical and healthy when talking about the money investment
trust - to prevent the Trustee from tending to act as a financial intermediary,
which is not excessive in many management hypotheses, particularly in the so-
called Administration Trust.
59. Colombia establishes this by saying that "in commercial businesses, when
there are several debtors, it will be presumed that they have been jointly and
severally obligated", art 825, C. Co.
60. DE CASSO and ROMERO, l.; CERVERA and JIMÉNEZ-ALFARO. F., Op,
cit., p. 2789.
61. Colombia. EOSF, art. 124, No. 2
62. In this matter, consult with advantage the already cited work of Professor
OSPINA FERNANDEZ, Guillermo. pp. 401 to 643.
63. Colombia, arts. 2,161 et seq. DC
64. Colombia, arts. 640 and 842 C. of Ca.
65. The work of Jean CARBONNIER already mentioned, T., may be usefully
consulted. 11, Vol. 11, pp. 114 And ff.
66. V. supra, Chap. 1, 4.2.1.
4.5.2. Novation
Novation is the substitution of a new obligation for another previous one, which
is therefore extinguished. Note that, while in dation in payment the relationship
between the parties is normally extinguished, in the event that they had no more,
in novation a new obligation is born that replaces the previous one.
Novation in general has three possibilities: the first, the replacement of the
obligation without changing the original parts. This happens, for example, when
the object of the obligation changes. Let us consider that one party owes another
a certain number of shares of a company and that, by common agreement, the
parties resolve, after the conclusion of the contract, that, instead of those share
titles, the debtor delivers a certain number of bonds issued by another company.
Another way in which novation occurs results from the debtor contracting a new
obligation in favor of a third party, remaining free from the original creditor.
Suppose that A owes B the sum of one thousand pesos, a sum of which, in turn,
B is C's debtor. Well, B can agree with A that instead of paying him the thousand
pesos, he pays them to C at the appropriate time, thereby releasing him from the
obligation originally contracted with him. Finally, novation can occur by the
replacement of a new debtor for the old one, who is then free of his obligation. It
is no longer the same debtor who contracts a new obligation in favor of a third
party, but rather the initial debtor is replaced by another. Two hypotheses are
specifically presented: on the one hand, the assumption of the commitment by a
third party, without the knowledge of the debtor, which we study when talking
about who can pay, and which grants the person who pays an action for
reimbursement against the original debtor. And on the other hand, the appearance
of a new debtor, with the authorization or initiative of the first, in which case we
have the figure of delegation where the original debtor appears as delegator, the
substitute debtor as delegate and the creditor as delegate. It will be perfect or
imperfect to the extent that the creditor accepts the new debtor (delegate),
releasing the first, or reserves the comfortable power of being able to address, in
any case, against delegator and delegate.
4.5.3. Remission
Remission is a way of extinguishing obligations that consists of the condonation

or forgiveness of the debt. It is a manifestation of the creditor's gratitude that is
conceived within the autonomy of private will, advocated in relation to property
rights and in accordance with which, one way of disposing of rights is not to
exercise them. Consequently, the remission is a unilateral act of the creditor that
expressly releases the debtor from compliance with his obligation or tacitly,
within certain cases, does the same, such as when, without having actually
received the payment, he delivers to the debtor the corresponding receipt or the
security in which the debt was incorporated or destroys it.
4.5.4. Compensation
Compensation is a way of extinguishing obligations that is based on a very clear

necessary assumption: the existence of reciprocal debtors of homogeneous
genres. This compensation can be legal, in which case it occurs without the need
for any declaration and by the simple presence of the required requirements, or it
can be conventional, when the parties so agree, to resolve debts of which they are
reciprocally creditor and debtor. The so-called judicial compensation is also
contemplated by the doctrine, in the event that a defendant counterclaims the
actor and, proven to be the facts on which his position is based, reciprocal
obligations arise that the judge compensates in the sentence.
The requirements ordinarily required for compensation to operate are that the
obligations are reciprocal and fall on fungible things, that is, substitutable one for
another and of the same kind, such as money; that they are currently payable, that
is, at the moment in which compensation must occur and, finally, that they are
liquid, that is, determined precisely so that their amount is indisputable.
This way of extinguishing obligations has a significant importance in the case of
the bank current account or checking account contract and its consecration
through conventional means is very useful in the contracts that banks enter into
with their clientele, even those different from the current account.
4.5.5. Confusion
The way of extinguishing obligations called confusion expresses the concurrence

in a person of the qualities of creditor and debtor at the same time. Think, for
example, of a person who owes a certain sum of money in favor of a commercial
establishment that he will acquire tomorrow, in which case in his assets he will
appear simultaneously as a creditor and debtor of the same sum, which produces
the extinguishing confusion of The duty.
4.5.6. Impossibility of execution or loss of the thing owed
This extinctive mode is predicated, in principle, on positive obligations, whether

they are obligations to give, or contracted to obligations to do. Indeed, in the case
of obligations to give, the impossibility arises from the loss of the thing and in
the case of obligations to give, the impossibility arises from the circumstances
that make its fulfillment impossible. To illustrate the latter, take the case of a
painter who has undertaken to make a painting for a company and who loses his
hand in an accident. In this case, it is evident that the obligation to do something
is considered impossible by virtue of an insurmountable circumstance with
respect to the obligor. But the aspect that is most frequently discussed is that
related to the obligations to give and specifically to the loss of the thing and the
consequences that arise from said loss for the parties. We already touched on the
point when talking about payment and how it should be made, to indicate when
the loss of the thing produces the extinction of the obligation.
and we said that, as a general rule, a distinction must be made between the
obligation of a certain body and the obligation of kind, to maintain that, in the
latter, the loss of the thing does not occur, legally speaking, because there is
always the possibility for the debtor replaced by another, given its fungible
nature. This, however, is not absolute, since the doctrine recognizes the so-called
limited genres, that is, those obligations in which a certain quantity and quality
has been spoken of, but within a generic set that can, however, be extinguished. .
Such would be the case of someone who is forced to hand over an animal in their
possession, it dies, and they find that the species (in the biological sense) has
become extinct. Or one who has committed to delivering part of a genre, limited,
in turn, by what exists in a certain place. Consider the obligation of a person who
must deliver ten shares of a company, among those he has in his possession and
which rest in a certain safe, in the event that it is stolen without his fault. The
obligation is extinguished as a result of the disappearance of the receptacle in
which the object of the service had been deposited.
Now, in limited types, when they disappear in their entirety or in certain species
or bodies, the important thing from a legal point of view is to determine to what
extent the loss is or is not attributable to the debtor. It is not attributable, as we
saw, when it is lost due to force majeure or fortuitous event, in which case
whoever invokes it must prove it. Or when the loss of a third party, not linked to
the debtor, arises or when the creditor is in default of receiving the property that
has been timely placed at his disposal. Otherwise, that is, when the thing
disappears due to an act or fault attributable to the debtor, although the original
obligation is extinguished, the obligation to compensate for the damages arises,
as we saw, an obligation that, ultimately, transforms the existing primitive and
leads, if you will, to compliance indirectly.
4.5.7. Prescription
This is the analysis of the so-called liberatory prescription and not what is known
as acquisitive prescription, through which a right of ownership or other real right
is acquired. The study is limited, then, to the way in which a credit right is
extinguished as a consequence of the simple passage of time, without the law or
the parties having established a specific period within which it must be made
effective for the exercise of said right. . The prescription finds its reason for
being in two considerations: on the one hand, it is assumed that the rights are
consecrated to satisfy the needs of individuals and that whoever allows excessive
time to pass without exercising them is, in a certain way, renouncing or
expressing the little interest that the aforementioned right deserves; but, on the
other hand, the aim is to provide a certain security to the world of legal
relationships to prevent some of them from being suspended for an indefinite
period of time.
The terms of prescription are enshrined in different legislations in different ways

and within each one they are different, depending on the nature of the right or
action in question. It is beyond the content of this general presentation to
investigate what these terms are in Latin American countries. Enough for us
affirm that, as a general principle, it can be argued that the terms of prescription
in relation to certain actions that correspond to subjective rights tend to be longer
when they arise from a civil business than when they arise from a commercial
business and that, within the latter , the terms are even shorter when they are
derived from a security, as is the case with exchange shares.
4.5.8. Term and condition
They are also ways of extinguishing obligations, as was deduced when we

studied their classification and within them the conditional and term obligations.
In effect, there are obligations that are contracted within a certain period, upon
which they are extinguished by that circumstance alone, if their exercise has not
been previously demanded. Take as a very illustrative example in terms of
banking activities, the guarantees or guarantees granted by credit establishments
in favor of a third party, with which one of their clients contracts and which,
practically without exception, are granted for a certain period. , generally that of
the main obligation plus an additional period. If within the respective opportunity
determined by the term the guaranteed third party does not turn against the bank,
its obligation is extinguished by that circumstance alone. The same occurs with
obligations subject to a resolutory condition. In this case, the obligation subsists
as long as the future and uncertain event on which its existence depends does not
occur. Once this has occurred, the obligation disappears for this reason.
4.5.9. Transaction
This way of extinguishing obligations implies, ultimately, the conclusion of a

legal transaction aimed at settling existing differences between the interested
parties or preventing, as a result of them, litigation from arising in the future. The
transaction is characterized by being a reciprocal renunciation of rights, that is,
by ceding each of the parties in their original position or claim, in order to
achieve a satisfactory solution that settles their differences in this way and
avoids, consequently, the judicial controversies that could arise or are in
progress. Therefore, to the extent that there is a reciprocal waiver of rights, there
is an extinction of the correlative obligations under the terms of the agreement
obtained.
4.5.10. Mutual agreement
This mode of extinction is nothing more than the recognition of the autonomy of
private will, in all those cases in which the obligation has as its source a legal act
and follows the old legal aphorism according to which things are undone as they
are made. If, therefore, the obligation arose from mutual agreement, the parties,
capable and without limitations, have in principle no obstacle to using the same
means and agreeing on the extinction of the obligation, in a valid and effective
manner. Of course, there is also room for mutual agreement to extinguish
obligations arising from other sources, to the extent that the patrimonial aspect is
considered. This means that if, for example, the commission of a crime has
caused damage that can be economically assessed, nothing prevents the creditor
from being able, by agreement with the criminal debtor, to modify or extinguish
the obligation.
4.5.11. Unilateral termination (Revocation and resignation)
Unilateral revocation is certainly exceptional, but, nevertheless, both the law and
the parties may provide for the power, in favor of one of them, to terminate the
contract and, consequently, extinguish the obligations that derive from said
agreement. Such is the case of the mandate contract, where the principal can, in
principle, revoke the order that he had given to the agent, although they present
some limitations, especially in commercial matters, as we will see in due course.
Another interesting example, in the area of banking contracts, is what happens in
some countries with the current account, because although in several there are
exhaustive causes for the termination of the contract, in others a unilateral power
has been established that allows it to be terminated, with or without notice, in that
way.
4.5.12. Death of the creditor or debtor
We have already seen how the general principle in matters of Private Law, in our
system, is that both rights and obligations are transmitted and, in this order of
ideas, it will be the heirs of the creditor who exercise them or the heirs of the
debtor who bear them. However, in relation to the former there are some
exceptions, especially in Civil Law, such as when there are very personal rights
or credits, such as the right to request food from certain relatives, a right that is
extinguished by the death of the beneficiary, unless his heirs were within the
kinship relations in which the law also grants them such power; but there it
would be by virtue of the law rather than the transfer of the right of the deceased,
that such power could be exercised. The same thing happens with the obligations
called "intuitu personae", in which the fundamental consideration that leads to
contracting is the existence of peculiar and very personal conditions of the
debtor. Such would be the case of the obligation assumed by a lawyer to present
a certain allegation that is expected to succeed, to the extent that his qualities as a
jurist are known.
Well, if you die before it is drawn up, it is evident that your obligation is not
transferable to your heirs, and if it were, it would not be interesting for the
creditor, since they would not be in a position, due to the simple fact of being
your heirs, to be able to satisfy with the same solvency the task that had been
entrusted to the professional.
4.5.13. Court decision
Under this section we bring together the entire set of possibilities that translate
into a judicial decision that extinguishes the mandatory bond. These are those
cases in which the controversy arises to attempt the declaration of nullity of an
act or contract or its resolution or its declaration of simulation, etc. In all these
cases and to the extent that the plaintiff's claims are successful and are included
in the sentence, the judicial decision will produce the effect of the extinction of
the respective obligation, to which the act or contract declared void, resolved,
referred. or simulated.
5. CONTRACTS 65
We already studied the legal act when talking about the sources of obligations
and we defined it as the manifestation of will directed in a conscious and
reflective manner to the production of legal effects, that is, to the achievement of
some modification in the legal system.66 It is now up to us to study the contract
as a prominent manifestation of the legal act and main source of obligations in
Private Law.
5.1. NOTION
The legal act has two very precise modalities: firstly, it can consist of the
manifestation of a single will, through which a person determines the production
of legal effects at his expense or for his benefit and whose main representation is
constituted by the will. Or it may consist of the manifestation or agreement of
two or more wills that seek the achievement of the same achievement and which
is classified as a bilateral or plurilateral act. The two most prominent examples of
the bilateral legal act are the contract and the convention.
The contract and the convention are related to a difference from species to genus,
in that contract means a form of convention aimed specifically at the creation or
constitution of obligations, while the convention is the agreement of wills aimed
at the production of a any effect, that is, to the creation, transmission or
extinction of rights and obligations.
5.2.
EFFECTIVENESS OF LEGAL ACTS
The existence and validity of contracts were subordinated in classical theory to
the presence of elements considered essential, namely: capacity, consent, object
and cause. Requirements to which was added the need for contracts to adapt to
the regulations of the provisions that protect public order and good customs, on
the one hand, and to the recognition and preservation of the forms established by
law, as necessary for the existence or validity of certain acts or contracts.
In a more modern conception it could be said that existence, validity and
enforceability are requirements for the effectiveness of legal acts, as we will see
shortly.
5.2.1.
Existence requirements
5.2.1.1.
Willpower
The legal act is born from a manifestation of will, from the desire of a person
aimed at the production of a certain consequence. Conceived in this way, it is a
manifestation of the individual or isolated will of the agent. Equipped with the
requirements of intention to be bound, specific destination and specification, it
becomes an offer, as a preliminary point that is an essential part of the dynamic
process of formation of the legal business, whether it is an agreement or contract.
For one or the other to be born, it is also necessary that it be expressed or
deduced

the consent of the recipient. This includes or reflects the point of contact where
the wills coincide and the agreement can be properly discussed. Consent is
necessary then, both for the conclusion of the contract and for the precision of its
content.67
The will, which we have called consent in the case of contracts, is manifested in
each contracting party by external signs that can be express, such as words,
writings, etc., or tacit, that is, conduct from which it can be unequivocally
inferred. a certain manifestation of will. The agreement of will arises from a
process that begins with the offer or invitation to contract which, like any
expression of will can be express, when it is directly and categorically directed to
formulating the respective invitation or tacit, when it is deduced from the conduct
of the individual, which can happen, for example, when a bank that provides the
usual services in the square has its doors open to the public. Passers-by,
regardless of whether or not they have a direct relationship with the
establishment, understand that there is a tacit offer to negotiate in the sense of
using the different services that have been made available to the public.
This offer can be addressed to a specific person, that is, it can be a private offer
or it can be addressed to the conglomerate, to the community in general, as
happens when a financial entity decides to issue bonds, debentures, or
debentures, in which case which the offer is made to an indeterminate and
unknown number of subscribers. Any individual who wants to lend his money
under the conditions and terms contemplated in the issuance contract can collect
the offer and conclude the contract in this way. Acceptance on their part is
individual and produces the coincidence of wills that, expressed in the manner
provided by law, gives rise to the birth of the contract.
Regarding the time and place where the contract is perfected, when it comes to
an agreement between absentees, there are two main systems: the first maintains
that the contract is perfected at the time and place in which the recipient of the
offer expresses its acceptance; The second, on the other hand, states that it is
necessary for the offeror to know in turn the acceptance that has corresponded to
his proposal, in which case the contract would only be perfected when the offeror
was duly informed.68
A final observation that may be of particular interest in the study of banking

contracts concerns the so-called acceptance by silence. In principle, acceptance,
like any other manifestation of will, can be express or tacit. In general, legislation
and doctrine reject pure and simple silence as a way of expressing one's will and,
consequently, as a way of accepting the offer that has been received.69
However, it should be taken into account that banking contracts, as we will see a
little later, are typical adhesive contracts or at least a high percentage of them are.
Clients contract with institutions based on the general regulations that they have
established and that, based on the law, fully regulate the contractual relationship.
We will defend this system; For now, it is enough for us to raise the practical
problem that arises when, by virtue of a modification in the law or the simple
initiative of the institutions, it is necessary to modify the regulations and,
therefore, the obligation to reform the contracts concluded is imposed. with each
and every client. Given the almost physical impossibility of attempting an
individual modification in large banks, the route used generally consists of
providing sufficient publicity for the reform introduced to the regulations,
sending it, if desired, with the monthly statements of the current account to all
clients, so that they can collect its contents; setting a deadline from which the
reform will come into effect and indicating that if no contrary statement has been
received before that date, the proposed reform will be considered accepted.
Well, some scholars, in a somewhat light way, criticize this procedure because
they consider that the silence of the recipient is not enough to be considered
acceptance and that, consequently, the method used is inadequate. They forget,
however, that, just as pure and simple silence has not been considered, in general,
sufficient to presume acceptance, there is what the doctrine has qualified as
circumstantial silence, that is, silence that, given the circumstances of manner,
time and place that surround the offer, allow us to conclude, without many
subtleties, an agreement that, in any case, if not express, will be sufficient to be
considered as tacit acceptance. To which it could be added, to defend the
procedure, that as soon as clients, after notification about the reform, continue
using the services, we will find ourselves facing an indisputable tacit
acceptance.7°
Let us say, finally, that for consent to have legal effectiveness, it must be
expressed, not only with full knowledge, but also with free will, that is, that said
consent does not suffer from defects.
5.2.1.2.
Object
Strictly speaking, the object is understood to be the content of the contract, that
is, the obligations arising from it, although, in legislative and doctrinal practice,
the object of the contract is referred to as referring to the object itself of the
obligations, that is, the positive or negative benefits expected from the
contracting parties, as a consequence of the commitments made.
The object must exist at the time of the conclusion of the contract, although
legislation allows contracts to be made in relation to future things, that is, things
whose existence is expected at the moment in which the corresponding right will
be exercised. The object is predicated, as characteristics, that it must be useful,
determined, possible and lawful. Utility touches on the seriousness of the
contract itself, to the extent that the parties' benefits must have a specific content
from a financial point of view. It must be determined or determinable in such a
way that there is no doubt about the existence of precise obligations borne by the
parties.
The concept is obvious in terms of certain bodies and, when it comes to gender
issues, we have already seen that their determination is done through precision
regarding their quantity and quality. The object must also be possible, both from
a material point of view and from a legal point of view. The physical or material
possibility refers to the very existence of the good in nature, with the exception
he~ha in relation to future things. The legal aspect deals with the existence of
goods in commerce, that is, their possibility of being negotiated by individuals, a
concept that, due to the negative, is best deduced from the recognition of goods
that are outside of commerce, due to their very nature. or by provision of law.
This may happen, in the latter case, with assets for public use, not susceptible to
alienation by individuals or those that, being involved in a judicial process, have
been seized and seized and, consequently, removed from commerce. .
Finally, the object is illicit when it is contrary to public order or good customs,
such as negotiating with a political right, such as the right to vote, with the sole
observation that, for some legislations and doctrines, It is also an illicit object
that refers to goods that are outside of commerce, mentioned; before as
impossible goods, from a legal point of view.
5.2.1.3.
Cause
The cause has two modalities or concepts, the so-called objective cause and the
so-called subjective cause. The first is usually expressed as that of the obligation,
rather than that of the contract, and in bilateral legal transactions it is constituted,
for each of the contracting parties, by the obligation that the other assumes. In
unilateral contracts, according to the authors, the cause does not lie in the
contract itself but in the antecedent fact that gives rise to the obligation, as would
happen in the case of a mutual contract, in which the cause of the obligation to
return the sum of money would be having received it from the hands of the
lender. From this point of view it is maintained that the cause must be existing.
But it is also stated that the cause must be lawful and, in this case, it refers more
to the subjective cause, understood as the impulsive and determining cause, that
is, the one that induces a party to contract. From this point of view, the illicit
cause can sometimes coincide with the illicit object, but, to distinguish them
precisely, a contract can be conceived whose object is lawful, for example,
renting out a house, but for a specific purpose. prohibited by public order or good
customs, such as the installation of a nursing home there, to the extent that this
possibility is prohibited by law.

5.2.1.4.
Imposed form
The contract, on the other hand, must meet the legislative requirements related to
its form. In this aspect and by way of exception to the general principle of
consensualism, according to which contracts are perfected by the simple
agreement of wills, legislation usually establishes two types of specific
formalities: those that exist in so-called real contracts and those that They appear
in the so-called solemn contracts. Real contracts are those that are only perfected
by the delivery of the thing, as happens, for example, with deposit or bailment
contracts; They are solemn contracts, for their part those whose perfection
requires a particular form, generally an authentic deed, which derives this quality
from having been granted before a public official authorized to attest to the
conventions concluded between individuals. At this point we must distinguish
between the formalities truly established as such, that is, as essential
requirements for the birth of the contract, and those that are only established by
law as a means of proof, that is, as a suitable and exclusive instrument. , in
principle, to be able to prove its celebration. In this case, the fundamental
difference is that the omission of the first produces the non-existence or absolute
nullity of the contract, according to the applicable legislation, while in the second
the proof is difficult, in relation to the wide range of possibilities available to
them, in principle, the parties, since the "ad probationem" formalities exclude
certain types of evidence to prove the conclusion of the contract.
5.2.1.5.
Elements of essence
Legislation, when classifying contracts, naturally establishes the elements or
things without whose presence they do not produce any effect or degenerate into
another contract, producing, in this case, the so-called conversion of the legal
transaction.71
The latter assumes, fundamentally, that in the face of a business that would be
destined to disappear for reasons of inefficiency, in the broad sense, it can be
rescued if the essential requirements of another contract can be predicated of it
and the latter is compatible with the business purpose of the contract. the parts.
There is no peaceful position in the doctrine on its application when it comes to a
business that would be classified as non-existent and the issue, of course,
ultimately depends on each legislative solution. But we could simplify by saying
that, in any case, it would not be applicable in the event that in that hypothesis or
in that of absolute nullity, the gloss or lack were not correctable.72
5.2.2.
5.2.2.1.
Validity requirements
Ability
We already touched on this attribute of personality when talking about them.73
We said then that capacity was the ability enjoyed by all subjects of law, legal or
natural persons, to acquire rights and contract obligations. We add that this
notion of capacity corresponded to what the authors have distinguished with the
name of capacity for common and connatural enjoyment of all subjects of law,
while they limit the concept of exercise capacity to express the possibility of
acquiring rights and contracting obligations by themselves. Suffice it to say now
that capacity is the general principle and that by exception the notion of
incapacity arises, whose most prominent importance appears when studying the
conditions of ineffectiveness of contracts.
5.2.2.2. Lawful object
It is not enough, as we already noted, that an object can be recognized in

business. It must be lawful, not contrary to public order or good customs. That is
why it has been said that there is an illicit object in everything that contravenes
public law and, in general, in any contract prohibited by law.74
On this matter, the doctrine has recalled that it is not about the classification of
the "things" object of the contracts, but rather "their destination." and the acts that
are carried out on them, which may be legal or illicit".75
5.2.2.3. lawful cause
The same statement can be made regarding the cause. Considered subjective, its
eventual illegality means that the determining reason is prohibited by law or
contrary to good customs or public order.76
5.2.2.4. Non-observance of all forms
It may happen that the solemnity provided for by law in a specific case has been
complied with and it can be concluded, therefore, that the act or contract has
come into being, but that a requirement has been omitted that leads to it being
considered irregular, case in which it will not be considered valid or will lead to
another, as we saw when mentioning the theory of conversion.77
5.2.3. Opposability requirements

Sometimes the law or the parties require that additional requirements be met, not
to recognize the existence or validity of the contract but to make it effective
against third parties, that is, to provide it with publicity. This hypothesis is of
notable importance in Commercial Law insofar as there is a public commercial
registry in which both merchants or their establishments must be registered and
certain acts or contracts must be registered, precisely to presumably make them
known to third parties.78
5.3. INEFFECTIVENESS OF CONTRACTS
Ineffectiveness of contracts is understood - in the broad sense - to be the set of

assumptions, by virtue of which the legal act does not produce effects or by
producing them, they are destined to disappear. In other words, there is a set of
essential or essential requirements whose total or partial lack determines the
impossibility of the contract coming into legal life. However, even if it is met, it
may happen that the contract suffers from some flaws or defects, due to which it
may disappear, as a consequence of the actions that are brought against them or
the judicial decisions that recognize it.
This ineffectiveness, however, has different degrees that are generally classified
into two: inexistence and invalidity, with different assumptions being predicated
on the latter, especially absolute nullity and relative nullity. Some authors include
as a cause of disability the so-called termination due to enormous injury, which is
a particular way of terminating contracts as we will see later. In relation to non-
existence itself, it must be repeated that not all legislations admit the concept,
which is why and even though the contemporary tendency seems to be to
recognize it, these systems involve the assumptions of existence in those of
absolute nullity. It should be noted, however, that non-existence as a concept is
somewhat ethereal, since it only has true legal relevance if a jurisdictional
authority concludes it, that is, determines that a certain act or contract is non-
existent, because the requirements cannot be predicated of it. or minimum
elements that are considered essential for its birth.79
There are regulations in commercial legislation that qualify particular cases as
ineffective, with effects similar to those of non-existence, but with notable
conceptual differences. 80 Added to the glosses that the topic has deserved is the
circumstance, clearly exceptional, that certain administrative authorities can
declare them.81
5.3.1.
Nonexistence
As we said, nonexistence means that there is not even a principle of
\
contract, due to lack of any of the essential elements required by law. Signi
It would also prove that the alleged contract or legal act, in general, cannot
produce effects and that, as a consequence, if it had occurred, the declaration of
non-existence would lead to annulling them and returning things to the previous
state. However, the weakness of the conceptual figure is evident here, since it is a
so-called successive contract, such as leasing, and a period of time has passed so
that the lessee has enjoyed the property and the lessor has received the agreed
price or fee, the declaration of non-existence can only produce future effects. Due
to this aspect, it is equated in its effects with absolute nullity and requires, like it,
for it to produce true effects, a judicial declaration.
In general, non-existence arises from the following three causes: firstly, the lack
of will or absolute absence of consent, either because there is no conscious will,
or because an error has been made regarding the nature of the contract or
identity. same of the object. Secondly, when an absence of object is found due to
indeterminacy or impossibility of the same. And finally, if there is a formal
defect in the solemn contracts82 or an essential element of the contract is missing
5.3.2. Disability
Invalidity, unlike existence, is based on recognizing that the act or contract is

born into legal life, but affected, in such a way, that it is condemned to disappear
or, at least, can potentially be destroyed by a judicial decision. As we said, the
main forms of disability are nullity, absolute or relative, and, for some authors,
termination.
5.3.2.1. Absolute nullity
Absolute nullity is characterized by resting on a public interest, so that it can be

invoked by any interested party and even be declared ex officio by the judge. In
some systems, it can even be invoked by any third party and by the public
ministry, in defense of the general interest.
Absolute nullity is produced, in general, by one or some of the following
circumstances: from the point of view of the intervening subjects, because
absolute incapacity is predicated on some of them in the terms that we had the
opportunity to study. It also occurs when the object or cause is illicit or immoral.
And, finally, when the planned solemnities have been completed, it nevertheless
suffers from some defects, not so many as to support the non-existence but
sufficient to invoke nullity or, in general, when there is an inadequacy of the
contract to the general principles of public order and good customs.83
In principle, nullities, even absolute ones, can be cured by ratification or
prescription, except for those caused by an illicit object or cause, which cannot
be ratified. Given the public interest inherent in its conception, its declaration can
be requested by any person and, of course, by the Public Ministry and must be
declared ex officio by the Judge, if found to be accredited in a process.
to)
Inability
Incapacity, an exception to the general principle, is above all a legal institution
aimed at the protection and defense of those who, due to lacking certain faculties,
are not authorized to exercise the rights themselves or contract the obligations
that correspond to them. It is, therefore, a notion that arises in contrast, as we
said, with the capacity to exercise. Let us briefly analyze what are the factors that
give rise, in general, to the qualification of incapacity or that allow it to be
predicated of a subject of law with the caveat, hardly natural, that like all the
matters that we are looking at in these general principles, they must be treated
with care. a great simplicity, in the sense that each legislation establishes
peculiarities whose precision would be impossible to do in light of the purpose
that we have proposed in this part of the work. In order to do so, it is necessary to
remember that incapacity is usually classified by doctrine into absolute
incapacity and relative incapacity. Those who are affected by the first are
completely unable to act validly, while those of whom the second is predicated
have a principle of capacity that, in any case, allows validation by the parties
once the determining causes have ceased. of disability. The consequences that
can be predicated, furthermore, of the acts carried out by absolutely or relatively
incapable persons, are subject to different legal regimes, as we will have occasion
to see later.
The causes or circumstances that allow absolute incapacity to be predicated of a
subject are, in general, the following:
i) Age. The legislative provisions on this matter take into account the physical
and mental development of individuals to estimate that, at least up to a certain
age, variable in each country, people lack sufficient mental development to allow
them to consciously express his willingness to oblige. They are prepubescent
minors to whom the law does not confer even a principle of obligatory capacity
and who, consequently, are classified, in the first place, as absolutely incapable.
ii) Mental condition. It may happen that a person has exceeded the minimum age
from which full negotiating capacity would be recognized! However, if that
person suffers from a mental illness that disables his or her rational capacity in
terms that, from a scientific point of view, reiterated in practice by a judicial
decision, he is not considered in a position to be able to validly express his will,
we find ourselves with another case of absolute incapacity that could be
classified as that which is typical of the insane, that is, of those who, having the
physical age to be able to be obligated in terms of general legislation, are
psychologically affected in such a way that the law deprives them of being able
to do so. validly.
iii) Physical or physiological conditions. This last cause is predicated on some
people, specifically and almost without exception in all legislation, deaf-mutes
who, unable to make themselves understood in writing or in any other way that
allows their will to be unequivocally inferred in one sense or another, are
considered by the law as absolutely incapable.
5.3.2.2. The relative nullity
Relative nullity, unlike absolute nullity, is linked to a private rather than public
interest and, in general, is a protection measure for certain people who, due to
their particular conditions of defenselessness, may be surprised in a contract.
Also, in contrast to the previous one, it can only be invoked by that party in
whose favor it has been consecrated, that is, the one that it is trying to protect in a
special way.
In principle, relative nullity arises, from what it says with the subject, when one
of the participants suffers from relative incapacity or, when consent exists, it is
vitiated by error, violence, or fraud.
a) Error
Error as a vice of consent supposes that one or both of the contracting parties
have made a mistake, even with respect to one of the fundamental elements or
assumptions of the business, either in fact or in law. Most legislation tends to
reduce the effectiveness of legal error as a vice of consent, based on the maxim
according to which "ignorance of the law is no excuse." This is not the case in all
of them and the contemporary tendency is usually inclined to create some
exceptions to this rigorous principle, admitting that if the application of the law
over time allows us to support the presumption that all individuals know it or can
know it, the truth is that The complexity of contemporary life and the
proliferation of laws, decrees, regulations, circulars, etc., makes it almost
impossible, in practice, even for lawyers themselves, to have knowledge of and
impose themselves on all the regulations in force in a given country. Given
moment. If, however, the error of law is ruled out, we have that the error in fact
has three possibilities: the so-called obstructive error or obstacle, whose presence
strictly excludes the true expression of consent and leads to the classification of
the contract as non-existent, for those systems that accept this possibility or lead
to a cause of absolute nullity. Secondly, the true error and vice of consent, which
can give rise to the action of relative nullity and, finally, the so-called indifferent
error, which in no way affects the convention and which, therefore, only has
interest in presentation from the academic point of view.
The obstructive error occurs fundamentally in two cases: when it concerns the
very nature of the contract, such as when one person believes that he or she is
giving a sum of money as a mutual benefit while the other intends to receive it as
a donation, and then, when it falls on the identity of the object, such as when the
seller plans to sell a house while the buyer plans to acquire an apartment. In both
cases it is impossible to speak of coincidental consent; Therefore, since one of
the fundamental assumptions for the formation of the contract does not exist, it is
almost forced to conclude that it must be considered non-existent.
The error, vice or error itself, occurs in the following cases: when it falls on the
substance or substantial quality that leads to contracting, such as when a person
intends to buy the shares of Compañía Mercantil SA when the seller is really
referring to the shares. from another company. Likewise, when the error falls on
the person, which ordinarily happens in so-called intuitu personae contracts. This
usually happens in free contracts and, by exception, in onerous contracts such as
when a pianist is hired to give a recital, believing that he is a renowned
performer, when he is simply a namesake or someone who does not have the
qualities and conditions of the first.
Ultimately, indifferent errors will be those different from the previous ones or
different from those that the law in each country considers obstructive errors or
vices properly speaking and may be, among others, those that refer to non-
essential qualities or some economic assessments. in which one of the contracting
parties makes a mistake or involves calculation errors, etc.
b) Violence
A first observation that we must make about violence, as a vice of consent, is that
the doctrine has distinguished, precisely, between force and violence, to reserve
for the first expression physical coercion that replaces and completely annuls
consent, as if someone , surprised by an evildoer, was forced to sign, having his
hand taken by the aggressor or as when a person, under the effects of hypnosis,
was forced to record a tape recording giving certain instructions not wanted by
him. In these cases, rather than vitiation of consent, it must be maintained that
there is a total absence of consent. Something different happens with violence,
itself, where there is a threat or moral or physical coercion that puts pressure on
the will, without eliminating it. The subject acts voluntarily, but as a result of
undue pressure exerted on him. Several elements or characteristic notes
distinguish violence. It must be an unjust threat which excludes, in the first place,
the case of legitimate defense, where the violent behavior, so to speak, occurs as
a consequence of an initial aggression by someone who, later, will claim to have
been coerced in this way. And injustice is also opposed to the threat consisting
only of recalling the possibility of taking legal action against the contracting
party that would be sustainable in law.
Likewise, violence, to be considered as such, must be serious, that is, produce in

the attacked subject a fair fear of suffering considerable damage to his person, his
honor or his property, or those of those who are his. closest. This characteristic of
gravity is opposed to the so-called awe, which exists as a consequence of certain
emotional relationships, family, work, etc. That is to say, the simple fear that one
has for some people who deserve particular respect or affection is not enough to
consider that consent has been vitiated, when it occurs in a certain sense not
desired by the contracting party.
Finally, let us say, to distinguish from now on from fraud, that violence can be
the result of the attitude of the contracting party or a third party and in both cases,
once the requirements mentioned above are met, it is considered a vice of consent
and, of course, subjects the act or contract to the sanction of relative nullity,
which we will see later.
c) Fraud
Fraud is understood as the maneuver or set of deceptive maneuvers used to

mislead a person or keep him in error, in a decisive manner to contract. That is to
say, that ultimately, the contracting party enters into the agreement by mistake,
but an error that in this case is induced by the contracting party. Consequently,
several elements are distinguished in fraud, among which: there are fraudulent
maneuvers, that is, machinations or deceptions produced with the intention of
misleading the other party and that said maneuvers deserve a common
disapproval, an observation that is aimed at distinguishing the so-called dolus
malus from the so-called dolus bonus. The latter is the set of resources, more or
less artificial, that people use in the contracting process, to highlight the virtues
of the goods that are the subject of the contract, minimize their defects, maximize
the calculation of the expected benefits, etc., but without being so reprehensible
to the community as to qualify as fraudulent, in the sense we have just expressed.
Furthermore, fraud, unlike violence, must come from one of the parties, unless,
of course, it is a third party who may appear to be acting on behalf of or on
behalf of one of them. Finally, the maneuvers must be decisive, to express in this
way the difference between the main fraud and the so-called incidental fraud, that
is, the one with which the contract would have been contracted, but under
different conditions than those that were actually done. In this case, some laws
only authorize obtaining a readjustment in the contractual conditions, which
accommodates the real circumstances that were hidden when the contracting
party was misled.
Certain legislations include bad faith as a vice of consent, which, unlike fraud,
would not be constituted by maneuvers aimed at inducing a party into error but
simply at disguising or pretending to ignore the other party's error once it is
known. , that is, to take advantage of the error in which one of them finds
himself, once such circumstance has been known.84
d)
Injury
In general, injury is understood to be the pecuniary loss experienced by one of
the parties as a result of an inequality or disproportion in contractual benefits.
The injury can be considered as a general notion applicable to all types of
commutative contracts or, just as a possibility for some of them or for some other
legal acts. Also, in relation to it, there are two main theories, that of the injury as
a subjective vice and that of the injury as an objective vice.
Injury as a subjective vice occurs when one of the parties, abusing the conditions
and ignorance, poverty or inexperience of the other, obtains a result that is
considered inequitable, taking into consideration the defenseless conditions of the
latter. As an objective defect, on the other hand, the injury only occurs to the
extent that there is an evident, quantifiable disproportion, enshrined in the
legislation, such that a simple estimate or mathematical comparison can conclude
the inequality in benefits.
Among the causes or circumstances that give rise to the so-called relative
incapacity, we can mention the following:
a) Age. As can be easily deduced from what we have just explained, once a
certain physical level has been surpassed, to which sufficient intellectual
development is supposed to correspond to having a principle of reflective
consciousness in relation to the decisions made, the individual is no longer
considered absolutely incapable of be recognized, from now on, as relatively
incapable whose acts and contracts have a principle of validity, in certain
circumstances. Suffice it to note that although legislation can vary in this regard
and in fact they do, in general that age is usually around 12 or 14 years, with the
particularity in our legislation of even establishing a small difference between the
minimum age for the woman and the minimum for the man, with an advantage
for the former.
b) Mental condition. Under this section we understand, perhaps with some
imprecision, the specific case of the dissipator, that is, that person who, in
principle enjoying full capacity, acts in an illogical and thoughtless manner in the
management of his or her patrimonial resources, squandering them without any
rational explanation and without that such conduct corresponds to that usually
adopted by people of sound mind. Although it is then classified as a mental
condition itself, since it is not exactly one, the truth is that legislation usually
considers as relatively incapable someone who, acting in this way, has been
declared interdicted, that is, has been declared judicially as a squanderer. But the
relative incapacity of squanderers, furthermore, is not predicated on all their acts
or contracts but rather tends to be restricted to the field of purely patrimonial
actions, leaving out other decisions such as those that affect their family status,
that is, their decision to marry, the recognition of a natural child, etc., these
possibilities also apply to adult minors even if we have not expressly said so.
c) Marital status. For a long time, even though this principle has been
categorically reevaluated in recent years, the married woman, that is, the woman
of legal age, fully capable, who contracted marriage, suffered a kind of decrease
in her legal possibilities by being subject to from the marital regime to the power
of the husband, personally and patrimonially. Consequently, and by virtue of her
new marital status, the woman was subject to a relative incapacity that is now
tending to disappear in all countries, returning the married woman to her full
capacity to exercise.
d) Legal personality. Even though for a good part of the doctrine this way of
approaching the problem is wrong, we must bring it into account because it
corresponds to the classic doctrine on incapacity, to affirm that legal entities were
or are subject to the same relative incapacity that we have been mentioning. .
Affirmation of the traditional doctrine that is also based on the need for these
people to have to act, like all incapable people, through representatives, given the
impossibility of doing so directly. However, the fundamental criticism has started
from the basis that legal entities cannot act directly, not because they are
specifically affected by incapacity, but because the different theories about their
legal nature lead to the recognition that their organic structure is necessarily
different from that of a natural person and in that order of ideas, it is necessary
that companies, and legal entities in general, have to act through bodies, among
which one, specifically, that performs the functions of representative
legal of the same, authorized to commit them to third parties.
,
To the above it is only enough to add that, as a general rule, those with relative
incapacity are in a position to enter into certain acts and contracts, requiring only
the ratification of their legal representative to give them full validity and that,
when the incapacity arises from age, It is possible, practically without exception
in all legislation, to obtain its authorization, in some cases provided for by law,
such as when an adult minor, over a certain age, marries or as a result of a
judicial process aimed at obtaining said declaration. . In these cases they can
celebrate all acts and contracts, with some restrictions enshrined in the law.
It is also interesting to note for our study that, in commercial matters, in principle
all the provisions of civil legislation on capacity are applied and that the
contemporary trend, rather, is to expand the possibilities of those with relative
incapacity in the case, for for example, that they are qualified of age or that it
involves the administration of the assets that make up their professional property,
that is, that result from their work activity or the exploitation of an industry or
commerce, cases in which and in relation With these assets they are considered,
or at least the tendency is, to be fully capable.ss
In general, it can be said that the invalidated contract does not generate the right
to performance or compensation for damages and that, as far as possible, things
should be returned to the state they were in before it was concluded.
5.3.2.3. lnskills
The law also enshrines some disabilities that it sometimes calls particular
disabilities and that are no longer aimed at protecting public order, the general
interest, such as absolute disability, nor at protecting some people specifically, as
is the case with relative disability, but rather rather to prohibit the actions of
persons, who are in themselves capable, in relation to certain acts and contracts.
This is what happens, for example, with the prohibition of some legislations on
entering into sales between parents and children of the family, that is, non-
emancipated children, who, consequently, are represented by those or what
happens in the field of Commercial Law. , when a person who has been declared
bankrupt fraudulently or negligently is prohibited from carrying out business.
5.3.2.4. Rescission
Some authors study rescission as a particular form of contractual ineffectiveness,

to express with it the invalidity arising from a defect of the object that produces
an injury to one of the parties and that, in that sense, would be linked to the
theory of injury. enormous, which we already saw, or to the redhibitory or hidden
defects of the thing in a contract such as that of sale, which if they had been
known by the buyer would have led him to abstain from contracting.
------------------------------------------------------------------------------
67. CARBONNIER, J. Op. cit., T. 11, Vol. 11, p. 157.
68. For some authors there would actually be four theories: declaration,
expedition, reception and knowledge or information.
69. It has been argued that there are four possibilities in which silence can be
considered qualified: a) when the parties have agreed that in the event of certain
manifestations, silence will be considered acceptance; b) when such can be
deduced from the way in which the parties have interpreted and applied the
contract entered into between them; c) when the law establishes it, and d) when
custom, as a source of Law, allows it to be deduced.
70. The recent consumer protection laws, which find in the general contracting
regulations or in the clauses predisposed by one of the parties, a potential source
of abusive clauses, have created a new complexity in the management of the
issue when classify as such or highly restrict unilateral modifications made by
predisposing parties. Such reluctance is reprehensible, in general terms, since the
massive provision of services does not allow the use of a system other than
having pre-prepared general regulations. Consequently, if they are acceptable for
contracting, the person who proposed them must maintain the possibility of
modifying them, without authorizing them, of course, to do so to the obvious
detriment of the user or for that purpose. But it will be by ensuring that the latter
does not occur and not preventing "per se" the unilateral change of the contract,
that a balance can be maintained between consumer protection and the reality of
the massive provision of services.
71. Colombia. Art. 1,501, C. c.
72. Colombia establishes that "a void contract may produce the effects of a
different contract, of which it contains the essential and formal requirements, if
considering the purpose pursued by the parties, it must be assumed that they, had
they known of the nullity, would have wanted to enter into another contract", art.
904 C. Co. Consult with advantage ARRUBLA PAUCAR, Jaime. Commercial
Contracts". T. 1, 6". Ed. DIKÉ Legal Library, Bogotá. 1994; TRUJILLO
CALLE, Bernardo. Of Titles-Securities. T. I General Part. Ed. LETER. 1999.
73.V. supra, Chap. 1, 2.1.4.
74. Colombia. Arts, 1519 and 1522 C. c.
75. OSPINA FERNÁNDEZ, Guillermo. OSPINA ACOSTA, Eduardo. "General
Theory of Contract and other legal acts or businesses." Ed. Themis. Bogota.
1994,
p. 244. Among the acts or contracts especially designated as having an illicit
object, due to a special prohibition in Colombia, these authors cite those contrary
to Public Law; the alienation of things that are outside of commerce; the
alienation of very personal rights; the alienation of things seized by judicial
decree and the alienation of the disputed species.
76. Colombia. Art. 1524 e. and.
77. Colombia. Art. 1760 e. and. v. Supra 5.2.1.5.
78. Colombia. Arts. 26 et seq. and. ea.
79. HINESTROSA FORERO, Fernando. "Effectiveness and ineffectiveness of
the Legal Business." Colombian Commercial Law Magazine. Medellín Chamber
of Commerce. 1985.
80. Colombia. Arl. 897 C. Co. The provision according to which "when ... it is
expressed that an act does not produce effects, it will be understood that it is
ineffective as a matter of law, without the need for a judicial declaration" has
been the object of multiple and severe criticism since it leads to recognizing a
figure confusing, lacking precision. v. DE LA CALLE, Humberto. "The
inoperability of the legal business." Ed. Themis. Bogotá, 1990.- ARRUBLA
PAUCAR, Jaime Alberto, Op. cyl. OSPINA ACOSTA, Eduardo. "The
inefficiency of legal businesses." Thesis. Pontifical Javeriana University. Bogota.
HINESTROSA FORERO, Fernando. Op. cyl.
81. Colombia. Arl. 133, L. 446/98 provided that "the Banking, Companies or
Securities Superintendencies may ex officio recognize the assumptions of
inefficiency provided for in the Second Book of the Commercial Code." This
norm was declared adjusted to the Charter by H. Constitutional Court in Sentence
C-1641 of 2000. M. Speaker Alejandro Martínez Caballero.
82 Colombia, establishes that "the legal transaction will be non-existent when it
has been concluded without the substantial solemnities that the law requires for
its formation, due to the act or contract and when any of its essential elements are
missing", art. 898 C. Co.
83. Colombia establishes that "the legal transaction will be absolutely void in the
following cases: 1. When it contradicts a mandatory norm, unless the law
provides otherwise; 2. When it has an illicit cause or object, and 3. When it has
been held by a person who is absolutely incapable" (art. 899 C. Lame
84. Mexico. This is what happens in Article 1815 of the Civil Code for the
District and Federal Territories: "Deceit in contracts is understood to be any
suggestion or artifice that is used to mislead or keep any of the contracting parties
in error; and bad faith. , the concealment of the error of one of the contracting
parties, once known",
85. Colombia establishes that: "the legal transaction entered into by a relatively
incapable person and one that has been consented to by error, force or fraud will
be voidable, in accordance with the Civil Code.
This action may only be exercised by the person in whose favor it has been
established or by his heirs, and will expire within a period of two years, counted
from the date of the respective legal transaction. When the nullity comes from a
legal incapacity, the biennium will be counted from the day on which this has
ceased", art. 900, C. Co.
5.4. CLASSIFICATION OF CONTRACTS 86
Just as we saw a classification of obligations, it is beneficial to analyze, even

briefly, the classification of contracts, especially because it will have to be
brought into account frequently when studying those that are the object of our
work.
5.4.1. Unilateral and bilateral
First of all, it is necessary to distinguish, to avoid confusion, between unilateral

and bilateral contracts and unilateral and bilateral legal acts.
The unilateral legal act is one that is formed by the expression or manifestation of
a single will, while the bilateral legal act implies the concurrence of two or more
wills. From this point of view and by definition, all contracts are bilateral legal
acts. Now, when it arises from the concurrence of two or more wills, it may
happen that the contract produces obligations for both contracting parties, in
which case it is classified as bilateral or that obligations arise only for one of
them, a hypothesis in which it is known as unilateral contract. A typical example
of a bilateral contract is the sale, where the buyer acquires the obligation to pay
the price and the seller, for his part, undertakes the obligation to deliver the good
that is the object of the deal. As a typical unilateral contract, the civil deposit can
be pointed out, characterized in that after its birth only obligations arise in charge
of the depositary, consisting of preserving the thing, safekeeping it and returning
it in a timely manner to the depositor. An important principle, in the case of
bilateral contracts, is that, by virtue of the interdependence of reciprocal
obligations, neither party is obliged to comply while the other does not do so or
agrees to comply with its obligation.
5.4.2. Free and expensive
The contract is said to be gratuitous when it only produces profit for one of the
parties and, as a consequence, the other must bear the corresponding burden. On
the other hand, we will be faced with an onerous contract when there is a benefit
for both contracting parties, so that each one is obligated for the benefit of the
other. Although there could be confusion between this classification and the
previous one and if, in practice, there tends to be a parallel between unilateral and
gratuitous, on the one hand, and bilateral and onerous, on the other, it can be
stated that, while every bilateral contract is onerous, not every unilateral contract
is free. In fact, to demonstrate the assertion, the example of a mutual agreement
with interest can be brought to mind, where we are faced with a unilateral
contract, since only obligations arising from it arise from the borrower,
consisting of paying the interest and returning the mutual sum; However, it is
evident that the contract is not free since both parties report a correlative benefit
from it: the lender profits from the interest and the borrower from the use of the
money that enters his assets and remains there for a certain time. .
5.4.3. Commutative and random
In truth, this classification is derived from the previous one, since both
commutative and random contracts are onerous contracts. Its difference is that in
the former the parties can appreciate from the first moment the advantages and
burdens that they acquire or support, while in the latter there is no expected or
predetermined balance, but rather the position of one or both parties depends on
the alloy. or luck. An example of a commutative contract could also be a sale,
where the buyer considers that the price paid is a fair sacrifice in exchange for
the good that enters his estate, while the seller assumes, in turn, the same thing.87
This does not happen with random contracts in which, as happens in insurance;
Whoever has covered his establishment against the risk of fire does not know if
the payment of the premiums will be effectively reimbursed one day, that is, if
the incident will occur or not and, if it does occur, how much he will have paid in
premiums and what the proportion between their total amount and the value that
will be recognized. And it can be said that the risk runs especially for one of the
parties, because, for example, in insurance, the insurance company, through the
application of the laws of large numbers, knows that if in a certain number of
cases it goes to occur and, consequently, will be obliged to pay, the global value
of the premiums received from the universe of clients that are covered against the
same risk, must be sufficient to meet said payments and still leave a profit
margin. Another typical example is constituted by gambling, that is, by the
expectation that arises for someone who buys a lottery ticket, for example, where
he knows that his chances are remote, but he gladly pays its price in exchange for
the hope of being the winner. award winner. 88
5.4.4. Main and accessories
This classification deals more with the obligations derived from contracts than
with the contracts themselves, since, once the requirements provided by law are
met, every contract has an existence by itself and does not depend, at a given
moment, on a different contract. What happens is that the obligations arising
from one contract may be accessory in relation to those arising from another
contract and, in this sense, they follow the fate of those corresponding to the so-
called main contract. This happens with the mutual contract that is accompanied
by a personal guarantee or bond, given by a third party. Qualified, in their order,
as principal and accessory, it is intended to suggest in this way that the
obligations of the guarantor are conditioned to the compliance or non-compliance
of the main debtor, so that if he pays, the obligation of the second that is
accessory is automatically extinguished, in this sense.
5.4.5. Instantaneous and "successive tract"
This classification suggests the double possibility of contracts, according to

which, in some the derived obligations can be satisfied in a single act, that is,
instantly, without duplication, while in others the nature of the obligations
imposes the assumption of loads whose realization or concretion occurs during a
more or less long period of time. An example of an instantaneous execution
contract is provided by the daily banking operation, the purchase and sale of
currencies, where both parties satisfy their obligations simultaneously and
definitively. On the other hand, we find numerous examples of successive
contracts, such as the leasing or provision of the safe deposit box service, in
which, by definition, the client will use them during the period of time provided
for by the contract. and, in turn, the bank will receive periodic sums as
remuneration for the use of the service. The same thing would happen, from the
point of view of classification, with the bank current account or checking account
deposit contract, in which the obligation to receive and pay acquired by the bank
is projected in time, indefinitely by general rule.
5.4.6. Of colaboration
Contracts of this nature are characterized not only by their development over
time, which would allow them to be subsumed into successive contracts, but also
because in their full development they imply the positive and creative
cooperation of the intervening parties. The course supposes the existence of a
true relationship that is not enough with the
repetitive, but static, compliance with reciprocal obligations - as would occur
with a lease contract - but requires active participation without which the
purposes sought by the parties are difficult to obtain. A clear example would be
that of a partnership managed jointly by the partners and more precisely in our
field, a real estate guarantee trust, as we will see in due course.
5.4.7. Consensual and real
Consensual contracts are those that are perfected by the simple agreement of the
wills of the parties. This will is expressed without being subject to special
requirements or forms, as is surely the case in almost all countries, with the sale
and purchase of movable property. Once the parties have agreed on the thing and
the price, the contract is perfected and the obligations derived from it are
reciprocally enforceable by the interested parties.
However, there are contracts that are only perfected through the delivery of the
thing, so that, despite there being an agreement of wills on its content and scope,
the contract is not relevant from a legal point of view except as long as it is
produced. the delivery or tradition of the good that is the object of the agreement.
An example is found in the deposit contract that only arises as a result of said
delivery.
Two notes are worth making on this matter: firstly, that, as a general rule, real
contracts are unilateral and free of charge, especially if they are civil contracts,
which does not occur to the same magnitude or with the same frequency when
deals with commercial contracts and, secondly, that the contemporary trend,
more or less strong, advocates the transformation of real contracts into
consensual ones, even starting from commercial practice which, as we have seen,
constitutes an informative source of copyright law. enormous importance in this
field. In fact, it is observed that, for example, in the case of the mutual contract,
which is real in classical theory, what actually happens ordinarily in the relations
between client and banker is that, once both have agreed agreement, the banker
to grant the credit and the client to receive it, the bank feels morally obliged to
deliver the money. Hence, the transfer of the same would be a way for the credit
institution to comply with the obligation arising from the agreement. Of course, it
may be argued, on the part of the doctrine, that the example better suggests the
existence of a pre-contract or a promise to contract, but it is obvious that, in those
cases, if the client has no action to demand the delivery of the money, The
transformation of the contract into a consensual one would give it enormous
interest.
Banking Law provides an interesting option and offers a more appropriate
response, without a doubt, to future credit needs, through the credit opening
contract, which is not real and does not usually have the formal restrictions that
civil legislation enshrines. ordinarily, to give validity to contract promises.
5.4.8. Solemn or formal
In truth, we could have dealt with it in the previous point because solemn or
formal contracts arise, conceptually, as opposed to consensual contracts. Solemn
contracts are understood to be those that are not perfected except through the
observance or completion of certain formalities established by law. That is to say,
a simple agreement of wills is not enough but it is necessary that they be
expressed through the formal channels established by law. Such may occur when
the law requires, for the perfection of certain acts or contracts, that they be
submitted to a public deed, executed before an official authorized, by virtue of
his position, to publicly attest to the respective agreement.89
5.4.9. Typical and atypical
It is said that a contract is typical if it has been regulated and regulated by law in
such a way that it recognizes it, establishes its effects, modalities, etc. On the
other hand, atypical contracts are those that, arising from the free initiative of
individuals and in development of the principle of private autonomy, of such
force in the field of Commercial Law, are created by the parties without
corresponding to a typical figure, preestablished by law. It is obvious that the
typicality or atypicality of contracts will depend in each country on the
corresponding legislative regulation, however, it is interesting to note that in
Latin America and in numerous countries, at least for a long time, banking
contracts have been atypical contracts, that is, not specifically regulated by law,
but arising from the initiative of individuals, specifically, the credit institutions
that have developed them and in relation to which, precisely, their existence is
explained, following the interesting process of creation of Commercial Law that
is based on the direct recognition of the operational reality of merchants; The
legislations that have included them have not, in general, done anything different
from expressing through legislation what was already obligatory through custom,
that is, through practices repeated over a long time, in the same sense, among the
bankers and their clients in a given place.
Note, furthermore, that the doctrine usually classifies as nominated contracts that,
without being regulated, are, however, mentioned in the law.9O
5.4.10. Relative or individual and collective

This doctrinal classification is due not to the number of people involved, but to
the effects of the contract in relation to the participating parties or third parties.
Relative or individual contracts are understood to be those in which the effects
derived from their conclusion only bind those who participate in them or those
who are represented by the participants. On the other hand, collective contracts
are those that, concluded between some parties, obligatorily bind others who are
not present or represented, such as when, by way of legal fiction and given a
certain union or union ownership, the contracts entered into by those who have
the statutory powers, are They apply by force to all union members and even to
other non-union employees.
5.4.11. Accession and free discussion
Adhesion contracts arise as an exception to those that follow the general principle
according to which the concurrence of wills aimed at producing certain legal
effects between the parties, must allow a broad discussion and a careful analysis
of the terms, clauses and consequences of the agreement that is going to be
celebrated. However, this is not always the case and, in practice, there are
numerous cases in which individuals go to contract and find models or general
conditions pre-established by their contractor and in relation to which there is no
other action than accepted in advance. integrum or discard the contract.
It must be recognized that the demands of modern life and, especially, those of
the mass provision of services, almost necessarily impose the need for those who
offer the mass service to pre-elaborate a contractual model and thus submit it to
the consideration of their clients. Potential customers. Given the multiplicity of
relationships that are perfected or emerge every day, it would not be possible, in
practice, to discuss with each of the interested parties the different circumstances
or particularities that may correspond to a given contract. The same happens, for
example, with public services, whether they are provided directly by the State or
by individuals. In both cases, there are numerous occasions in which the State
intervenes to approve the models or general conditions established by the
respective company or entity.
From this point of view, then, it is an imperative of the time and a natural
consequence of the provision of a certain type of services. However, and to the
extent that state intervention has been less vigorous, jurisprudence tends to view
the existence of contracts by adhesion with some distrust, especially insofar as,
through pre-established clauses, positions of unjustified privilege are consecrated
for those who drafted the contract, which are inequitable for the person who
accepted it. There the judge fulfills a regulatory function where, almost judging
in equity, he tends to defend the party that is supposedly weaker, that is, the one
that had to be forced to submit to the model presented.
Consumer protection laws usually include mechanisms and provisions aimed at

avoiding the inclusion of abusive clauses, as we have mentioned and will see
later.91
5.5. INTERPRETATION OF CONTRACTS
The interpretation of contracts is aimed at unraveling exactly their content and

scope and, consequently, the obligations that arise from them. Since the contract
is law for the parties, some of the rules provided for the interpretation of the law
apply to its interpretation.
5.5.1. Criteria
It can be said that there are two criteria for the proper interpretation of contracts.
The first, in a logical order, consists of specifying the intention of the parties,
recognizing the driving force that the autonomy of private will plays in its
celebration. The other consists, given the impossibility of obtaining an
unequivocal conclusion from the first, in objectively analyzing the contract, to
seek its effects in light of extrinsic criteria.
5.5.2.
Rules of interpretation
We will see some that are commonly used to specify the meaning of contracts.
5.5.2.1.
Intention before literality
In the interpretation of contracts, before the literal expression of the formulas
used, it is necessary to investigate the intention or will of the parties so that, once
this is specified, it must be considered before the literal terms, if they seem
contradictory. .92
5.5.2.2.
Previous and subsequent conduct of the contracting parties
In the world of legal business and when it comes to expressions of will, the
contract cannot be considered an isolated and autonomous act, but rather it must
be integrated into the behavior of the parties, so that the conduct assumed prior to
the conclusion of the contract, that is, in the preliminary stage, as well as the
attitudes adopted later, the intention, content and effects of the contract can be
better known.
5.5.2.3. Good faith
We already spoke at the time about the principle of good faith. It is enough for us
to remember that the interpretation of contracts is based on the elementary basis
according to which agreements are concluded in good faith, that is, there is
mutual trust between the parties and the clauses that reflect their will must be
aimed at reaffirming this trust. , rather than betraying her or surprising the
position of one of the participants.
5.5.2.4.
Systematic interpretation
The analysis of the content of the contract must be based on a systematic
investigation
- matic, since it is not enough for the interpreter to stop at a specific clause, even
if it seems decisive and clear, but it is essential to interpret some clauses in
relation to others, in an integrated and global way, since the will is expressed by
the set of all of them. and not because of the peculiarity of just one of them.
5.5.2.5.
Positive interpretation
In case of doubt about the effect of a clause or the general nature of the contract,
given the possibility that no meaning is assigned to one or the other or the one in
which the contract produces some effect, this one should be preferred. That is, it
is based on the basic premise that contracts are concluded to produce effects and
not to fail to do so.
5.5.2.6.
Ambiguous clauses, due to the uses of the place
Given the impossibility of using other criteria or other rules, ambiguous clauses
must be interpreted according to the uses or customs of the place. This principle
is particularly important in the field of Commercial Law, for reasons that we
have explained several times.
5.5.2.7. Sense that best suits nature and object
of the contract
Given the possible presence of a plurality of meanings, the one that best suits the
nature and purpose of the legal transaction concluded must be chosen, as long as
the conclusion of a certain contract and not another is unequivocal.
5.5.2.8.
Favorability of the clauses for those who did not impose them
In case of doubt and when in a contract one or some of the clauses have been
imposed by one of the parties, these will be interpreted in the sense that most
favors the other contracting party. This principle also has outstanding importance
in the study of our subject because, with banking contracts being concluded, for
the most part, through general clauses or contracts called adhesion,
Yo
~- --
GENERAL PRINCIPLES 119
There is no doubt that the financial institution imposes, in a certain way, the
clauses on its clients. Therefore, in case of doubt, the application of this principle
will lead to them being interpreted in a manner favorable to the institution's
client. This is the general trend, in any case, in consumer protection laws.
5.6.
TERMINATION OF CONTRACTS
Contracts ordinarily terminate by their fulfillment or the realization of their
purposes or by the extinction of the obligations that arise from them, for any of
the extinguishing causes that we had the opportunity to analyze.93 Among them
the voluntary manifestation, since they are terminated unilaterally, when this is
possible or that the parties agree to resolve them.
But, in addition, by judicial decision that puts an end to the contract, in the event,
for example, that its non-existence is declared and as soon as this figure is
recognized as such by a given legal system or its nullity is declared or, finally, it
is present different circumstances such as those derived from the non-compliance
of one of the parties that gives rise to the demand for resolution by the other. In
relation to these judicial decisions, the doctrine distinguishes some hypotheses,
namely:
- Termination. To qualify with it the nullity referring to an objective defect, as
would happen in the case of the enormous objective injury or in the case of
redhibitory defects of the thing sold.94
- Resolution. From the judicial point of view, characterized by referring to
contracts of immediate execution where it is possible to return things to the state
prior to their conclusion, and
- Reciliation. With which the same resolution is intended to be expressed but in
the case of successive contracts, where the effects of the termination of the
contract only occur in the future, without it being possible, as in the previous one,
to return things to their original state. .
-------------------------------------------------------------------------------
86. On the matter, consult Guillermo OSPINA FERNÁNDEZ. "Civil Law-
Obligations". Ed. Univ. Javeriana, 1963, pp. 25-37 AND Ricardo TREVIÑO
GARCíA. "Basic principles regarding contracts." Ed. Institute of Technology and
Higher Studies of Monterrey, 1972, N" 5.
87. Colombia establishes that "when the performance of one of the parties is
ridiculous, there will be no commutative contract", article 872, C. of Co.
88. The stock market presents interesting examples of contracts in relation to
which the debate arises as to whether they are commutative or random
transactions. The most representative ones appear in the field of so-called
"products. derivatives". Two examples illustrate this. Firstly, the so-called future
contracts or "forwards" by virtue of which and, lastly, a sale is made at a certain
price to be fulfilled at a future date, so the parties are obliged to deliver the thing
and pay the price, as in any sale. And those known as options - which are sold on
the stock exchanges - and which grant the power to whoever receives them to
buy (call) or sell (put) certain assets at a predetermined price. In them, the grantor
is obliged to sell or buy on the scheduled date or within a period if the "acquirer"
of the option exercises it. The fact that there is a high level of risk, in an
inherently speculative market, has led a sector of the doctrine to maintain that
they must be considered random. CALVO, Alfonso and FERNÁNDEZ DE LA
GANDARA, Luis. "International Contracts". Ed. Tecnos, Madrid, 1997.But it is
not a peaceful position. It is also maintained that they are commutative "because
although there is a certain non-substantial randomness, there is also a pecuniary
interest perfectly determined from the beginning." MORLES, Alfredo. "Financial
Instruments and Intermediation Markets." Ed. Andres Bello Catholic University.
Caracas. 2000.
89. The trend in commercial matters is increasingly broad. Colombia, for
example, establishes that "merchants may express their willingness to contract or
be bound verbally, in writing or by any unequivocal means." It adds, however,
that "when a legal norm requires a certain solemnity, as an essential requirement
of the legal transaction, it will not be formed until such solemnity is completed,"
art. 824, C. of Co.
90. Colombia. Such would be the case of the discount contract in article 1407 of
the C. Co.
91.V. Infra, Chap. 111, 1.2.4.
92. Colombia. The interpretation of the law follows a contrary logic. In effect, it
is established that "when the meaning of the law is clear, its literal tenor will not
be ignored under the pretext of consulting its spirit" (art. 27. c. cj
93.V. Chap. 1, 4.5 Supra.
94.V. 5.3.2.3 Supra.
Chapter II
BANKING LAW
1. GENERAL FRAMEWORK
1.1. BACKGROUND
To study Banking Law is to recognize, above all, the existence of entities

called banks, in relation to which the authors bring us detailed and precise
accounts of their evolution and historical background.! Its value not only lies in
the simple verification of some facts and statements, but in the recognition of
some cardinal antecedents whose importance is undeniable for the study of the
different contracts and contemporary banking institutions, as well as the titles and
instruments used in this activity. more frequently.
The antecedents date back to the most remote times. Historical research, mainly
supported by archaeology, has made it possible to verify examples of operations
that today can be considered banking and that were practiced since very ancient
times. For example, it is stated that in the Red Temple of Uruk, in Mesopotamia,
there are traces that allow us to conclude that the priests received gifts and
offerings and lent some to slaves and prisoners. Likewise, the so-called Code of
Hammurabi in Babylon is cited as a very notable precedent, from which it is
inferred that the commercial activities carried out by priests and laymen and,
even more so, those that we could call banking, had acquired such importance
that they deserved a detailed and, Extensive regulations.
In Greece, in an economy where currency already played a very important role,

the work of the "trapezites", properly speaking, moneylenders, and the
"colubites", money changers, were known and regulated, whose activities
flourished in Athens. Among them, it is worth highlighting, as antecedents of
maritime insurance, the bulk loan operations, consisting of the banker giving the
borrower a sum that the latter would only return if the goods arrived safely at
port.
In Rome, although historians seem to agree that in a first stage its real estate and
formal organization gave little room to commercial regulations, the truth is that,
at least from the contacts with Greece and the development of relations with
other peoples, the numularii, money changers, and the argentarii, properly
speaking, bankers, appeared. Like their Greek counterparts, the Romans
developed a whole series of banking operations, collections and payments on
behalf of their clients, settlement of inheritances through the auction system,
delivery of money at interest, witnessing contracts, receiving deposits, etc. To
which can be added the accounting system, whose evolution was particularly
notable.
Later, as a consequence of the barbarian invasions, there was a freeze in the
commercial movement among the peoples of the West, which, in addition, was
made difficult by the prohibitions of the Church by condemning as immoral the
loan at interest, which at the end decided many explained the notable
development of this typical banking operation among non-Christian peoples,
especially the Jews. However, the Crusades favored exchange and
communication and imposed on those who traveled in them the need to transport
money and send it to their places of origin, leading to a flourishing of
commercial and, therefore, banking activity. For example, the Templars,
gentlemen bankers, are recognized as having a very important function because,
supported by their military forces, they were in a position to guarantee not only
the transportation of monetary species, but also their very conservation, by
receiving them in deposit. Among their activities was the rental of safes to their
clients, to whom they gave a key identical to theirs, an unquestionable antecedent
of the modern safe deposit box service.
An important role is also given to the goldsmiths, who, working with precious
metals and faced with the risks posed by banditry and the general greed that they
aroused, had to use peculiar protection and security systems. In this way, in
addition to their main activity, they were able to offer, to those who lacked
identical security measures, those derived from their own systems, receiving their
precious species in custody, in exchange for which they issued a certificate in
which their receipt was recorded. , its possession gave rise to the fact that, on
occasions, the holder of the deposit, instead of directly claiming the goods for
subsequent transfers, transferred the document to a third party so that he could
proceed, either to demand the delivery of the goods, now to negotiate the title, in
turn, with another person.
But at the same time, and in an empirical way, it was confirmed that in this way
the goods and coins delivered into custody remained indefinitely and in an
appreciable volume in the hands of the depositories, from where, first in a
reprehensible manner, but later legitimized by their repetition , the goldsmiths
began to transfer goods or grant credit based on the deposits in their possession.
All this allowed the use, by the holders, of the certificates as an instrument of
exchange, and by the depositors, of the goods received as a basis for granting
credit.
Continuing the historical process in leaps, let us mention how the development of
medieval fairs stimulated the activity of money changers due, in large part, to the
diversity of coins and the need to reduce the risks of their transfer. At the end of
the 14th century and the beginning of the 15th century, various financial
organizations appeared, from the "Montes" to finance the municipalities, to banks
such as the "Casa di San Giorgio", in Genoa.
With the discovery of the new World, the opening of large markets and the
weakening of the ecclesiastical restriction on the collection of interest for loan
operations, banking acquired a special personality and was configured with its
modern characteristics, among which stands out the presence of the banknote as a
monetary form, no longer linked to the existence of certain goods in deposit, nor
issued to a particular beneficiary, but issued to the bearer, transferable by simple
delivery and with the primary function of an exchange instrument. Contemporary
banking is characterized by being integrated into a system that, as we will see, is
usually headed by a central bank and is governed by particularly strict
regulations.
But all of the above, which can be consulted with advantage in numerous
authors, is secondary to the general principle that we would like to point out in a
prominent way to logically explain the existence of banking as a concept and,
especially, of contemporary banking. To do this we have to return a
little and specify some nations linked to the history of currency, which we
already mentioned quickly when talking about Commercial Law. 2
The validity of the so-called principle "of the division of labor" produced the
change and with it the circulation and distribution of wealth. At first, this change
was carried out by the simple system of barter, that is, by the physical exchange
of some things for others, with the innumerable inconveniences that this
produced. Think, for example, of the lack of coincidence between reciprocal
needs, the inequality between the quantities available to exchange and the lack of
existence, among others, of a relationship criterion that would allow evaluating
the appreciation or patrimonial content that each party attributed to it. to the
goods available to be exchanged.
This gave rise to the need to establish a measure to which things could be
referred to in order to appreciate their value. But in this trend it was necessary to
look for a universal and representative form, that is, acceptable to everyone and
with evident patrimonial content, which would allow barter to be decomposed
into two opposite and complementary operations, in relation to a standard or
measure of value that would serve as an intermediary. in the changes.
Different societies knew different forms of currency. Historians mention, among

others, skins, slaves, livestock, fabrics, wood, etc. Given then in any of these
organizations a measure of value, it was possible that those who had initially had
to opt for simple barter could estimate their respective assets in a value,
expressed in the third element, in order to specify the quantum of the obligation. ,
satisfy the balances that will result in favor of one of the parties, due to their
goods having a higher price than the other, etc.
However, the inconveniences that arose from the possibility of destruction,

conservation costs, transportation difficulties, the impossibility of fractioning, the
lack of rarity, the variability in the price, etc. are not escaped. All deficiencies
that allow us to logically deduce and explain the need to look for a currency that
would meet a minimum of requirements and overcome the previous drawbacks.
This is why, in contrast to what has been seen, the currency, in its most universal
form, found its most acceptable manifestation when it met the characteristics of
being easily transportable, indestructible, divisible, without losing its value as
such, homogeneous, stable in its price and, as far as possible, of low weight and
volume, to facilitate its circulation. Thus arose the concept of metallic currency,
made of precious metals and in general demand, such as bronze, lead, tin,
platinum, gold or silver, among others. All with some difficulties derived from
the variability in their value but in general, capable of providing acceptable
representative species and with the characteristics that we have just mentioned.
Furthermore, metallic currency is distinguished - which must be emphasized - for

having an intrinsic value, that is, appreciable in itself, since any of the precious
metals used had and has industrial and commercial applications that give it, for
alone, a specific heritage significance.
However, the development of commercial operations showed that, although

metallic currency had undoubted advantages, it still faced serious limitations,
especially due to the difficulties of transportation, when large operations were
involved and there was, consequently, the need to use a significant volume of
monetary species. The so-called paper currency then emerged, a title
representative of value, no longer because it was attributed a concrete and
intrinsic valuation, but because it was based on an abstract valuation, resulting
from the support provided by the issuing entity. Now, if the first cause of the
issuance of paper money was the usefulness and need of a substitute for metallic
currency due to its lack of abundance or its transportation difficulties, the truth is
that a second very important cause and origin of The main disorders in its use
arose from the need to provide extraordinary resources, particularly by States,
when emergency situations, such as wars, forced them to have a greater amount
of currency to acquire extraordinary goods and services. required by the
anomalous circumstances of the conflicts. And we say that this has been one of
the main causes of disorder, since the States, abandoning the prudential and
security measures required by the creation of a paper without any intrinsic
patrimonial content, on numerous occasions issued exorbitant amounts of
monetary species without specific support, which produced, by definition, its
debasement and explains why in contemporary systems the issuance of currency
is not only maintained as a practically universal state monopoly, but is subject to
rigid principles of support that guarantee individuals the solidity of it.
From the above arises the concept of a monetary system in which legal
provisions regulate the manufacture and circulation of currency and usually refer
to a standard, currency itself or precious metal, which serves as a comparison to
the others and as the basis for the system. The best known today, despite the
vicissitudes it has gone through at different times, is the gold standard, which in a
simple way expresses the relationship between the currency of each country and
the amount of gold that is in the hands of the entity. issuer and which serves as
support for the issuance of the tickets. For a long time, the existence of this
monetary standard was coupled with that of the "convertibility of the currency",
understood as such the possibility that individuals enjoyed of exchanging their
paper money for the equivalent amount of precious metal that backed it.
Nowadays it can be said that convertibility is practically abandoned in all
countries.3 Perhaps it is convenient to add the existence, however, of a principle
that remains valid and is that of the "liberating power of currency", at least within
the spatial limits of each State's law enforcement; principle according to which
the law grants certain monetary species the virtue of being imposed by debtors on
creditors as payment, so that with their delivery the obligation contracted is
validly satisfied.
All of the above, despite being synthetic and disorderly, from the point of view of
the history of currency and banking, has been said to support the cardinal
principle that a conception of banking, a conceptual explanation of its reason of
being and its vocation to permanence, is found above all in recognizing that the
world, for a long time, has revolved around a monetized system and that said
system could not subsist with sufficient efficiency, without the presence of the
bank as administrator of the monetary resources and, of course, the beneficiary of
their employment. If one wanted to express the same idea in another way, one
would say that it must be recognized that banking has existed and subsists
because it performed what we could call primary functions with respect to
currency, that is, its creation, transfer, exchange and custody and that, only From
that first relationship with the monetized organization, operations arose and were
developed that today we classify as banking which, ultimately, in relation to the
most important ones, are nothing different from the administration and use of that
currency.
To such functions could be added its creation, no longer physical, that is, by
minting metallic currency or printing and issuing paper currency, but through the
mechanics of "secondary creation", based on the availability to lend that the
deposits leave. made by their clientele. To the previous list we must add the so-
called "plastic currency" - in a figurative sense since it is hardly a substitute - by
virtue of which it is possible for users, using credit or debit cards, to make cash,
carry out banking operations and satisfy obligations. monetary funds at their own
expense, regardless of metallic coins, bills or checks. For this reason, it can be
stated that banking activity is universal, in the sense that whatever the political
system adopted in a State, always and by definition, as long as the economic
organization is based on a monetized scheme, banking will necessarily exist. and
carry out its own operations.
1.2.
NOTION OF BANKING LAW
Returning to the central theme of this chapter, once a first approximation has
been made to the notion of a bank as administrator and user of monetary species,
it is necessary to analyze what Banking Law consists of, what is the content of
the expression and what matters it regulates.
First of all, note that, at least in the opinion of the majority of authors, Banking
Law cannot be considered as an autonomous part of Law, in the sense that its
principles are so peculiar and exceptional compared to other branches, that it can
considered scientifically as independent. Because under the heading of Banking
Law, a whole set of rules is studied that touch on various branches of Law and
that are simply grouped together, from an academic or didactic point of view, to
analyze and study banking entities, the activities they carry out, the contracts they
enter into and the relationships with regulatory entities and control systems. In
other words, the first difficulty is that Banking Law not only refers to activities
that must be regulated by Private Law, but also contemplates a whole series of
aspects that in most countries are regulated by Public Law rules. , which in itself
implies a fundamental discrepancy in the formulation of the principles and, as a
consequence, in the determination of the conclusions. It is appropriate, therefore,
that we pause a little on this matter.
1.2.1.
Public Banking Law
If we have said that, in general, Private Law has recently supported a
phenomenon of "publication" of its norms and that Commercial Law is by no
means strange to it, it must be stated that this legislative trend is particularly felt.
in the field of Banking Law. If they wanted

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By pointing out the two extremes of the process, it could be said that banking
activity has gone from being a simple private activity, subject to the free
initiative of individuals, to becoming a function of the State or, in any case,
jealously intervened and regulated. Although in some countries the banking
service has been nationalized so that it can only be provided by the State through
organizations created by it or in which it participates, since through
administrative concession individuals are allowed to develop in temporary form
said activity, or that the principle that banking is a purely commercial activity is
maintained in a given country, its exercise is subject to the strictest regulations,
both for the birth of legal entities whose objective is the development of banking
activities, as well as for carrying them out, to the extent that they must be subject
to the parameters, instructions and restrictions that are usually imposed by either
the common legislator or a specialized body, with powers that allow it to dictate
laws in a material sense. and sometimes even one and the other.4
This trend or realization in almost all countries is, in general, due to the
concurrence of two conceptual causes. Taking into account the importance of
banking services, their massive provision and the obvious need with which they
are demanded by individuals, many legislations and even Fundamental Charters
have considered that the banking service is a public service, one of those that
obey the general need of the community that must necessarily be satisfied and
whose use cannot be dispensed with. So, even in cases in which the legislation
recognizes that it is a private activity, this would only lead, for those who accept
this thesis, to it being a public service provided by individuals. In this way, as a
public service and for that reason alone, it is usually susceptible to rigid state
intervention aimed at ordering, regulating its rates, imposing the conditions under
which it must be provided, etc.
But even if it is not accepted that the public service theory has been decisive in
explaining this evolution, it is clear that the role that banks play in the economy
largely justifies it. In effect, we affirm that banks create currency in the sense
that, through bank deposits made through checks and through the mechanics of
loans paid into accounts, individuals and the community in general become
payment methods. additional, different from those created directly by the State
through issuance and that fully fulfill the same function in the economy, by
expanding people's consumption capacity. This is what we call "secondary
creation of the currency."
Furthermore, banks, through their main active operations, place resources in the
market, that is, they grant credit, which, considered as a social good, is essential
for the orderly development of the community's activities. Economic life cannot
be conceived today, even in its simplest stages, without the presence of credit
and, of course, everything that it says with its concession, its rates, its destination,
etc., interests the community, before the simple individuals considered as such.
Well, the principle of monetary sovereignty starts from a fundamental basis and
that is that the currency is the creation of the sovereign, that is, of the State and
that it not only says with its primary form but with the credit possibilities that are
derived from it, the validity of certain interest rates and the attention of certain
sectors with priority in relation to others. This sovereignty translates into the
possibility of regulating the monetary system and especially the banks that are
creators of currency, can only be so, to the extent that the State allows them to do
so and, in any case, within the limitations that it allows. impose. Add to the
above the Circumstance that, in addition to currency creators and credit
distributors, banks manage a significant volume of the community's savings,
which explains the need to guarantee it in the best way, taking into account its
profound social resonance.
The restrictions usually imposed on banking activities can be summarized as
follows:
1.2.1.1.
Prior authorization
you
Through the participation of the State in granting the essential permit so that
individuals can begin the provision of the corresponding services; authorization,
which can be simply regulated, in the sense that it is limited to verifying the
adequacy of the behavior of the interested parties to the legislative prescriptions,
but which can become discretionary and essential to the extent that the State
reserves the right to grant or not. the operating permit

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without their decision, let's call it capricious, being controversial, as we saw
when talking about companies. 5 All this, as long as it is not a nationalized bank,
that is, there is the possibility for individuals, even exceptionally, to directly
provide said service.6
1.2.1.2.
Permanent intervention
Regarding the most notable moments of social life, such as the appointment of
representatives, with the demand for possessions before a State agency; existence
of obligations such as those of providing periodic and detailed reports, possibility
of carrying out visits, etc. To all of the above we can add the state's power to
regulate the monetary system and to dictate, consequently, rules on the
constitution of reserves, certain relationships between its capital and its liabilities,
freezing part of the available sums allocating them to certain forced investments,
channeling of credit, etc., which we will see when commenting on the functions
of the central bank.
1.2.1.3. Imposition of sanctions
Faculty that can extend to the application of the most drastic ones, such as taking
possession of the establishment and to which we will return when talking about
the control entities.
1.2.2. Private Banking Law
Private Banking Law regulates the set of property relationships between the bank
and its clientele. More specifically, contracts concluded between
credit institutions and their clients, as a necessary background for carrying out
the operations of this activity. It is in this field that Banking Law is part of
Commercial Law and in this, that the subject matter of our study is framed. Even
though we note that in the opinion of the majority of authors, Banking Law is not
actually an autonomous law, nor, therefore, is Private Banking Law with respect
to Commercial Law, this does not mean that it does not have some very
prominent particular principles. , sometimes common with those of Commercial
Law, but, in others, special and peculiar, understandable in light of the technical-
economic framework in which banking operations are carried out.
Among the sources of Private Banking Law, custom must be highlighted, which
for years has constituted the basis of regulation between banking entities and
their clients, so that within the evolution in this matter, before legal provisions
typifying contracts, have entered into unnamed contracts whose main clauses, the
product of a decantation and result of professional activity, are included in the so-
called general contracting conditions or regulations of credit institutions.
1.3.
OBJECT
Once it has been specified that the concept of Banking Law covers norms of both
Public Law and Private Law and leaving out all the provisions that, linked to the
topic, regulate aspects, such as bank accounting, the supervision of banks, etc.,
We have that a systematic analysis of the matter would involve addressing at
least the following three aspects:
a) The banking system, including in this study all the entities that intervene in
relation to banking operations, not only those that carry them out but those that
regulate or control them. In this chapter we will do a general review of the point.
b) The operations of banking entities, using the expression in an extensive sense
that covers all financial intermediaries, through the technical-legal study of said
operations. Our work will be limited to the examination of the legal aspect, that
is, to the contracts that serve as a necessary background for carrying out the
operations and, exclusively, to the extent that these correspond to those of deposit
or short-term credit banks. term or, better now, commercial banks whose purpose
tends to be very broad. Which will not prevent, however, from making frequent
references.

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references to technical aspects, which would be impossible to do without in a
legal matter that is essentially informed by the technical development of
operations.?
c) The assets or the object of the operations, which in this matter would be
constituted, in summary, by money and securities. A complete study of the
former would have to start from a history of currency and translate into. an
economic-legal analysis of it, which unfortunately is beyond the scope of our
work. In relation to the latter, it would be necessary to investigate in detail,
through their most prominent representatives, the securities or commercial
papers, of which we will bring into account some principles, especially in
contracts, such as the current bank account, in where it will be necessary to
remember some fundamental notions about the check or the contract for issuing
bonds or obligations.
In relation to all of them, it is mandatory to consult the so-called uniform laws of
Geneva on bills of exchange and checks, as well as the Uniform Draft Law on
securities, prepared by the Mexican professor Raúl Cervantes Ahumada, at the
request of the Institute for the Integration of Latin America, INT AL, which,
collecting Latin American experiences and projects on the subject, constituted a
successful legal proposal in terms of integration by trying to reconcile the
different opposing points, not many in truth, if one notices that it is about
legislation inspired, in this matter, by European continental law.8
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1. See, among others, CERV ANTES AHUMADA, Raúl. ''Title and Credit
Operations". Ed. Herrero, Mexico, 1969; BARDELLA, Gianfranco. "Notes on
Banking Technique", 3rd ed., Ed. Studium SA Bookstore, Lima, 1975;
MURATTI, Natalio. "Elements of Banking Science and Technique." 4" ed., Ed.
The Ateneo, Buenos Aires, 1960; and VILLAMAríN, Hernán. "Evolution of
Banking Law". .Ed. Comptroller General of Boyacá, Tunja, 1972.
2.V. supra, Chap. 1, 1.3.
3. Some Latin American economies such as those of Argentina and Ecuador have
adopted the so-called "dollarization" that would allow local currency to be
converted into dollars at par - at least in theory - but, naturally, not into gold,
with respect to which the principle was preached in the past.
4. Colombia. The jurisprudence is not uniform, although there are
pronouncements from three high courts that would agree in maintaining that it is
a public service granted by the State to individuals. (Supreme Court of Justice,
June 12, 1969. M. Q. Hernán Toro Agudelo. Council of State. July 7, 1989. M.
Q. Consuelo Sarria Olcos. Constitutional Court T-443 of 1992 and T-735 of
1998). The latter expressed in another ruling, however, that rather than being a
public service it should be considered as being of public interest (T-099/97);
position reiterated, even by the Banking Superintendency. Concept 980022032.
Legal Address. T. 1 p. eleven).
5.V. supra, Chap. 1, 2.1.3.
6. MARTINEZ NEIRA, Néstor H. He warns that the pure concessional system is
a legacy of the Kemmerer Mission and prevails - or prevailed, at the date of the
work - in Chile, Ecuador, Guatemala and Paraguay. He adds that, based on the
most recent reforms, it has evolved towards a mixed system that requires an
initial authorization that leads to entities being born with a restricted legal
capacity and that they can only develop their object after paying the capital. and
other operational requirements have been met, obtain a new authorization to act.
(Op. cit. p. 228). Now, what is important and what has substantially changed in
the approach is that the initial authorization tends to cease to be discretionary and
become a regulated administrative act that is issued after objectively verifying
compliance with the minimum requirements established by law. This was the
case of Bolivia, Colombia, El Salvador, Peru and Uruguay.
7. Consult part of the topic in MARCUSE, Roberto Jacques. "International
Banking Operations". Felaban Library. 2" edition, 1983, Bogotá.
8. INTAL. "Draft Uniform Securities Law for Latin America." Ed. Intal, Buenos
Aires, 1967.
2. BANKING SYSTEM
2.1. NOTION
We understand the banking system, for the purposes of our study, as the
set of authorities, entities and institutions that set the rules, carry out and control
credit intermediation. These are, therefore, three levels with different functions,
closely related, each of them complex or at least in the possibility of being so, in
the sense of being made up of one or more authorities, or classes of entities or
institutions, whose set In truth, it makes up what could be called the banking or
financial system.
2.2. REGULATORY ENTITIES
The point aims to specify, in the simply academic field, where the regulatory
power in these matters comes from or where it lies and who exercises it. As in
other points and in this one in particular, we emphasize that this is a simply
conceptual position, to recognize part of the multiple differences or particularities
that the aspect has in each of the countries.
2.2.1. Regulatory power

We said back, when dealing with Public Banking Law, how the contemporary
trend, which implies strict regulation of banking operations, is based on the
principles of so-called monetary sovereignty, or the consideration of banking as a
public service, or in one and the other and translates into the direct provision of
the service by the State or through individuals, but through a state concession.
Exceptionally, the carrying out of activities privately, but always subject to strict
regulation and severe control. Let us limit ourselves, then, in this section, to
remembering how and where the regulatory powers in this matter can be
specifically assigned, as a static function, that is, defining the general framework,
or dynamic, that is, the permanent possibility of modifying the exercise of power.
activity whenever circumstances require it.9
The first legitimizing source of the state's regulatory capacity must and is usually
found in the National Constitution or in the Fundamental Charter of the
respective State, which defines whether it is a function of the State or if it is a
particular activity, but intervened, etc There must exist the principle that allows
supporting some of the theses presented as justifying the current trend or a
different one that leads to the same practical conclusion.
The second source, based on the provisions of the Constitution and within the
system of the pyramidal hierarchy of norms, is found in the ordinary legislator,
whether called Congress or Assembly since, by exception, 'the Executive is
empowered to fulfill its role in whole or in part. In this case, the regulation of
banking activity will be done through ordinary laws, if it is a function of the
State, or through intervention or exceptional laws; if another is the current
principle.
Finally, said regulation may result from standards dictated by a specialized
entity, authorized, of course, by law and whose provisions are aimed at fulfilling
said purpose or monetary management that, of course, definitively affects the
exercise and application of banking functions. This is the case, with regard to the
last hypothesis, of the powers assigned to the Central Bank or reserved to the
control body, called in some countries the Banking Superintendency or even
exercised directly by the Ministry of Finance, in other cases. . Some clarification
should be made about the concept of the latter and the functions that are usually
assigned to it. 10
2.2.2. Central Banking
2.2.2.1. Concept
Left for centuries to simple private initiative and the laws of the
market and later regulated by general laws, a banking activity and, more
properly, a financial system, that does not have a central bank as an organism at
its head, is not conceived. superior, regulator and coordinator of the activities and
functions of the other banks.
Of course, and since the notion of the Central Bank was imposed, there are
various functions that have been entrusted to it and that reflect, if they are well
adapted, a response to the different circumstances of the national and
international economic world. In the latter, monetary management systems are
based on the existence in each country of a Central Bank authorized to comply
with agreements, develop policies and maintain the decision lines agreed upon
internationally. 11
Within the broad concept of Central Banking, two groups of functions can be
distinguished relatively clearly. One that says with the powers that have been
assigned to it when it plays the role of supreme monetary authority. The solution
is different in different countries, but it may consist of a direct exercise of these
powers by the board of directors of the institution or, in other cases, in the
breakdown of that board so that there is a specialized committee that acts. as a
monetary authority and that has the power to dictate the corresponding
regulations or, in short, that there is an authority independent of the Central Bank
that exercises these functions from a monetary point of view but that, in any case,
in practice, will be closely linked with that. The other aspect concerns the
different functions assigned to it, let alone as a monetary authority, but as a
Central Bank in the sense of being a bank of banks and a banker to the
Government. 12 Let's do a quick review of each one.
2.2.2.2. Dictate regulations on currency, credit, exchanges and foreign trade
a) Functions
These functions, which as we have just decided, may or may not be exercised
directly by a Central Bank, but which in any case correspond to the idea and
notion of central banking, are explained by the difficulty with which the law can
regulate changing and dynamic situations. , whose regulation must be adapted to
the new circumstances expeditiously, if not automatically, if an efficient result is
to be obtained. In other words, given the traditional mechanisms that must be
used to issue the law by the ordinary legislator, it is almost impossible for it to be
adjusted in the agile manner that the economic circumstances require, especially
because in these matters of currency, exchange or foreign trade, they usually
occur without prior notice and in the event of a delayed or inadequate reaction,
generally burdensome consequences for countries and banking systems must be
assumed.
The main functions in this aspect relate to matters of currency and credit and
within them can be listed, as an example, the establishment of credit quotas that
can be used by banks, the setting of interest rates, both for these operations as
well as for discount operations or the same active operations of the banks; the
indication of reserve requirements or reserves that banks must maintain with
respect to the liabilities acquired; the establishment of forced investments or the
obligation to place certain percentages of resources in certain types of loans that
correspond to the attention of priority sectors, in the opinion of the authorities;
the establishment of percentage relationships between capital and reserve and the
total liabilities that entities can incur; the establishment of ceilings or periodic
growth percentages for certain balance sheet items, etc. As can be seen, all these
provisions are eminently technical and their mobility must be axiomatic given the
impossibility of having stable economic conditions that guarantee their more or
less long permanence. It is also possible that the central bank has powers
assigned to foreign exchange and foreign trade, especially in countries where
there is no exchange freedom or it is restricted and, consequently, a whole series
of aspects need to be regulated, such as indebtedness. in foreign currency;
interest rates on international operations; the opportunities and deadlines for
reimbursement, the deposits that must be established to verify imports; the way
in which export products should be reimbursed; the accounting of international
reserves, etc.
b) Issue the currency
We have also said that currently, and almost without exception, the issuance of
currency is a function reserved exclusively to the State and generally assigned to
the Central Bank which, as a consequence, is the issuing bank.13 However, to
avoid the abuses of yesteryear and the imbalances produced by them, the law
establishes severe limitations on the efficient and only permissible cause for the
issuance of said monetary species, establishing that banknotes can only be issued
for the acquisition of gold, if this is the standard. currency of the country, or by
purchasing foreign currency; pointing out a set of conditions that guarantee the
independence of the Central Bank in relation to the Executive, specifically with
the Minister of Treasury or Finance, to prevent the latter, pressured by the needs
of his position, from being able to indiscriminately request resources from you;
and finally, ordering that the issue conform to the most serious postulates of
technique and seriousness, the only ones that can ensure the stability of the
currency and, therefore, that of the country.
c) Be a Bank of Banks
This expression means that the Central Bank ordinarily provides commercial
banks with almost all of the services that they, in turn, provide to their clients. It
can be a depositary of your resources, a lender and accountant, make transfers in
your name, make payments to third parties, maintain deposits in custody or
fiduciary orders, etc. But, in addition, it generally offers a very important service,
consisting of being a clearinghouse for interbank operations and, consequently,
liquidator of reciprocal accounts, especially those that derive from the remittance
made by one to another of checks to office. The mechanism is well known and
has consisted, in summary, in that the checks received by a certain bank in charge
of others, instead of being presented for payment directly to them, are sent to the
clearing house where an account is kept. of each of the banks with their peers.
There, in turn, the checks from the other banks have been received against the
bank in our example, in such a way that the accounting entries and the
corresponding compensations are produced so that only the final balance that
results in favor of this bank or against it, it is credited or debited from the
account. And so, of course, with all the others.
In this way, it not only operates with enormous agility, but with an efficient
economy of time and movements, which allows the balances of each of the
entities in the Central Bank to be quickly determined, as a result of the clearing
house transaction. The operation that, for example, has been carried out at night
or in various stages during the day, is reversed, so to speak, the next morning,
with the checks that have been returned by the banks issued due to defects such
as non-existence. of funds, etc., in which case the items resulting from the returns
are crossed again and the corresponding adjustments are made to the balances.
This traditional procedure has been replaced by the use of electronic clearing
houses that eliminate the physical sending of checks and replace it with the
periodic and reciprocal sending, electronically, of lists of checks by other banks,
so that the central bank establishes the resulting balances for the system based on
them. Although the procedure is not without risks and would mean, in its full
form, the circulatory truncation of checks, it has a series of obvious advantages
that we will see later. 14
d) Be a government banker and tax agent

Just as it provides services to commercial banks, it also does so with the
Government, in all the possibilities that we have contemplated, of which the most
important is to be its lender, in relation to typically banking operations. Now, to
reconcile this aspect with that of the issuance of currency, there are also rigid
provisions aimed at avoiding excessive indebtedness on the part of the
Government. To this end, a principle is usually applied, according to which the
sums lent to the Government must correspond or satisfy, exclusively, transitory
treasury needs, keeping a direct relationship with the current income of the State
and constituting only an advance in relation to income. which, having been
caused, have not yet been received by the treasury or by the corresponding entity.
Obviously, formal requirements are added regarding the use of debt documents,
which must be signed in the manner provided by law.
In addition, the Central Bank acts as the Government's fiscal agent, especially for
the placement of debt securities issued by it, which it sometimes guarantees and
serves fiduciarily, taking charge of their amortization, payment of interest, etc.
e) Be a depository of the reserves

A faculty that seems logical and explainable is that of conserving the country's
reserves, either in physical form, keeping them in its coffers, or by investing
them in third countries or in obligations issued by them, so that they produce an
adequate profitability. The management of reserves usually runs hand in hand
with the administration of the resources that each of the countries has in
international credit organizations, of which they must be partners according to
their statutes. Likewise, this function almost always includes the management of
payment and compensation agreements signed between the country in question
and other countries.
2.3. FINANCIAL INTERMEDIARIES
2.3.1. Notion and content
The expression financial intermediaries can be taken as a synonym for banking

intermediaries, if the expression bank is taken in a broad sense, or it can include
both banks and other different intermediaries, if the word banks is taken in a
restricted sense.
For the purposes of our work we can say that financial intermediaries are the
organizations or institutions in charge of capturing capital resources and
transferring them to the productive sectors of economic activity. We have already
said how, in our opinion and we will return to this point shortly, although the
study of banks and banking operations is usually based on the credit operations
that they carry out, that is, on their intermediary function as collectors and
allocators of resources. , we want to insist that they are nothing different from the
product of "a monetized economy that requires suitable agents to manage the
currency and that, consequently, as its administrators, and for that reason alone,
are in a position to carry out the operations of credit that derive from the greater
or lesser availability of the money in their possession.
A systematic and clear study of financial intermediaries, starting from banks,

would imply the use of an elementary method consisting of analyzing how each
of them participates in the raising and placement of resources and what typical
and proprietary instruments they use to carry out this intermediation.15
Saving fast, we cannot forget that at a global level the trend has been to move
towards the German commercial banking model, largely as a result of the erosion
of the deposit base, as savers have become more sophisticated and have chosen to
orient their flows towards more profitable investments. For this reason, banks
have found it necessary to provide all kinds of financial services, either through a
universal or multifunctional banking scheme, or through groups with the
presence of subsidiaries specialized in the provision of new services. The truth is
that currently, in addition to their traditional intermediary function, they operate
in the foreign exchange, securities, derivatives, insurance and other markets.
Such reality has forced legal systems to redefine the activity to subject those who
carry it out to their own legal regime and the administrative controls that derive
from it. 16
Furthermore, in a broad sense the study of financial intermediaries would

include, for example, life insurance companies which raise resources in the
market and place them through investment operations well defined by law, or
capitalization companies that some countries recognize as capitalization banks
and, even, the financial entities called in certain countries auxiliary credit, such
as stock exchanges, which although they are not intermediaries, in the sense that
capture and place resources directly, they are between the holders of titles and
those of capital. The same would happen with general warehouses which,
through the typical titles they issue, the certificate of deposit and the pledge
bond, become indirect promoters of credit and the mobilization of the assets
deposited in their warehouses.
We will immediately see a quick classification of the banks, that is, the financial
intermediaries that usually receive this name.
2.3.2. Bank classification
There are various criteria to classify banks, either by the operations they carry
out, by the economic-political content of their activity, or by the relationships
between their operations and a certain sector of economic activity. Ultimately,
the classifications, if you will, are a result of the different criteria. 17
For us, however, there is a fundamental aspect that allows one bank to be
technically distinguished from another and that is the peculiar position it adopts
as an intermediary and which translates into its own use, that is, normally
unrelated to others, of a typical instrument. of attracting or placing resources or
both. Criterion that is also valid to distinguish all financial intermediaries from
each other. Consequently, only to the extent that a different and particular
instrument is used can an individual rating of a bank with respect to the others be
justified, in our opinion. For this reason we find that there are classifications of
banks that obey this criterion, which we could call main, while others obey
secondary or accessory criteria in relation to it.
This distinction makes complete sense in financial systems in which the

specialization of banking is recognized, that is, diverse functions are assigned to
different credit intermediaries. However, it is of reduced importance in the
countries in which the commercial banking system has been adopted, in which,
with the banks provided with a type of general competition clause, they can carry
out practically all the activities of the banks. various banks in specialized
systems, with the only restrictions imposed by law. And even though the solution
is not universal in Latin America, because both systems coexist, the truth is that
international banking competition seems to be leading the notion of specialized
banking to a crisis, to the extent that the most aggressive financial entities They
would not have the restrictions inherent to this specialized banking model, as
such, totally inelastic in its purpose. If we add to this the obvious advantages,
from a marketing point of view, that allow customers to be offered a more
complete range of services through a single sales point and not, as is currently the
case, that customers They must go to the different specialized entities in an
obvious waste of time and cost, it can be easily understood why there is such
great pressure towards the adoption of multifunctional banking regimes.
The alternative is not without risks in countries with imperfect financial markets
and high concentration of share power, since it allows those who manage the
public's savings to invest in companies in the real sector of the economy, which
requires careful monitoring of the transparency of operations and the conflict of
interest regime.
Let us, however, initially look at some types of banks according to the above
criteria.
2.3.2.1. Commercial or warehouse
By commercial banks we must understand those financial intermediaries that

capture resources from the market, especially through bank deposits and that use
them, together with their own capital and reserves, to make loans, initially in the
short term, through credit contracts. mutual or discount. They thus serve the cash
or treasury needs of merchants and meet the resource requirements of individuals
for ordinary consumption expenses.
2.3.2.2. Financial or investment
They are banks, even if not called that in all countries, as they are also called
financial companies or corporations, which raise resources using deposits or
medium and long-term loans, as well as the issuance of bonds or obligations and
which place said resources , together with its own capital, in medium and long-
term operations that may consist not only of granting credit but also translate into
capital investments in certain companies. As can be seen, and unlike the previous
ones, they fulfill the function of providing credit to buy those assets of companies
whose high cost and slow amortization do not allow them to be financed with
short-term resources. It is, therefore, a credit preferentially for the industry, with
peculiar instruments of acquisition, issuance of obligations and placement,
investment in the capital of companies, both different from those used by
commercial banks.
2.3.2.3. Mortgages
Mortgage credit banks, highly developed in Latin America, are characterized by
raising their resources through the issuance of securities called covered bonds
and mortgage bonds, which we will have the opportunity to analyze when
studying the contract for the issuance of obligations and other securities; 18
generally backed by credits constituted in their favor. These banks place these
resources together with their capital and reserves in credit operations for housing
construction, almost without exception, and against the guarantee of a mortgage
constituted on the same asset built or purchased. They then serve a specific sector
of economic activity and seek to satisfy a primary need, particularly felt in Latin
America: to provide the population with adequate housing, with the warning that
there are very high percentages of it that lack it. They also usually have precise
instruments for collecting and allocating their resources. Likewise, commercial
banks may have mortgage sections that fulfill these functions, in some countries.
2.3.2.4. Saving
The banks or savings banks of this name collect the small savings of the
community through the deposit contract in a savings account, characterized by
the delivery of an evidentiary title, generally a savings book,19 or by the issuance
of bonds or stamps. saving. They allocate the resources raised either in
investments in particularly safe lines, more than profitable in most cases, or in
loans to the depositors themselves, both in the short, medium and long term, even
for the purchase of housing in certain systems, where There is the so-called
contractual savings.
2.3.2.5. Trustees
Trust banks or trust companies are those that obtain their resources from the
transfer of assets made to them by virtue of the execution of a commercial trust
or trust contract, characterized by the mandatory allocation of the same to a
specific purpose indicated by the trustor or constituent or who are limited to
carrying out the so-called trust assignments, most of them from the execution of a
commercial mandate contract. The placement of its resources is multiple and
very broad, because it obeys the fulfillment of the instructions received from its
clientele. When it comes to commercial trust contracts, although they act towards
third parties as owners of the resources they use, they maintain an obligatory
bond with their client that implies that, ultimately, they act on their own behalf
and for their benefit or that of the trustee. . They cannot receive deposits or raise
resources through other means, we repeat, other than what constitutes their
peculiar channel for obtaining resources. As in the case of mortgage banks, these
functions can also be carried out by another type of bank, duly authorized
according to the country's regulations.
As far as it is a function assigned to a bank, which is not obvious throughout

Latin America, capitalization banks use the so-called capitalization contract as a
fundraising instrument, a business that, as its name indicates, is aimed at
allowing the formation of capital through permanent and constant savings or
through the payment of a single sum, a truly exceptional modality. The resources
thus obtained are used by banks or capitalization companies to constitute
technical reserves intended to guarantee the repayment of capital, which, in turn,
are invested in liquid and safe assets. Likewise, they use the resources to make
loans to their clients, usually as a result of reimbursement or as an advance on the
amounts saved. The peculiar note in the reimbursement consists of the possibility
of so-called early reimbursements through raffles, so that the saver not only has
the certainty of being able to receive his capital, generally with an increase, at the
end of the program time, but also has the additional expectation of being able to
obtain in advance the sum whose capitalization has been undertaken, if he is
favored in a lottery.
Other classifications, which we could call secondary, not because they are less
important but because they do not correspond to the central criterion of
distinction that we mentioned, may be the following:
2.3.2.7. Domestic and foreign
Banks are classified in one way or another according to their domicile, which is
usually reflected in the integration of the capital by national or foreign
shareholders. As can be seen, in principle the circumstance of being one or the
other does not affect, from a technical point of view, the minimum operating
possibilities, in such a way that, if we are talking about commercial banks, they
will use the same deposit instruments and placement. Of course, it is necessary to
take into account that, due to internal policy factors and as long as this does not
violate a constitutional guarantee of equality, it is possible that foreign banks
may have some possibilities limited so that, for example, they cannot capture
domestic savings. or that they have to restrict the framework of their activities to
the execution of foreign trade operations or any other similar limitation. But we
repeat, this is already a problem of internal politics of each country or of
international agreements that gives the classification a peculiar significance that,
otherwise, it would not have.
2.3.2.8. Public and private
The classification that distinguishes between one bank and another with this
qualification is due to the fact that the bank is public and will be so whenever the
bank is nationalized or private, where there is the possibility that the capital used
in its formation, its management, etc. ., is in the hands of individuals. In
countries, and there are many, where both coexist, it is good to note that the
philosophical reason that justifies the existence of public banks seems to be to
direct their activities towards the promotion or attention of certain sectors that,
for
deserving particular protection from the State or not being susceptible to
effective service within the laws of the current market, are placed in the hands of
state agencies to serve them. However, it is not unusual to find public banks in
Latin America that openly compete with private banks in all their commercial
operations and in serving the same clientele.
In Colombia, a very peculiar situation arose after the so-called financial crisis of
1982, since nationalized banks coexisted with those that were called official
banks, in which there was a significant contribution of resources from the
Financial Institutions Guarantee Fund. It could be said that, while in the first
case, it was emergency measures that led to such a result, in the second it was a
slow process of economic support trying to help the banks move forward. He
finally led, given the magnitude of the credits, to the decision to convert them
into capital. In one case or another they were transformed into public law entities
with the purpose of subsequently reprivatising them. 20
2.3.2.9. Agricultural, livestock or mining credit
and other sectors could still be mentioned, because we have only wanted to
indicate with this classification that which derives from the specific sector served
by a specific bank, without the attention of the sector implying the use of
mechanisms different from those that their colleagues would use to attend to the
ordinary clientele. Of course, depending on the needs of one sector or another,
the credit will be for one term or another, different guarantees will be required,
but ultimately, and as a general rule, the mechanisms for obtaining and placing
will be the same.
A final note, which could have been the first, consists of reiterating that in most
countries the specific possibilities of banks are not limited to taking one of the
specific forms that we have mentioned, but sometimes, for example , commercial
banks are also authorized to collect savings through a specific section or carry
out trust operations or trust orders through a trust section or, even, authorized to
provide the mortgage credit service by opening and maintenance of a section for
this purpose. For this reason, we can study a countless number of contracts that
correspond to the multifaceted position that banks usually adopt in Latin America
and that, moving them away from a criterion of specific specialization, allows
them to act in different sectors or with different mechanisms.21
2.3.2.10. Cooperative Banks
In this case, the classification is due not so much to differences on the object that,
fundamentally, will be common to other banks, but to the circumstance that their
resource structure is built from cooperative or mutual associations, in which it is
assumed that the collective effort of the associates not only contributes to the
achievement of the funds received by the entity but, in turn, it is these associates
who in the first place, if not exclusively, have the right to receive credit or use the
different services that they can provide.
The elasticity with which they can strengthen capital on a daily basis with the
contributions of cooperative members constitutes an interesting advantage over
the more rigid systems that legislation usually enshrines for increasing the capital
of public limited companies.
2.4. CONTROL ENTITIES
Banks, to the extent that they must be established as companies and especially
capital companies, are subject to various controls. On the one hand, to the
internal ones, provided for by the law and the statutes, in an organization such as
the review or audit and, on the other hand, to the external ones that correspond to
the surveillance that the State usually exercises over companies. What we want to
highlight, however, as we have done on several occasions, is that banks are
generally subject to stricter controls and, in most cases, assigned to a specific
entity, whose task is precisely , in ensuring that they comply with the law. In
other words, just as there exists outside the common legislator and, as a general
rule, a monetary authority that dictates rules with legal content in a material
sense, that is, mandatory for banks, there is also a control entity whose primary
function is ensure that the activities of the banks fully comply with the higher-
order prescriptions that regulate their performance.
2.4.1. The international panorama
Within the "globalization" process and regarding the activities of supervisors and
control entities, it is necessary to highlight the work carried out by the "Basel
Committee", which owes its name to the city that is the headquarters of its
General Secretariat. Founded in 1975 by the so-called "Group of Ten", it
currently works in contact with practically all the banking supervisors in the
world and its recommendations constitute not only a mandatory source of
consultation for the study of the subject but have been translated into the
adoption of internal legislation that includes them. In this way, the tendency
towards internationalization, always recognized in Banking Law, is reflected in a
concrete way in matters of enormous importance for regulation.22
The work of the Committee in these twenty-five years has been extensive and has
focused fundamentally on two fields: on the one hand, investigating ways to
make supervision and control over international banks that operate, naturally, in
many countries more efficient, and on the other, formulating a whole series of
recommendations regarding "prudential regulation", which say as much about
adequate capital, asset qualification, credit quotas and risk dispersion, as about
operations with groups, participation in different countries, responsibility of
directors, internal control and delegation mechanisms and, of course, knowledge
of clients and application of ethical principles in business management
There is no doubt about the progress that has been achieved in regulatory
uniformity and in collective reflection on the need to preserve and recover
orthodox banking management schemes. However, and without ignoring it, it
must be noted that his work is not exempt from criticism. In our opinion, your
approach has reinforced beyond all limits a tendency towards excess regulation,
the establishment of restrictions and the imposition of very large information
burdens, with enormous costs for the operation and with a perverse effect by
virtue of which we have said that we are transforming business bankers into
regulatory administrators. But with an aggravating factor, thinking that safer
systems are made with the simple expedient of overloading regulations. Nothing
could be further from reality and nothing more painfully distorted by the reality
of the financial crises in Southeast Asia at the end of the last century.23 In short,
it is clear that it is necessary to have good standards and effective supervisory
systems, but this can be completely insufficient when men fail or overheated
healing formulas are applied without taking into account new realities that do not
support them and for which they can be counterproductive.
Additionally, the way in which the weighting of risks has been recommended
does not seem appropriate, where with a clear bias from Central Bankers,
investment in papers of the State or its entities has been privileged, assigning
them zero risk compared to credit operations. which sends an inconvenient and
subliminal message to the banker for whom it would be safer and more
comfortable to stop intermediating. But this would naturally go against the
dynamic function that banks are called to play in an economy. Another
objectionable aspect relates to the way in which the importance of capital is
maximized, which places intermediate-sized banks, which are even the largest in
the region, in serious trouble. And of course, the capacity for local regulation is
lost by making the mistake of applying standards that were designed for
international banks to local or regional banks, without distinguishing their
characteristics or recognizing the environment and financial culture within which
they have emerged. But perhaps the most delicate thing is to allow such
interference by the supervisors in the activity that, in some way, they end up co-
managing the business.24
2.4.2. Principal functions
Among the functions that this body can carry out and that in some countries
could be assigned directly to the Central Bank itself or to the Secretariat or
Ministry of Treasury or Finance are the following:25
2.4.2.1. Participate in the birth
We have already said that a common characteristic in relation to banks is that

their birth depends on the discretionary or non-discretionary will of the State,
expressed through an organism that may be the control one and without which it
is impossible for the entity to be born. legal life.
2.4.2.2. Maintain the commercial registry
Companies, as merchants, regularly have among their obligations to register in

the commercial registry along with a certain number of acts and contracts that
derive from their current activities. One of the functions that this control entity
can fulfill, then, is to keep totally or partially the commercial registry, at least
from the subjective point of view, that is, from what concerns the birth of the
person itself. and with the existence of his legal representation about which,
when this happens, he is in a position to certify, that is, to give public faith about
both facts.26
2.4.2.3. Possess and qualify your directors
Function is the one that, linked to the previous one or rather as a support for it,
consists of qualifying the suitability of the people who can be part of the board of
directors of the institution or be its legal representatives and giving them
possession in a public act of which it takes record and which, for this reason,
allows you to certify or attest to the person of the legal representative, as well as
his or her powers.
2.4.2.4. Authorize the opening of branches
The opening of a new office by a bank involves a study of the market itself, the
possibilities of the establishment, the fulfillment of a series of requirements
regarding security, location, economic capacity, adequate relationship between
its immobilized assets and total assets, etc Compliance with these requirements
and, therefore, the authorization or refusal for the operation of the new office,
may also correspond to the control entity or be part of a general authorization that
only requires its intervention in exceptional circumstances.
2.4.2.5. Authorize the opening of bank sections
Banking laws usually require, when it comes to carrying out certain activities
other than those that naturally flow from its constitution, the obtaining of a
specific authorization. This can happen when a commercial bank wants to create
the trust section and provide the services that correspond to it. In this case and to
the extent, of course, that the legislation allows commercial banks to offer such
services, it is also up to the control bodies to issue the corresponding
authorization, in relation to which they also require compliance with certain
requirements, such as such as the constitution of certain guarantees, the
demonstration of sufficient economic solidity, etc.
2.4.2.6. Point out standards on accounting and operations
It may also correspond to the entity that we have been studying, the power to
issue and control the application of the set of accounting and technical standards
that are related to the activities of the banking entity and, even, to have to
approve the general regulations. to which the bank subjects its clientele.
In relation to the first aspect, the powers have traditionally been justified by
considering that they are technical, complex and changing aspects that require an
immediate response in the regulations. But the issue does not cease to raise
concerns, even of a constitutional nature, as long as a clear principle of
separation of powers remains in the Political Charter. Because, in effect, in this
way, the control entity dictates the norm (legislates), later ensures that it is
complied with (administers or executes), and, finally, if its transgression is
verified, sanctions Uuzga). This leads, as is obvious, to a complete concentration
of legislative, executive and judicial powers.27
2.4.2.7. BANKING LAW 153
Apply sanctions for non-compliance with the law

For the control function to be efficient, it is not enough that the entity is in a
position to set standards, request reports, make visits, etc., but that it is usually
empowered to impose sanctions resulting from improper application of the law
that may be both institutional, for example, imposition of fines, and personal, in
the event that the reprehensible conduct can also be attributed to certain
employees, in which case the control entity would be in a position to order the
removal of the respective official, in the worst of cases.
Of course, such power must be exercised subject to the higher provisions that
guarantee citizens their effective capacity for defense; Extreme caution must be
taken when referring to the transgression of provisions dictated by the same
supervisor. 28
2.4.2.8. Adopt sanitation measures
In order to best ensure the solid survival of the supervised entities and in events
that could compromise their viability, the law usually provides supervisors with
broad powers aimed at overcoming supervening difficulties.29
2.4.2.9. Take possession of an establishment
Upon the commission of a serious offense or the adoption of conduct in the

management of business that, despite strict surveillance and the preventive and
sanitation measures adopted, has led the guarded establishment to a situation in
which its economic stability and , therefore, the interests of its third-party
creditors, it can be conceived that the control entity takes possession of the
establishment either to manage it, if there are possibilities of economic recovery
or to proceed with its liquidation, which truly constitutes the highest sanction for
administrators and shareholders.3o And this is said despite understanding that,
philosophically, a decision of this magnitude is inspired by the protection of the
financial system and that of depositors and savers, so that they can obtain
payment of their debts. in a liquidation process.
2.4.2.10. Exercise jurisdictional functions
A contemporary trend has assigned administrative control bodies the possibility

of issuing decisions with the force of res judicata and, in general, of resolving
conflicts, that is, it has provided them with jurisdictional powers, in an
exceptional manner. Various arguments have been put forward to justify it,
among which the endemic burden of ordinary jurisdiction and, therefore, the
disturbing delay in the resolution of conflicts, the high technical level and the
complexity of the matters that usually generate conflicts between financial
entities and their clients and the individual "expertise" of the supervisor to
understand it, including the low amount of some claims that make it even more
unjustifiable to subject individuals to assuming costs suddenly greater than the
value of the amount in dispute.
The solution, however, must be viewed with caution, especially if it involves

conflicts in relation to which the supervisor has had the opportunity to intervene
in the ordinary exercise of his powers. This would occur with the explanations
requested from a financial institution, due to the complaint of one of its clients,
which, when unsatisfactory, have given rise, for example, to the imposition of a
fine. If the complaining client could subsequently go to the control entity to
request a jurisdictional decision, an obvious conflict of interest would be
generated for it, since its independence and impartiality would be compromised,
which are essential for a judge. 31
2.4.2.11. Perform consolidated supervision
One of the clearest concerns that have inspired the Basel work has been to be
able to effectively supervise international banks operating in different countries,
including those called "tax havens", for which there are, of necessity, different
levels and qualities of supervision. In this matter, significant progress has been
made not only due to the adoption of internal legislation that includes it but also
due to international agreements at the level of supervisors that pressure such a
decision.
But the issue is also an object of concern at the domestic level, particularly when
there are financial or mixed groups without adequate regulation, so that it is easy
for administrators to channel certain operations through the unsupervised entities
of the group or those subject to regulations. less severe control. Even in
exclusively financial conglomerates, it may happen that effective control is
obtained from one or more unsupervised holding companies, which is clearly
unacceptable.32
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9.V. In this regard MARTíNEZ, Néstor Humberto. Op. ciL pp. 184 And ff.
10. Colombia. Constitutional court. Sentence C-675/9B. M. Q. Antonio Barrera
Carbonell.
11. United Kingdom. As of December/01, what could be considered the most
powerful regulatory entity known has come into operation. In
Indeed, the Financial Services Authority (FSA) is an independent non-
governmental entity that regulates all areas related to financial and monetary
businesses, concentrating the powers that until then were assigned to nine
regulatory entities. The Act. 2000 of Marketing and Financial Services, by which
the FSA was born, gave this entity responsibility in the areas of regulation of
deposits, insurance, investment banking, fight against market abuse, stimulation
of public agreements of the financial system and reduction of financial crime.
Can be consulted with advantage URL: http://www.fsa.gov.uk
12. Colombia. The autonomy of the Bank of the Republic, as a central bank, has
Constitutional status, although its powers are enshrined in the law dictated by the
mandate of the same Charter and must be exercised in a harmonious manner with
those of other authorities, in order to seek together the achievement of the high
goals of the State that correspond to them. (Constitutional court. Sentences C-
021/94 M. Q. Antonio Barrera Carbonell and C-481/99, M. Q. Alejandro
Martínez Caballero).
13. A distinction has been made between minting currency, that is, "printing and
stamping a piece of metal... by means of a die or die" and issuing it, that is,
"producing and putting into circulation paper money..." ( Dictionary of the
Spanish Language, 22nd edition, 2001, pp. 41 and 883).
14.V. Infra, "Electronic Banking" Chap. 111, 3.12.1 and Chap. V, 4.1.2.
15. Ecuador. It indicates as private financial institutions banks, financial
companies or investment and development corporations, mutual savings and
credit associations for housing and savings and credit cooperatives, which carry
out financial intermediation with the public (Art. 2nd General Law of Institutions
of the Financial System. Codification RO/250 of January 23, 2001).
16. The Anglo-Saxon doctrine distinguishes between two criteria: the so-called
list approach, which consists of establishing a list of specific activities that, as
such, are usually exhaustive, and the so-called formulary approach, which
involves a generic definition of the activity, within which all of them fit. the
possibilities subsumable in it. In the first scheme are the United States (National
Bank act) and Germany. In the second, countries like England and, in general,
the European Union. The scheme adopted by the United Kingdom gives special
importance to the collection of resources from the public (Section 3 of the UK
Banking Act) like the Colombian legislation that prohibits and severely sanctions
massive and habitual collection without authorization (D. 1.981/88). The
European Union has accepted two elements as essential to banking activity:
taking deposits from the public and placing them through loans given on its own
account (arl. 1 of the First and Second Directives). For example, under the latter,
entities that are professionally dedicated to lending money but do not collect
from the public are considered "financial institutions" but not banks. The topic is
not simple and requires clarifications. For example, could a cooperative entity
that only draws from its members be considered not to draw from the public and
escape the definition? Could the same thing happen, for those who attracted the
public but did not make loans but rather dedicated themselves to investing in
securities? The point is of obvious importance since it not only seeks to have
clarity about the recipients of the banking legislation but, mainly, to prevent
savers from ending up defrauded by unauthorized intermediaries. CRANSTON,
Ross. Op. cyl. pp. 3 And ff.
17. MARTINEZ NEIRA, Néstor H. Op. cyl. Distinguishes between commercial,
savings, mortgage, investment and trust banks. pp. 235 And ff. Venezuela. The
General Law of Banks and Other Financial Institutions applies to universal,
commercial, mortgage, investment, development and second-tier banks, as well
as financial leasing companies, money market funds, savings and loan entities,
exchange houses, groups financial institutions, border exchange operators and
credit card issuing and operating companies (art. 1st, D. 1526/2001).
18.V. infra, Part 11, Chap. VIII.
19. In practice, the passbook is today anachronistic and tends to be replaced by
debit cards, without the bank's burden of offering lower-educated users the
administration and registration of the account in each operation disappearing, as
we will see in due course. .
20. Colombia. The Organic Statute of the Financial System and Decree 2915/90
contain the basic rules that must be followed in the disposal of the State's
shareholding in financial and insurance institutions.
21. As we noted above, this has led many to defend "multibanking" as a desirable
structure, although the issue has sparked many controversies. See in this regard,
LUQUE, Juan Pablo. "Multiple Banking". Thesis. Javeriana university. Bogota,
1984. MARTINEZ NEIRA, Néstor H. He maintains that commercial banking has
become more oxygenated in recent years. Op. cyl. p. 73.
22. RODRIGUEZ AZUERO, Sergio. "The Basel Committee and banking in
developing countries." Financial Legal Bulletin W 926. Asobancaria. Bogota,
1997.
23. RODRÍGUEZ AZUERO, Sergio. "Some reflections on the financial crises."
Private Law Magazine. University of the Andes. N" 24. Bogota. 2000. Among
the common internal causes in many of the examples studied, we pointed out: a)
disorders in public finances and fiscal deficits; b) excessive variations in interest
rates; c) fall in the gross domestic product or deceleration thereof; d)
management of the exchange rate; e) increase in the unemployment rate; f) weak
or poorly regulated financial systems; g) poorly supervised systems; h) conduct
of directors and i) imprudence. Among the external causes: a) the domino effect;
b) the inefficiency of multilateral organizations; c) the unstable flow of
international capital; d) the sudden increase in debt, and e) the difficulty of
control and supervision of financial conglomerates.
24. RODRIGUEZ AZUERO, Sergio. "Critical reflections on some fundamental
Basel principles." Financial Legal Bulletin. Asobancaria N" 1002. Bogota. 1999.
By the way, Mr. Quinn BRY AN, of the Bank of England, said in 1991, making a
kind of assessment of Basel: "I find these propositions
Totally inconvenient on two points. First, it seems quite wrong to me that
prudential requirements should be, in some way, used to manipulate the
economic cycle. But even if one accepts that the purpose of this delicate
management was not to do macroeconomic management but to harmonize capital
relations with the variations and qualities of assets, I think that this argument is
wrong. Banks continue to negotiate in particular in risk taking and risk
assessment. So even if supervisors were capable of this delicate handling - and I
see no reason to think they could - it is neither their business nor their
responsibility to do so in a market-driven economic system. It is up to the banks
themselves to make a risk assessment and to supervisors to establish a predictable
framework within which banks can receive or reject customer demands.
"Otherwise," he concludes, "we could also leave aside the excuse and
paraphernalia of relationships and simply tell the banks how much and to whom
they should lend."
25. MARTINEZ NEIRA, Néstor H. Op. cit., following the Colombian
experience, groups the powers into: a) concession, b) authorization, c) regulation,
d) advice or consultation, e) control, f) information, g ) certification, h)
interpretation, i) jurisdictional, and j) sanctioning.
26. Colombia. The doctrine had traditionally held that this was the case based on
the provision of banking legislation, which not only imposes an essential
intervention by the Superintendent in the creation of the entity but also provides
for his forced intervention for the qualification and possession of the
administrators and the opening of branches and agencies, to the point that it is up
to the Superintendency "in accordance with the modalities inherent to the nature
and structure of the entities subject to its permanent inspection and control, to
issue certifications on their existence and legal representation", art. . 3rd, D. 1939
of 1986. However, this conclusion has had to be reviewed by virtue of the
issuance of joint circular No. 1 of 1983, by the Superintendence of Industry and
Commerce, the Banking Superintendency and the National Securities
Commission, by virtue of which demanded that the aforementioned subjective
registry be kept before the Chambers of Commerce, under the pretext of the
existence of a unitary criterion regarding registration. The respective circular was
sued before the Litigation Court, and it ruled on the legality of the rule, stating
that they are two records of a different nature that, therefore, can coexist. For the
rest, the opening of branches and agencies does not require the intervention of the
Superintendency today, with exceptions and it is the Chambers of Commerce that
certify their existence and representation. On the issue of branches, see article 74
EOSF.
27. I have argued, furthermore, that one of the greatest risks that can be generated
in these scenarios is that supervisors can compromise their own independence
and their ability to supervise the sector. What happens, for example, in terms of
credit rating and constitution of portfolio provisions? That to the extent that the
Basel recommendations are more universally applied, the banker must proceed
with greater regularity and detail to classify and qualify his portfolio. But since
the Supervisor reserves what he considers a natural power to review what he has
done, it may happen that, by not agreeing, he is ordered to reclassify one or more
clients and in this way he is forced to increase the respective provisions. Well, in
that event, it is obvious that the Supervisor ends up co-managing, defining,
sometimes with subjective criteria, aspects of the business, which is clearly
inconvenient and can even generate hypotheses of responsibility. v. "Critical
reflections on some fundamental Basel principles." Op. cit that includes the
conference given in 1998 in Lima on the subject.
28. Colombia. The Constitutional Court has held, in repeated jurisprudence, that
"the principles of criminal law - as a paradigmatic form of control of the punitive
power - apply, with certain nuances, to all forms of sanctioning activity of the
State. ...And the Constitution is clear in pointing out that due process applies to
all types of judicial and administrative actions (CP ar! 29). Consequently, ... the
definition of an infraction must respect the principles of legality and
proportionality that govern the sanctioning activity of the State." The ruling
highlights how the illegality of conduct that involves the imposition of an
administrative sanction must take into account constitutional and legal
obligations, including Government decrees, but without taking into account the
instructions of the Banking Superintendency (Sen!. C-1161 of 2000. M. Q.
Alejandro Martínez Caballero, when studying the constitutionality of articles 209
and 211 of the EOSF, the backbones of the sanctioning powers in financial
matters).
29. Colombia. Among the measures that the Superintendency can adopt or order
include special surveillance; recapitalization; fiduciary administration; the total
or partial transfer of assets, liabilities and contracts and the disposal of
commercial establishments; the merger and the adoption of special recovery
programs. (EOSF, art. 113, modified by art. 19 of the L. 510/99).
30. Colombia, due to the so-called financial crisis of 1982, included
nationalization as an in extremis sanction if it became evident that, through other
mechanisms including the form of possession, it would be impossible to save the
Bank and protect community interests. But it linked it from the beginning to the
political decision to reprivatize the entities that were the object of the measure
and legislatively established the way to carry it out (EOSF, arts. 303 et seq. d.
2.915/90).
31. Colombia. The Constitutional Court declared unenforceable articles 51 and
52 of Law 510 of 1999, which attributed jurisdiction to the Banking
Superintendency to resolve conflicts of modest amounts between clients and the
supervised entities, considering that the principle of "due process" could be
violated. ". In effect, if the person who must decide is subject to the instructions
of his superiors who had to do with the matter, he does not have the impartiality
and independence that every person who exercises a jurisdictional function in a
State of Law must have. In the same ruling and provided that no such conflict
arises, the Court declared constitutional articles 134, 135 and 136 of Law 446 of
1999, which empower the Banking, Companies and Securities Superintendencies
to recognize the causes of ineffectiveness of which deals with the Commercial
Code (Plenary Chamber. Sent. C-1641 of 2000. M. Q. Alejandro Martínez
Caballero).
32. Colombia. Two draft framework laws on securities (108/01 Senate) and
financial sector (106/01 House of Representatives), presented by the
Government.
2.5. SPECIAL SUPPORT ENTITIES
The financial crises, which occurred recurrently in the last quarter of the last
century, made evident the shortcomings of the regulatory and control entities,
whose very broad powers were not enough to overcome them and which led to
adjustments, either to further expand their field of action, already to assign more
precise and better designed functions to new authorities as a result of the implicit
recommendations suggested by the same difficulties. The main concern, in
relation to the role of the central bank, also resulted from being clearer than ever
that its role as a provider of liquidity for the banks of the system, should be
limited to supporting them with credits to face the temporary difficulties, derived
from cyclical or treasury problems, so its resources cannot be used to support
permanent deficits derived from structural problems that do not concern the cash
flow but rather the asset structure of the petitioning entity. And with respect to
the bank itself, as a supervisor or to specialized organizations, such as the
Superintendencies, the main question was the empirical verification that highly
specialized administrative police entities do not have, due to that circumstance
alone, the management instruments and the financial mechanisms suitable for
carrying out processes of intervention and liquidation of entities, whose mere
monitoring requires enormous efforts of resources and personnel and whose
allocation conspires against the fulfillment of its high mission of inspection and
surveillance.33
The creation of a specialized entity has therefore constituted the appropriate

administrative response, on the basis of complementing, in this way, the
traditional tasks carried out by the authorities we have just mentioned and has led
to establishing the need for registration of certain financial entities, those that are
allowed access, starting with the banks, so that they are the beneficiaries of the
support mechanisms established by law but, at the same time, contribute with
their contributions to support the operating costs, based on a budget annually, as
well as to pay the premiums that allow them to obtain deposit insurance for their
clients, which we will talk about later.
2.5.1.
Asset strengthening
In summary we can mention among the main faculties, the following:
2.5.1.1.
Capitalize
That is, both subscribing shares in a registered entity and trading them, under
certain assumptions. The power extends to the contributions of "guarantee
capital, which do not represent an effective injection of resources, but which
allow the respective item to be considered a true capital, especially for
compliance with certain coefficients required by law for the establishment of
which it is essential, as would be the case of individual credit quotas and the
relationship with risk-weighted assets. Through this means, it is possible to
provide the capital resources required by the control entity as necessary to restore
the equity balance, if the shareholders do not provide them, within the period
indicated to them.
2.5.1.2.
Grant credits
Unlike those granted by the central bank, these are specifically intended to
strengthen the assets of the respective entity and can be granted both to the entity
itself and to third parties, for example, its shareholders, as well as linked to
projects that allow carrying out investment programs. business reorganization,
such as mergers, acquisitions or transfers of assets, liabilities and contracts, with
the implicit purpose of protecting savers.
2.5.1.3. Guarantee operations

Which in practice can take different forms, from the general granting of
guarantees and guarantees to the constitution of specific guarantees required for
securitization processes, or to compensate those who must assume losses in
mergers, acquisitions or other similar operations, resulting from a sanitation
process
2.5.2. Support for small depositors
The most useful instrument in pursuit of this purpose is, without a doubt, deposit
insurance, established to cover losses that depositors in good faith may suffer,
that is, those unrelated to the causes that gave rise to the serious situation faced,
in case of bankruptcy, insolvency or administrative liquidation of the entity.
The use of insurance of this nature has been the subject of many criticisms,
especially considering that its existence can unconsciously stimulate a certain
administrative laxity and even an aggressive and imprudent policy of attracting
or placing resources on the part of unprofessional administrators. In fact, it is
argued that if in the end the depositors are going to be covered by the deposit,
they will have less prudence when judging and choosing the banks with which
they want to work, that is, they will not make a difference between the different
participants based on the risk they should be assigned to each one and they may
be attracted, for example, by remuneration rates significantly higher than those
offered by the rest of the market, ignoring the natural alert that such a
circumstance should generate in them. Not to mention that, without prejudice to
the civil, criminal or administrative sanctions to which the imprudent
administrator could be subject, there would be a greater probability that part of
his actions would go unpunished, given the lesser pressure derived from the
apparent non-existence of injured parties, who Being covered by insurance, they
would have no legitimacy to claim any compensation.
On the other hand, however, it is clear that given the presence of increasingly
larger banks in the systems and, in any case, the implicit trust of the community
in the surveillance that the State exercises over the banks, nothing can be more
explosive and disruptive than a bank failure when it leads to suspension of
payments to depositors. In fact, specialized literature suggests that the eventual
bankruptcy of a bank can be positive if depositors become aware of the latent risk
that exists and differentiate between the different entities, learning to recognize
the factors that generate it and that should incline them towards certain in front of
others. And that such a warning is equally valid for other participants in the
market. But this is far from what can happen in practice, especially when it
comes to banks with a very significant number of clients, since the impact that
this could produce is so strong, including triggering a systemic crisis, that there is
no government that can bear the political cost of standing idly by while "the laws
of the market operate."
For all these reasons, the balanced solution seems to be in the middle,
establishing universal insurance coverage, but limiting its amount to a certain
amount, so that, given the pyramid that reflects the composition of the deposits, a
certain amount can be effectively protected. very important number of depositors
- which justly reduces the social impact for those who, in themselves, do not
usually have sophisticated elements of measuring banking risks, that is, they are
ordinary citizens - while the liquidation process is subjected to the smallest
number of depositors, even if they hold the largest volume of deposits among
them. Well, something goes from the treasurer of the large company to the
ordinary client who does not have a three-dimensional or in-depth vision of the
financial sector, which is why it is not easy for him to weigh danger factors that
are part of the professional background of specialists. 34
2.5.3. Administrative liquidation

To more efficiently fulfill this task, which involves removing failing financial
institutions from bankruptcy or insolvency proceedings before ordinary judges, it
has been necessary to add or reinforce the traditional powers, beginning with the
power to appoint and remove the liquidator, which includes the reporting of their
remuneration, the monitoring of their activities and even the challenging of some
of their decisions, such as those that entail obligations under their responsibility
derived from deposit insurance.
Under the natural supervision of the government entity, the liquidator will fulfill
his functions, including the preparation of inventories of the entity's assets, their
appraisal, the recognition of credits, with the legal priorities they entail, the
processing and resolution of the appeals filed against their decisions, the
collection of credits, the sale and liquidation of assets, the initiation of liability
actions against previous administrators and those required against third parties
and, in general, all actions aimed at canceling liabilities and liquidate the entity.
In the course of its actions, it must keep due accounting records of its actions and
provide a detailed and periodic account of the way in which it has performed its
function.
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33. Colombia. At this point we have followed the structure of the Guarantee
Fund of Fihancieras Institutions (FOGAFIN), created by Law 117 of 1985.
34. Colombia. The maximum insured value in the current deposit insurance is the
sum of $20,000,000 (a sum close to US $9,000) and the deductible is 25%, in
accordance with article 2 of Resolution 5 of 2000. v. Supra 2.4.
3. BANKING OPERATIONS
It is about studying the different operations that banks can carry out and
analyzing whether it is possible to achieve a conceptual abstraction that allows
them to be defined through their common elements or, at least, if there is a
fundamental concept from which they can be identified and differentiated.
3.1. NOTION
In Latin America, the excellent definition of Professor Joaquín Rodríguez

Rodríguez has made a name for itself, who states that "a banking operation is a
credit operation carried out by a banking company en masse and on a
professional basis":35 However, there are multiple definitions that can be
Consult the authors and various solutions that have been given in this matter.36
The starting point, even if it seems simplistic, is based on two premises: to

classify an operation as banking, it is necessary to use a criterion
subjective, that is, recognizing the presence of a bench at one of the ends.
But, in addition, trying to find a generic definition implies identifying the

functions assigned to banks at different times, in order to be able, empirically, to
investigate their content. Now, if we have maintained that historically banking
finds its reason for being in the management of a monetized economy, that is, in
the administration and creation of monetary species, it is not difficult then to
locate the bank as an intermediary in capital management, since their
administration, far from being static, is eminently dynamic and implies their
lucrative placement in the market. That is to say, banking operations will, in the
first place, be those carried out by credit institutions to attract and place resources
in a professional manner, that is, permanent and massive, as they correspond to
the corporate purpose of these institutions.
Thus, the bank as a merchant will derive its profit from the difference between
the costs that it must pay to obtain the resources or that it must assume in their
administration and the price it receives for placing them in the hands of third
parties. Of course, if, as happens in many countries, this intermediary operation is
classified as an objective commercial act and is capable of being carried out by
individuals, the classification of banking will have to be based exclusively on the
intervention of a business, that is, on a subjective criterion, as we mentioned.
From the above it emerges that, in principle, banking occasions are or imply the
carrying out of an operation or better, a credit business; technical and restricted
meaning - characterized by being a current transfer of ownership over a thing,
from one person to another, with the latter being responsible for subsequently
returning an equivalent quantity of the same kind and quality.37
This credit business always falls on fungible things, those that can be replaced
one by another and that constitute an obligation of kind, in kind, for the debtor
and, in the event that they support the performance of a banking operation, they
necessarily imply the existence of profit, that is, they are onerous.
Different theories have been developed regarding the legal nature of credit
businesses.38 The most notable may be: the so-called "theory of enjoyment",
according to which one person transfers the property to another so that the latter
can enjoy it in exchange and As consideration, recognize a remuneration or
interest rate, when it comes to money. It has been criticized because in reality in
credit businesses one cannot speak of the enjoyment of a foreign thing because
the transmission of the same is done as property, it enters in full the assets of the
debtor, who acquires as consideration the obligation to deliver something
equivalent. There is also the theory called "profit or exchange" according to
which things are not given to confer enjoyment of them but to obtain other things
in exchange. That is, it is about exchanging present things for future things, in
which case the remuneration or interest rate is simply the difference in price
between them. It has also been criticized for considering that it is not logical to
talk about exchanging some things for others, since these are identical masses of
goods where the exchange would result, for example, from X amount of money
for X amount of money. .
Finally, and this seems to be the most relevant contemporary doctrine, we speak
of the "term theory" where the exchange of goods is not sufficient to explain the
credit business but rather the cause of the same for the transmitter lies in
obtaining of remuneration, no longer for the enjoyment of the thing or the
difference in price between the identical masses of goods that are exchanged, but
as a consideration for the sacrifice that must be made as a creditor, getting rid of
a productive good from his patrimony for a certain period. time to allow the
debtor to profit from this circumstance. The interest within this theory is, then,
the recognition of the value that time has in credit businesses.
In any case, what can be maintained is that the business or credit operation is
characterized by the existence of a gap in time, between the moment of receiving
the ownership of the money in our case - and that in which it is necessary restore
an equivalent amount. In this way we can say that there is a banking operation
whenever the transfer of property occurs both in the event that the bank receives
it from one of its clients, and in the event that the bank transfers it to one of its
clients. . That is to say, in this case the bank finds itself in a permanent and
double position, within the credit business, resulting from its intermediary
function; It carries out credit business to attract resources and does the same,
immediately, to place money.
It is not difficult to verify, however, applying an empirical criterion, that the

operations carried out by banks do not always respond to the execution of a credit
operation, with the legal content that we have just explained, but rather refer to
other intermediary possibilities in which there is no acquisition or transfer of
property and where, in most cases, they are only services that find their legal
basis, no longer in a credit contract but in other contractual schemes, especially
the m~ and the
buy and sell. This verification allows, therefore, to differentiate banking
operations by saying that there are some that can be classified in this way in the
proper sense, while
after others, being also banking, no longer correspond to the common and
distinctive element of being supported by a credit operation. It is not, therefore,
that some are more important than the others from the point of view of their
study; simply that they differ in that some correspond to the central reference
element that we have used, while the others, with a positive legal criterion,
correspond to the other functions that the law grants to banks in each country and
that, of course, In the simplest form they can also be classified as banking
operations.39
3.2. CLASSIFICATION
There are multiple classifications that the doctrine has made of banking
operations.40 The most popular and widespread in Latin America divides
banking operations into two large groups: the first, called fundamental or typical,
which basically correspond to the performance of a credit business and the
others, called atypical or neutral or complementary, group together all the others
provided by banking entities. The first, that is, the typical fundamentals, are
classified, in turn, as active and passive, depending on whether banks place or
raise resources with them. This qualification also has a clear
accounting classification since the operations, through which resources are
raised, are reflected in the liabilities of the balance sheet, while those through
which they are placed, appear recorded in the assets.
However, it is advisable to make some clarifications in this regard to understand

the criteria with which we have classified the operations and, therefore, the
banking contracts that we will study in the work. Active or passive operations
imply a coincident parallelism of the three factors, in the sense that they are
recorded in the asset or liability of the balance sheet, as the case may be, they
imply a placement or raising of resources, in their order and are found as support
a credit operation. The same does not happen with some operations that translate
into a placement of resources and are recorded in the asset, but are not based on
the execution of a credit operation and, consequently, will not be classified as
such for the purposes of our classification. An example may illustrate this
statement. Think of an exchange operation, in which the bank acquires gold or
foreign currency by disbursing a sum in national currency. In this case, a
movement occurs in the asset where the equivalent sum of the national currency
disappears, to be replaced by the record of gold or currencies, or better, the sum
in pesos in cash is transferred to another item of the asset. where it will appear as
the counterpart value in pesos of the amount of foreign currency acquired. There
is an investment or placement of bank resources. However, there is no credit
operation in the sense that there is no transfer of ownership, which would be a
reciprocal transfer of both monetary species, without charge for any of the
returned ones. That is to say, the business is exhausted in its conclusion without
it being possible to affirm that there is a debtor, who would be the bank's client,
obliged to repay an equivalent amount of the money received from the sale of
gold or foreign currency, nor vice versa. For us, then, it will be a neutral banking
operation, as it does not meet the essential requirement of corresponding to a
credit operation. Nor does such a thing happen with some operations that are
recorded in the liabilities of the balance sheet but do not involve deposits nor,
therefore, imply a credit operation. Consider now a bank acceptance that
generates a certain liability, but that barely qualifies as a form of credit in a
figurative sense, as we will see in due course.
Another observation that I had to make, from now on, is that the credit
operation criterion covers not only the possibility of a real transfer of the
property over money in most cases, but it also covers the potential transmission,
so to speak, that is, the ability for the client to have a sum of money -, even if he
or she has not received it from the beginning. , as we will see when dealing with
the credit opening contract, in the meaning in which we have taken it for our
study. Under this possibility, the so-called true fiction signature credit would also
fit as opposed to money credit - where the bank does nothing more than
guarantee or endorse a document from its client, thus enabling it to obtain the
corresponding resources in the market, directly or through the obtaining goods
and services on credit.
We could say that there would be, in any case, the possibility of obtaining the
required amount in a different way, but based on the intervention of the bank as
guarantor. Although the operation does not initially appear in the asset, but only
appears as a memorandum or contingent account, it can lead to the forced
granting of credit by the bank, without prejudice to the fact that the simple
guarantee has served the client to obtain a benefit, usually credit.
For these reasons and those seen at the beginning, it can be explained why,
contrary to the solution adopted by some authors, we have classified the
documentary credit contract among those that correspond to an active operation
of the banks, among other reasons because we think that In essence, it is just a
credit opening contract, as it relates to the relationship between the bank and its
client. With these caveats and notes, we have adopted the following traditional
classification:
a) Passive banking operations
1. Irregular deposits, which include checking and demand account deposits, term
deposits and savings deposits.
2. Issuance of debentures and other titles.
3. Rediscount. .
4. Reception of credit.
b) Active banking operations
1. Loans, which in our opinion also cover advances, although at the time we will
treat them separately, and the signature credit.
2. Discounts.
3. Opening of credit.
4. Documentary credit.
5. I report.
6. Leasing or financial leasing, and
7. factoring
c) Neutral or complementary banking operations
1. Deposits.
2. Intermediation in collections and payments.
3. Purchase and sale of securities, shares, currencies and other assets. Security
boxes.
4. Trust or commercial trust.
5. Degree.
Note, finally, that the previous classification is neither original nor indisputable,
since as we have already seen, there are multiple ones tried by the authors. It has,
however, the advantage of its general acceptance in Latin America and its clarity
from a didactic point of view, which is explained, among other things, by its link
to the accounting structure of banking entities.
In summary, we can maintain that the banking operation is a credit operation

carried out by a bank, characterized in that the respective entity carries out its
activity in the form of an intermediary that profits from the resources obtained by
placing them again. As has been argued 41 "borrowing to lend earns typifies the
banking operation."
Neutral operations, for their part, are distinguished because more than credit
intermediation there is mediation by the bank in collections, payments, in the
performance of certain services on behalf of their clients or in them the banks
limit themselves to receiving goods in simple custody or administration, but not
in irregular deposit, as we will see.
Additionally and with the purpose of enriching the pedagogical approaches, we

have added two partial classifications, derived from independent criteria, namely,
the one that distinguishes the operations that allow the mobilization
ordinary portfolio or financial assets and that which groups together operations
that involve the granting of a signature credit and not a 'money or disbursement
credit', even if they may be developed later in that form.
The first would include all the operations that allow those who normally generate
a portfolio to transform it into cash or obtain credit based on its pre-existence and
include: a) the advance, b) the discount, c) the factoring, d) the repo, and e) the
securitization or securitization, which the latter is known under these names in
Latin America.
The latter group together all the ways in which the bank undertakes an obligation
without a disbursement of money being produced, essentially or simultaneously,
and include: a) the opening of credit, b) documentary credit, c) acceptances, d)
the guarantees, and e) the guarantees.
For the rest and under these two criteria we have reordered some of the chapters
of the work, without abandoning the general structure that comes from the first
edition.
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35. RODRÍGUEZ, Joaquín. "Banking Law". Ed. Porrúa SA, Mexico, 1968, p.
twenty. 36. GIERKE states that "a general and exhaustive definition of value
does not exist, according to the opinion of the most authoritative doctrine."
EHREMBERG maintains that "in truth the expression banking operation is only
a large global one: it includes those operations of which each one in particular,
by itself, is enough to classify its exercise as a commercial enterprise and the
businessman, as a merchant, as a banker." . STAUB says that they are "those that
satisfy the needs of traffic for the obtaining and disposal of money and valuable
values", all cited by Joaquín RODRÍGUEZ, Op. cit. p. 18. Other authors such as
LA LUMIA, BOLAFFIO and MURATTI focus the operation on the
"interposition of credit", cited by Manuel GOVEA LEININGER, "Banking
Operations". Ed! Fabreton, Caracas, 1972, pp. 52-53.
37. The notion of "credit" in a broad sense exceeds that which has just been
formulated. In effect, it would naturally extend to all operations in which the
obligation to pay a sum of money is deferred to a time subsequent to the
execution of the service by the counterparty and that some sector of the doc. trina
has generically classified it as "financial operations", where, for them, term sales
and leasing or financial leasing would fit.
38. Consult at this point the work of Ernesto SIMONNETO. "Credit Contracts".
Translation by Juan Martínez Valencia, Ed. Bosch, Barcelona, 1958, pp. 7 to 63.
39. The notion of "complementary operations" cannot be forgotten here, that is,
those that contribute to supporting the development of the main object and that
flow spontaneously from the negotiating capacity of all legal entities. In countries
where the specialized banking scheme persists, the definition of activities that are
outside the corporate purpose generates some difficulties, not only because many
of the authorized operations are not exclusive to the banks, but also because the
corporate notion of complementary operation is difficult to demarcate. The issue
has been raised above all at the level of treasury operations given the multiplicity
of investment alternatives. For example, in Colombia, the Council of State
considered illegal futures operations carried out by a trust company with its own
resources, maintaining that said activity exceeded its legal capacity, which could
be highly questionable since the company's management has to ensure that The
capital of its shareholders does not remain idle, that is, it has to be invested and
there does not seem to be any rule that reserves such an operation to a different
financial entity in an exclusive manner. (Sent. of June 14, 96, Fourth Section) On
the contrary, the Banking Superintendency - fortunately in our opinion - has
considered the possibility of establishing special common funds dedicated to the
purchase of invoices, which imply, in essence, allocating customer resources to
area. lyze credit operations, probably by understanding that it is done at their own
expense and risk and not that of the fiduciary and because positive legislation
prohibits the massive collection of resources without authorization but does not
limit the permanent placement of own resources (Gir. External 51/97).
40. ALDRIGHETTI, Angelo. It classifies them into: a) operations related to
credit intermediation, b) operations related to payment intermediation, and c)
operations related to capital management. "Banking Technique". Ed. Economic
Culture Fund, Mexico, 4th edition, 1956, pp. 12 and 13. EHREMBERG AND
GIERKE, cited by RODRÍGUEZ Joaquín, Op. cit., p. 33, classify them as
follows: the first: 1) acquisition and disposal of securities; 2) money exchange; 3)
money acquisition and delivery operations; 4) payment attention, and 5) asset
management operations. The second: 1) acquisition and disposal of effects; 2)
custodial banking operations; 3) acquisition and disposal of means of payment;
4) some credit operations, and 5) payments.
41. GIRALDI, Pedro Mario. "Introduction to the study of banking contracts." Ed.
Abeledo-Perrot, Buenos Aires, 1963, pp. 22 And ff.
Chapter III
INTRODUCTION TO BANKING CONTRACTS
1. NOTION
From the beginning we note that the expression banking contracts refers to the
agreements entered into by banks and their clientele or, eventually, between
banks, the content of which corresponds to the development of the operations
inherent to its corporate purpose. In the first part we study a set of fundamental
notions about Law, obligations and contracts, their essential requirements, their
classification, etc., which will be accepted from now on. Before undertaking the
study of each of them, it remains to make some additional details that
characterize them. Their definitions in the various legislations and the notes that
are most characteristic of them will be seen as far as possible through footnotes
in each contract. In this way we have replaced the presentation included up to the
fourth edition of the book, considering that doing so does not sacrifice in any
way the essence of the work, since the specific references to the different
countries and solutions will remain enriched throughout the work. and that the
table presentation, after each chapter, is unnecessary since we have included in
the attached CD, all the financial and commercial legislation of the Latin
American countries, as well as the indication in each chapter of the "sites" that
They allow access to databases where the pertinent provisions are updated.
The concept of banking operations is ultimately based on a subjective criterion

since, whether they are typical operations, that is, credit or complementary
operations - following the traditional criterion that we have just adopted to
classify them -, in principle many They can be carried out by individuals and
only acquire the title of banking when at least one bank participates in them. It
carries them out repeatedly and massively, that is, professionally, since they
correspond to the development of its corporate purpose. The same thing happens
with banking contracts whose qualification results from the application of the
same subjective criterion.
It can be accepted that banking contracts consist of "the agreement of wills

intended to regulate the rights arising from a relationship whose object is a
banking operation." In other words, the banking contract is the agreement of
wills between two or more people, one of whom is at least a bank, under which
rights and obligations arise whose object corresponds to the banking operation to
which the agreement refers. . In other words, the purpose of the contract and the
obligations that arise from it depend, ultimately, on the nature of the banking
operation to which they refer.
The banking contract constitutes the conceptual background that supports and
explains the execution of a banking operation. Contract and operation can be
simultaneous in time and are even confused in practice. The operation can even
be carried out and in fact is carried out every day, without the parties being
aware, most of the time, that they are entering into a contract; However, it is
evident that as soon as the operation is carried out, it arises from an agreement of
wills. Which is nothing other than the execution of a contract expressed in the
form and terms provided by law, if it is classified as such resulting from the
broad possibilities that the autonomy of the will has in the field of Private Law. If
the operation is not carried out or if it is defective in relation to what the client
expected or if, for any reason, differences arise regarding the obligations of the
parties, it will be necessary to return to the source of the operation, to its
conceptual background, that is, That is, to the cause itself: the concluded
contract. And in this hypothesis it will be necessary to specify its content and
scope, the obligations of the parties and the consequences of non-compliance.
Studying banking contracts is, in other words, studying the operations carried out
by banks, except that, instead of emphasizing the technical aspect, emphasis is
placed on the legal elements that go into the formation of the agreement of wills.
It could almost be said that it is the same event classified as an operation, insofar
as it implies a technical development, and as a contract, insofar as it touches on
the causal antecedent that serves as its support.2
Since banking contracts have as their exclusive purpose the performance of a

banking operation or, in a broader sense, its modification or termination, we
adopt for their study the same classification criteria as that used for banking
operations. In this order of ideas and to follow the logical process of
intermediation, we will study, first, the contracts that precede the execution of
extensions, that is, those through which banks raise resources; next, the contracts
that precede the execution of active operations, that is, those through which they
place the resources and, finally: the contracts that precede the execution of the
main neutral operations.
As can be seen, the very name of the contracts corresponds almost exactly to that
of the operations to which they precede. However, it will be seen that some
operations that from a technical point of view could be studied separately, such
as the different credits that banks grant, are brought together to be analyzed
together, since in essence they all involve the execution of a contract. of mutual.
The same occurs with neutral operations of intermediation in collections and
payments that, from a technical point of view, give rise to distinguishing several
hypotheses but which, legally considered, all obey the execution of a mandate
contract. The above is easily explained if we remember that our study places
more emphasis on the legal aspect than the technical one.
2. CHARACTERISTICS
We have seen the general notion of contract and stated that its general principles
are applicable to banking contracts. Let's just see how, when it comes to these,
there are some notes that tend to appear in all of them, without being exclusive,
but that manifest themselves in a peculiar way compared to non-bank
contracting.3
2.1. RELATIONSHIP WITH THE TECHNICAL STRUCTURE
Commercial Law is nourished by operational reality and it is based on the

practices of merchants that superior and mandatory rules are formulated. This
assertion is evident in banking contracts where there is an intimate relationship
between the legal formulation and the technical-accounting reality of the
operations to which it refers.
Banking activity, developed over centuries, is one of the most dynamic that
Commercial Law knows because it is in a permanent process of innovation and
change; whenever economic systems, commercial activities and community
requirements impose the creation of new institutions, titles and ways of managing
or investing money. These forms become increasingly subtle and sophisticated as
the research of experts finds different channels or combinations to develop their
techniques. This translates into the multiplicity of banking services that, in some
cases, are imprecise in number, as is the case with fiduciary assignments where
practically all legal business is covered within the possibilities of the contract.
The same occurs in the complex world of international trade where, every day,
increasingly demanding forms, modalities, resources and operational instruments
emerge. In this way, Banking Law and banking contracts, in particular, far from
the possibility of abstraction, have to be linked to this operational reality, if they
truly intend to effectively translate the negotiating will of market participants.
Given that banking's natural function is to manage money and that the
monetization of economies, added to demographic and economic factors, such as
the sustained growth of the urban population compared to the rural population
and the increase in per capita product, has exponentially multiplied the number
and frequency of transactions settled in money, it is not difficult to understand
the enormous weight and influence of the electronic transfer of funds and, in
general, the development of so-called electronic commerce, as we will see from
now on.
2.2. VERY PERSONAL CHARACTER

Although it may seem paradoxical, since for many it is a public service and, in
practice, banking entities offer their services to the community indiscriminately,
the conclusion of agreements has a very personal nature.4In effect, the world and
the credit management imply the reciprocal granting of the highest trust and,
consequently, it is not reasonable to expect that any individual, simply by virtue
of being part of the community, is in a position to impose on the banks the
conclusion of a contract and the carrying out certain operations on his own
initiative. On the contrary, banks are very jealous in choosing their clientele, both
to maintain the name and prestige that is derived from adequate selectivity, and
to protect the community, since the conclusion of many of the contracts equips
clients with contracting instruments, whose trust among the conglomerate could
lead to the community being surprised in its good faith, if those who use them are
not people of high moral qualities and economic solvency. Such would happen
with the e.Jltregade a cheqjlera, without having previously qualified the current
account, who would go on the market with the moral endorsement of the bank,
misleading the community, which would have the right to assume that the
respective bank had not granted it the possibility of issuing checks in favor of
third parties, without having previously verified a set of requirements and
personal qualities of the account holder.
Because, in addition, it should be taken into account that, even for the use of
public services - if banking activity were one - open indiscriminately to the
community, it is necessary, as a general rule, that certain requirements be met in
order to be able to use them. This is the case with the public transportation
service, in relation to which and in the vast majority of countries, people have to
pay a stipend, even a small one, to be able to use it. Or in relation to which
requirements and conditions of presentation and behavior are required, without
which the provision of the same could legitimately be rejected. Hence, even in
the broadest conception of the function performed by banks, it is obvious that
they must be in a position to demand compliance with certain requirements from
their potential clients.
On the other hand, and this is especially valid in systems of nationalized banks or
mixed banks - where state banks and private banks come together - it is up to
them to make a particular effort to serve people who, in themselves, would not
have to find a complete answer in private banks, it is to the State, because there
political and social criteria of subsidy or protection can be introduced that, if
applied by private banks, would lead to the very dangerous consequence of
placing the resources collected from the community without sufficient guarantees
or in a dangerous manner. . Such would be the case, for example, of making
loans to any credit applicant, for the sole reason of the social benefit that this
entails, without taking into account that, ultimately and if that debtor does not
have sufficient guarantees or it is not a activity that guarantees the repayment of
the sums placed, risks would be introduced, not for the bank's money, in the
abstract, but for those it manages, precisely, by having captured them from the
saving community.
A contemporary reality has come to impose a mandate for the banker that is
expressed under the imperative: "know your client", in response to the enormous
disturbances that the flow of money from illicit activities, particularly drug
trafficking, has produced. In effect, the great ease and speed with which financial
operations can be carried out allows huge sums of money, generated by
organized crime, to enter financial systems in a process aimed at mimicking their
origins and giving them the appearance of regularity, known internationally. as
"money laundering" or "money laundering". 5 One of the most vigorous
responses to combat this international scourge was the adoption of the United
Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances in 1988, commonly called the "1988 Vienna Convention." In the
same direction, in November 2000, the United Nations General Assembly
adopted the International Convention against Transnational Organized Crime,
under the premise that an effective fight against the growing problem generated
by money laundering will not be effective without effective International
cooperation. 6
On the other hand, the OECD (Organization for Economic Cooperation and
Development) has clearly established that the fight against the lax systems of the
so-called "tax havens" not only entails a system of protection against tax evasion,
but also against money laundering that is favored by the policies of secrecy and
restriction of exchange of information that usually exist in countries classified as
such.7 And the group of G-7 countries, in turn, has launched a campaign under
the name of "Actions against Abuse of the Global Financial System" in seeking
to eliminate such practices. As a consequence of that campaign, the Financial
Stability Forum - FSF - and the Financial Action Task Force on Money
Laundering - FATF (Financial Action Task Force on Money Laundering - FATF)
were established.8 Similar statements are found in the "Declaration of Basel
Principles", in Directive No. 91/3088 EEC, in the Buenos Aires Convention on
Money Laundering, held within the Organization of American States (OAS) in
1995 and in the "Model Regulations on Crimes of Laundering related to Illicit
Drug Trafficking and other Serious Crimes" approved in Honduras in 1998.
For this reason, today, more than ever, we can affirm that, with some exceptions,
banking contracts are concluded intuitu personae, that is, in consideration of the
personal qualities of those who contract with the banks. This explains, from now
on, why in many banking contracts and in numerous countries they are not only
concluded for an indefinite term but can also be unilaterally terminated by the
bank, which is due, in most cases, to the disappearance or deterioration of the
conditions of contract. morality or solvency that were taken into account when
concluding the deal.
Now, everything said has to be compatible with the doctrinal and jurisprudential
trend that warns about the possibility of abuse of the power not to contract, that
is, that the decision does not result from a reasonable analysis of the conditions
and qualities of the client. potential but that evidences a capricious attitude
contrary to the orderly exercise of the right and unjustifiably detrimental to the
person who receives the refusal. A first approximation can be made through
legislation relating to practices restricting free competition and abuse of a
dominant position, according to which the refusal to contract, without reasonable
justification, when there is no substitute supplier in the relevant market, is
considered illegal conduct1.9In the European Union, the refusal to contract can
be considered discriminatory conduct and, in this way, constitute a violation of
article 86 of the Treaty of Rome. 10
Another approach, closer to the topic, can be given by the generic statement that
Banks, given their peculiar function in the markets and as dispensers of a true
"public good", credit, have a duty of cooperation that requires them to contract
when the service offered does not have alternatives in the market
specific and when the purpose that said service is intended to satisfy is vital for a
user, taking into account their particular needs. 11
In our opinion, the point must be addressed under the premise that the eventual
obligation of a financial entity to contract must be considered absolutely
exceptional and could only be conceived if the circumstances of dependency
occur simultaneously, due to lack of options for the potential user, vital need and
Above all, there is no reasonable justification for the bank's refusal to do so,
which leads to classifying its decision as totally uselessly capricious. And, in that
order of ideas, it does not distort, in any way, the premise according to which
banking contracts are very personal, that is, they are concluded with
consideration for the person of the co-contractor.12
2.3. PROFESSIONAL CONTRACTING
2.3.1. Notion of professional

Professional hiring. In the modern sense of the term, which does not refer
exclusively to the subjective criterion that assigned the quality of merchant to
someone who was recognized as such - since the bank usually is recognized by
express recognition of the commercial statutes - but to someone who massively
provided a service for which particular preparation is required, is recognized by
the community that aspires to obtain goods or services of satisfactory quality and
is willing to complain severely if it does not obtain them. 13 Strictly speaking,
the term acquires relevance within a contemporary reality that recognizes the
emergence of two new categories of legal subjects: the professional and the
consumer. And since the relationship that is established suggests the existence of
a party that may be weak in the contracting process, the law intervenes, as it has
done on more than one occasion, to protect it by demanding that the professional
behave in accordance with the highest community interest. that protects the
consumer.
2.3.2.
Professional obligations
The set of burdens, obligations and expected behaviors that are predicated today
in a practically indefinite manner of the professional, does not result from a
development that in the abstract burdens a participant in the commercial activity
in a capricious manner but has been constructed as a mechanism to protect the
consumer. , that is, to the purchaser or user of its goods or services because, in
some way, under the new formulation of social and economic relations, it sees
the professional as the strong party that imposes its conditions, in markets that it
knows particularly well and does so. , ordinarily, through the imposition of
general contract clauses or contract models of their authorship to which users
simply adhere, as we will see later. In fact, the contemporary trend, with
enormous development in Europe, is to consolidate a positive consumer right and
not exactly a status of professionals. 14
However, a professional can be or act as a consumer towards another
professional with respect to the acquisition of goods or services that are not part
of their specialized activity, that is, do not constitute their own business or, if it is
a company, They do not flow from the direct exercise of its corporate purpose
although they contribute to 10grarIo and, therefore, they are not part of its
"expertise." A bank, for example, is a consumer when it purchases the vehicles
required for its directors or for the transport of securities, compared to the
manufacturer or distributor. And it is when you purchase plane tickets for your
employees to travel to another city to perform a certain task. But it can also
happen that two professionals contract with each other, regarding objects or
subjects in which both are experts, so to speak, and then and in our opinion
neither can invoke or, in any case, not with the same intensity, the fulfillment of
the obligations that we will see shortly, insofar as it is not found in the supposed
helplessness that consumer protection inspires. When an international company
of recognized size and reputation negotiates with a local bank for credit support
for the development of an infrastructure project that it is going to undertake, it
does so supported by financial departments and legal advisors, internal and
external, of no less capacity than those of the bank, when not better.
Consequently, it could not be assumed, in real terms, that the bank would be able
to impose inequitable conditions, as there would be fear that could occur if it
were a professional versus a simple consumer. 15
There are numerous professional obligations that have been recognized by law or
jurisprudence. The French doctrine, for example, mentions that of loyalty and it
includes the duties of cooperation, of executing the contract, of information, of
surveillance, of transparency, of perseverance, of fidelity, of respect for the
interests of the counterparty, and to facilitate the execution of the contract. and to
them it has added the obligations of effectiveness and safety. Although it is
observed, in essence the long list is supported by traditional principles of good
faith, prudence and protection of the expected result for those who contract. But
they have been rediscovered under the perspective of the presence of the
professional and led to enrich the topic that is now presented full of nuances.
2.3.2.1. Loyalty
To do so and because it is part of this broader notion, let us begin with the
principle of good faith, which is expressed contractually in various forms but
which assumes, to make the simplest approximation, that the parties negotiate
and bind themselves in the reciprocal spirit of spontaneously comply with the
clauses agreed upon with the purpose that what is planned is obtained, that is, so
that the business reaches a successful conclusion and not with the hidden
intention of betraying the trust placed in the agreement. In this sense, it is
obvious that behavior is expected from both parties and not only from the bank.
And a warning is in order because a wrong approach has led to the extreme of
placing so much emphasis on the figure of the professional and the obligations
under his responsibility that it seems to forget that whoever contracts with him,
even if he is not an expert, has sufficient capacity to discern, understand a
contract and impose itself on the content of the rights and obligations that both
parties acquire or assume, and that, therefore, must commit with the same
conviction and attitude to honor their commitments. Perhaps, deep down, it is
more the fear of the different economic capacity of the participants that leads to
adopting the protective position, but it is an aspect that must be analyzed with
prudent criteria to avoid going to the extreme of validating a scheme. in which it
seems to always be presumed that the professional is an abuser, negotiating with
an incapable person.16
Well, if as a general principle contracts are concluded in good faith, it acquires

greater meaning in trust contracts concluded intuitu personae because in the
management of credit the parties grant each other exceptional trust, which not
only binds them to each other. but also to the community. In fact, think about the
case of checks, typical securities for the due exercise, by the current account
holder, of the rights that arise from the bank current account or checking account
contract. They circulate as long as the conglomerate makes an act of confidence
in the honorability of the issuer, in that of the endorsers, in that of the bank that
issued the checks or checkbooks, etc., so that the system as a whole is not
explained and, above all, All in all, the reception by the members of the group
would be unjustified if the concept of good faith did not prevail.
Furthermore, due to this special good faith with which the parties and third
parties intervene or are linked to banking operations and, of course, to the
contracts that give rise to them, the laws punish fraud with particular severity, as
happens in the case of writing checks without sufficient tondo provision, with an
adulterated signature or on canceled accounts; cases in which criminal sanctions
are even established for offenders.
Likewise, it explains the circumstance that some commercial legislation grants

banks quasi-public powers that would far exceed those of a contracting party,
interested only in its results, such as leaving records that, sometimes, have the
effects of the contract. I protest, in the case of checks or securities received for
collection. Or, overcoming the natural conflict of interest, they grant them
powers of extrajudicial execution of the pledge -10 which would be expressly
prohibited by law for any creditor secured with it-, allow them to certify the
negative balances constituting the overdrafts, as well as issue documents with
particular evidentiary effect. 17
2.3.2.2. Information
A first level obligation, derived from or subsumed by that of loyalty, but which
due to its importance deserves special treatment, is that of information that is
generally imposed on any contracting party, even if he is not a consumer, and
that, It is even assumed in the pre-contractual stage. By virtue of its recognition,
the professional must make the potential contractor aware in a clear and
understandable manner not only of the conditions and qualities of the service
offered or requested, but also of the risks or precautions that must be taken into
account in relation to them. This is a cardinal aspect in which commercial and
marketing techniques that tend to present a "pink" or perfect vision of the
products offered must be reconciled with a reality in which there are risks, some
empirically recognized. Therefore, and to limit ourselves to financial products, it
is only natural for the seller to highlight the advantages and try to induce the
interlocutor to buy them but, at the same time, to impose on the client the
precautions involved in handling a checkbook or card. of credit, to give two
examples, or the various risks that can be seen in a financial portfolio made up of
papers with certain characteristics. And if this is the case at the stage of
formation of the contract, it will be even more so during its life, as soon as
relevant situations arise for the client that could be affected, to which he must
react or make certain decisions that avoid the harmful effects that are anticipated,
or lessen their effects or, ultimately, allow you to consciously assume the
consequences and inherent risks, if they exist.
The obligation to promptly and adequately inform clients about the course of
their operations is generic to all assignments of administration of other people's
interests, as happens in the mandate contract where the agent not only has to
inform his principal but also render account of the management of the
patrimonial interests that have been entrusted to him. In banking activity this
duty is very strict and we will see specific applications of it when studying many
contracts.
In the permanence relationship that characterizes many banking contracts,
starting with the bank current account and in the businesses in which the bank
acts as manager of the interests of its clients - think, among others, of
intermediation services in collections and payments , in the representation of
bondholders, in the fulfillment of obligations derived from the documentary
credit contract and in trust business, in particular - events may arise in which the
bank's decision entails a conflict between the interests of the client and its own.
own or those of a third party. In this hypothesis, the application of the principle
of loyalty will indicate that, under no circumstances, could the bank make a
decision that would favor it or benefit the third party to the detriment of the
interests of its client. But since in practice the situations can be extremely
complex and the decision of the bank is equally important, since many decisions
are not exclusive and some, despite suggesting otherwise, may end up being
beneficial for the client, it must be remembered that the conflict is It is best
handled if the cause that frequently contributes most to the client's eventual claim
is eliminated, which is ignorance of the factual situation, which again leads to the
obligation to inform.
In effect, if the client knows what is happening, his first possibility is to expressly
authorize the bank to act in a certain way, thereby eliminating his possible
responsibility in advance. And if not, it leaves no doubt for the bank about the
care with which it should make its decision. In fact, it is not strange that conflicts
of interest are resolved by the law itself upon disclosure of the potentially
explosive situation. We have given two classic examples for this purpose: that of
the mandate contract in which the agent is prohibited from negotiating with
himself, unless authorized by the principal, and that of the rules on credit for
related persons - such as directors, senior employees. , shareholders, parent or
subsidiary companies, etc. - which normally prohibit or limit it to a high degree
but whose exceptions are generally based on respect for certain principles of
equality and the express authorization of collegiate bodies, that is, the board of
directors. and even from the Board of
partners or shareholders meeting. 18
As formulated, the information obligation is clearly result-based, which is why

the bank must be in a position to prove that the supervening and relevant
information was made known in a timely and complete manner to its clientele. 19
And if you do not do so, you will risk being condemned for the damages
resulting from your failure to comply. Now, it goes without saying that this
obligation does not extend to that of advising nor that the expressions can be
considered equivalent. Advising or recommending goes further, it suggests paths
of action among several possible ones, all or several that are apparently good.
Perhaps if it involved prevention they could be considered similar, although it is
not strange that when choosing one decision over others there is a simultaneous
analysis of the strengths and weaknesses of all of them. Therefore, although the
dividing line is not always clear, we support the doctrinal position according to
which the obligation of advice is different and must be the subject of an express
agreement that enshrines it.20
2.3.2.3. Efficiency and Prudence
The community expects that the professional's actions will be effective, that by
virtue of the particular competence he or she possesses, the client will have well-
founded reasons to "feel in the best hands." And this is not only due to the
particular preparation and knowledge of the subject, in general, but also due to
the different products -goods or services- that it offers and the markets in which it
operates. Under this obligation, the professional must know the regulations and
requirements that his activity and his clientele must satisfy, the risks that his
business naturally generates or the extraordinary ones that his experience
suggests are possible and the most reasonable way to avoid them or minimize the
possibility of their occurrence. and, above all, having the internal organization
and the external support or help that is necessary to make a correct decision in a
doubtful case.
For this reason, it can be argued that as well as being effective, it must be
prudent, that is, to carry out in a cautious and diligent manner the acts necessary
for the due achievement of the purpose of the contract and the satisfaction of its
obligations.21
2.3.3. Professional responsibility
Any discussion of responsibility involves, as a general rule, the analysis of

conduct. And it is established, therefore, for legislation inspired by European
continental law, based on the notion of fault, by virtue of which the origin of the
damage for which compensation is claimed can be attributed to the behavior of
the defendant. Now, the predicate loses force in the hypotheses of contractual
responsibility that concern us because, to the extent that the result expected by
the client, which should flow from the fulfillment of the obligation assumed by
the bank, does not occur, it does. for breaching the contract and a liability is
generated for the bank from which it can only be relieved if it proves that what
happened is due to an external and unbearable cause - as occurs in our legislation
with the so-called force majeure or with a fortuitous event - or originates in the
act of a third party, of the same characteristics or in the fault of the victim
himself, that is, of the client.
Well, in our opinion there are two variables that have influenced the
transformation of professional responsibility in recent years: the inclusion within
its obligations, that is, in addition to those enshrined in the contract, of expected
behaviors that are predicated on their position by virtue of the law or
jurisprudence, as we have seen and the tendency to objectify certain situations in
which not only is the good conduct of the bank irrelevant but it is not enough for
it to exonerate itself from responsibility by proving the fault of his client or, in
any case, such a file is totally exceptional.
As regards the first situation, it is natural then that if it is considered, for

example, that effective and prudent action is an obligation of the banker as a
professional, the inefficiency and lack of prudence that may be predicated of his
action become a direct and immediate form of breach of contract. In other words,
such obligations are treated as a result and are considered unfulfilled, of course,
if the banker did not inform about the risk of the product, or did not inform the
client of the conflict situation, despite which he acted or He did not use the
expertise he displayed in making decisions that ended up affecting the client.
and for the second aspect and by application of the theory of dangerous activities
typical of certain businesses, whose risks and consequences must be assumed by
whoever provides them, as would be the case of the banking business, the law
tends to enshrine hypotheses that have been called of objective liability, in which,
in the event of non-compliance, it is not necessary to inquire into the conduct of
the bank, which is why some sector of the doctrine has warned that these are
rather presumptions of fault at its expense.23 Now , the initial severity of this
theory seems to be highly moderated in the face of the evolution shown by the
general theory of contractual responsibility, since, to the extent that the
obligations are results-based, the practical effect becomes practically identical. In
effect, as we noted before, in such a case it will be the debtor, presumed in
default, who will have to try to prove the facts or circumstances exonerating his
responsibility without invoking his diligent attitude having primary relevance in
such purpose. Even if it has been, its recognition will be inane in the quest to
undermine the responsibility derived from not obtaining the result to which it had
been committed. The most innovative scope of the theory would be given
because it would not be possible for the bank to try to relieve itself of its
responsibility by proving the fault of its client.
In this case, the preponderance of the objective element would be total, since it
would exclude the consideration of the debtor's conduct but, at the same time, it
would leave out the analysis of that of the creditor, whose clumsiness could
exonerate, due to fault attributable to him, the responsibility. of the debtor, in
accordance with the applicable general rules. The most common example is the
payment of false checks, although the solution in comparative law is not
uniform.24
Now, what is subtly happening is that it is not about discussing whether the bank
as a professional fulfilled an obligation or failed to do so but was diligent. No,
what has been established is that being diligent constitutes per se an obligation
for the professional. Consequently, if it is established that no action was taken in
that manner in the hypothesis of medial obligations, it may be held that the
burden of proof falls on the plaintiff client, and the thesis that he must prove his
diligence is successful, according to with the law, the obligation will be
considered unfulfilled. And if damage has occurred, there will be a claim for
liability compensation.25
------------------------------------------------------------------------------
1. GIRALDI, Op. cit., p. twenty-one.
2. DE CAMARGO VIDIGAL, Geraldo. "Banking Contracts". In: Magazine of
the Latin American Bank Federation No. 36. Nov. 1979. Q. 204. The Brazilian
writer notes that "there are authors who see in the expressions 'banking operation'
and 'banking contract' the reference to the same set of facts, but from different
perspectives: the operation would mean the consideration of the economic
content of banking businesses, in so much so that a contract would include the
consideration of its legal elements". And he adds that: "the experience of banking
activity shows us that in each bank operation, numerous commercial contracts are
generally combined. Hence, probably, references to bank operations and not to
banking contracts are more common and traditional. "The usual complexity of
operations conflicts with the isolated consideration of the different contracts that
accompany them."
3. The contracts themselves, the technical form of their implementation and their
characteristics have been significantly influenced by the rapid development of
information technology, which represents a hasty adaptation effort for jurists, as
we had warned in previous editions. For this reason, we have introduced a special
point later in this chapter under the name "Electronic banking", without prejudice
to the particular references that we will make on the subject, when dealing with
each of the contracts. In this matter we recommend, at the time, aftl:EN DE
TOBÓN, Maricelo; LONDOÑO HOYOS, Fernando; RODRIGUES, AIfredo.
"Influence of computing on the interpretation of the legal order." In: the
Magazine of the Latin American Federation of Banks, No. 48, February 1983,
IEd. Kelly, Bogotá. Today the bibliography is enormous and a selected part of it
will be brought up in the next point and throughout the work.
4. This has led some sector of Argentine doctrine to specify that, in their opinion,
financial activity is of a private nature but of public interest, since it does not
meet two of the three requirements that any service that seeks to be classified
must have. as public, namely, "equal rights of users with reference to their claim
to demand the service" and "obligation of the provision." It is stated that equality
does not exist, since each entity has the capacity to contract freely and under
different conditions, depending on the market, solvency risk or any other
economic factor that supports its future relationship with the applicant. Nor is it
mandatory to contract since not only must prerequisites be met by the interested
parties but there is an implicit burden of not linking undesirable clients, which
would reiterate the very personal nature of banking contracting. FARGOSI P.
Horatio. "The dominant position in the contract. "Again about banking as a
public service." The law, T. 1980-0, p. 558. Cited by César Eduardo
LOMBARDI. "Banking Responsibility. Notes, Features and Practical
Applications". Journal of Banking Law and Financial Activity, year 4, January -
December 1994, No. 19/24. Ed. Palm. Buenos Aires. p. 187.
5. The 64th General Assembly of Interpol held in Beijing in 199510 has defined
as "any act intended to conceal or conceal the nature of illicitly obtained assets in
order to make it appear that such assets come from lawful sources." . URL:
hllp://www.imoHn.org (access date: December 10 /2001). SOARES DA VEIGA,
Basque. "Direito/Banking". Ed. Almedina. Coimbra, Portugal. 1997, p. 471 And
ff.
6. The Convention, signed during the conference in Palermo, Italy, has been
signed in Latin America by Argentina, Colombia, Guatemala, Bolivia, Brazil and
Paraguay (December 12, 2000); Chile, Ecuador, Mexico, Panama and Uruguay
(December 13, 2000); El Salvador, Honduras, Nicaragua, Peru and Venezuela
(December 14, 2000) and Costa Rica (March 16, 2001. Information obtained
from URL: http://www.oecd.org/crime (access date: December 6, 2001).
7. SUÁREZ, María Carolina. "The Global Implications of the OECS Project to
Counteract Harmful Tax Practices." In: press to be published in the Revenue law
Journal. Vol. 11. 2002. GOLO COAST, Australia.
8. Currently 29 countries and two world organizations are part of it: the European
Commission and the Gulf Cooperation Council. Brazil, Mexico and Argentina
make up this intergovernmental body established in 1989.
URL:http://oecd.orglfatfl (access date: December 4, 2001).
9. Colombia. It establishes as an act contrary to free competition the refusal to
sell or provide services to a company or to discriminate against it when this could
be understood as retaliation for its pricing policy. However, the refusal to
contract is not expressly provided for as a cause for abuse of a dominant position
(D. 2153/92, arts. 48 and 50).
10. BIGLlAZZI GERI, Lina and others. "Civil law. Facts and Legal Acts". T. 1.
Vol. 2. University extership of Colombia. Bogota, 1995. Colombia. The
Constitutional Court accepted the position of the European Union, pointing out
that freedom of enterprise and autonomy of will are not absolute principles, but
rather, when there is a vital and legitimate interest, a situation of economic
dependence and there is no cause to justify the refusal to hire, it is not possible to
refuse (Sen!. of guardianship. August 14/97. M. Q. Eduardo Cifuentes Muñoz. A
similar solution inspires the provision according to which "people who provide
public services or have a de facto or legal monopoly will not be able to suspend
the supply to consumers who are not in default, even with prior notice, without
authorization from the Government." (ar!. 979 C. Co.).
11. LÓPEZ VALDERRAMA, Andrés. "The Duty of Cooperation in Legal
Businesses entered into by Financial Institutions." Financial Legal Bulletin No.
1,000. Asobancaria. Bogota, 1999.
12. Colombia. The Banking Superintendence has maintained that financial
institutions can refuse, without justifying their decision, to affiliate commercial
establishments to the credit card system, based on the autonomy of their will
(Concept 9800050252 January 26/98). Naturally - we add - we are starting from
the reasonable and unprepared action of the entity that makes the decision
inspired by the best security criteria of the system and not by the capricious and
unjustified purpose of denying a service, which would lead to the debate on
possible abuse. in the terms in which doctrine and jurisprudence have been
pronounced. But what is more important, and continues to inspire the statement
that supports and substantiates this point: the bank cannot relieve itself of the
obligation to know who it contracts with and to assume the consequences if it
makes a mistake in choosing its client.
13.V. Supra. Chap. 1, 1.3.3.2. SENISE LISBON, Roberto. "Civil Liability
"Consumer Relations". Ed. Dos Tribunais Magazine. Sao Paulo, Brazil, 2001.
14. LE, Philippe. CADIET, Lo"ie Op. eil. p. 496
15. Colombia. In this sense, a recent arbitration ruling has been issued. Inurbe/
Fiduagraria M. Ignacio Narváez García, Julio Cesar Uribe Acosta, Jorge Suescún
Melo, June/99, p. 40. CRANSTON, Ross. "Principles 01 ffanking Law." Ed.
Clarenton Press. Oxlord University Press. New York. 1997. pp. 159 And ff. It
makes an interesting analysis of the position adopted by the English Courts,
particularly based on the provisions of the urcc (Untair Terms in Consumer
Contracts Directive).
16. LE TOURNEAU/ CADIET express their concern in the following terms:
"The etonant quiproquo prevailing regarding professionals. The considerable
growth of the field of action of professionals, the appearance of new subjects, the
birth of unprecedented obligations, have been concomitant with the extraordinary
demand for responsibility that characterizes the contemporary world. A
quiproquo etonante reigns regarding the professionals. The public, their clientele,
has the tendency to credit them with almost superhuman powers, so that in case
of dissatisfaction they turn against them by suing them. True, no one is more
convinced than us that freedom implies responsibility. But it is not only the
responsibility of some entities placed on a pedestal to better bring them down
immediately. Responsibility implies the freedom of all citizens and that implies
that each one accepts and assumes his destiny, which means that he cannot
always heal or win his process. The professional, no matter how diligent and
competent, has no control over destiny and cannot eliminate the dangers and
risks of the existence of our human condition, whose tragedy is precisely the
unpredictability of the manifestations of our fallibility and mortal condition. Life
is and will continue to be surrounded by risks, even in an aseptic universe. No
one will ever be able to rediscover the lost paradise, where absolute security
undoubtedly reigned. Consequently, this insidious and pernicious tendency to
always seek and designate someone responsible must be rejected,
saying to oneself that the evil is not so great because it is insured... by someone."
(p. 497). '1
17. Colombia. Art. 326 N" 6 literal e). EOSF.
18. RODRÍGUEZ AZUERO, Sergio. "The Responsibility of the Trustee", pp. 74
And ff.
,RODRÍGUEZ AZUERO, Sergio. "Civil Liability of Directors of
Societies". Magazine of the Colombian Academy of Jurisprudence No. 312.1998.
Bogota. Colombian law provides another interesting example by ordering
directors to "refrain from participating by themselves or through an
intermediary...in acts in which there is a conflict of interest unless expressly
authorized by the shareholders' meeting or general shareholders' meeting" (L .
222/95, art 23, number. 7) In this regard we have said: "Conflicts of interest are
numerous in commercial legislation and in reality. They flow naturally from life.
But the same law, normally, and the parties usually solve them by putting its
existence on the table and giving it a way out that eliminates the potential
damage derived from acting in a direction contrary to that which must be
protected. "Acts in which there is a conflict of interest can be beneficial for
society and therefore the law does not prohibit them but rather carefully regulates
them" (p. 58).
19.V. Supra Chap. 1,4.3.6.
20. LE TOURNEAU / CADIET, Op. cyl. p. 507.
21. Prudence is defined as "one of the four cardinal virtues that consists of
discerning and distinguishing what is good or bad in order to follow it or flee
from it." Royal Spanish Academy. Dictionary of the Spanish Language, 2001
edition, p. 1853. Colombia. It consists of acting with the "diligence and care that
men ordinarily employ in their own business" (art. 63 C. C.).
22.V. Supra Chap. 1, 4.3.6.
23. PIZARRO, Ramón D. "Civil Liability for the risk or vice of things." Ed.
University. Buenos Aires, 1983, p. 37. He states: "The doctrine of created risk
can be summarized in this way: whoever uses things that, by their nature or
method of use, generate potential risks to third parties, must be responsible for
the damages they cause" MOSSET ITURRASPE, Jorge. "Liability for damages."
T. 1, General Part. Ed. EDIAR 1982, p. 123. In the same sense it states: "An
organization or company is created for profit, to obtain profits or benefits, and if
in the exercise of its own activities the possibility of a risk arises, regardless of
any culpable or fraudulent behavior , which then translates into damage, it is fair
that it be compensated by the person who "knew and generally controlled the
source of the risk." Both transcribed by RIERA ESCUDERO, Op. cyl.
24. Colombia. Although the starting point would suggest objective liability, the
bank can be relieved of liability if it proves the fault of its client or its
dependents, which can lead to frequent situations of shared responsibility (arts.
732 and 1391 C. Co.) However, if the check has been lost and the bank has not
been given timely notice, then the bank will only be responsible if the forgery or
alteration is obvious (art. 733, C. Co.).
25. Colombia. The financial statute has provided that "institutions subject to the
control of the Banking Superintendency, as soon as they carry out activities of
public interest, must use due diligence in the provision of services to their clients
so that they receive due attention in the development of the contractual
relationships established with them and, in general, in the normal development of
their operations...". d. 663/93, art. 98, inc. 4th (we have underlined).
Additionally, the law establishes that "The proof of diligence or care rests with
the person who should have used it..." (art. 1604 C. C.).
26. ARRUBLA PAUCAR, Jaime Alberto. Op. cit., p. 56. DIEZ-PICAZO, Luis.
"Law and social massification; technology and Private Law." Ed. Civitas.
Madrid, 1979, p. 22. VALLESPINOS, Carlos Gustavo. "The contract for
Adherence to General Conditions." Ed. University, Buenos Aires, 1984, p. 180.
27. PINZÓN SÁNCHEZ, Jorge. "General Contracting Conditions and Abusive
Clauses." Private Law Magazine" No. 17. University of the Andes, 1995.
CIFUENTES MUÑOZ, Eduardo. "Comments on the Presentation: 'Banking
Contracts in the Commercial Code: disquisitions on 20 years of peaceful
existence'." Comments on the new Commercial Code. University of the Andes.
Chamber of Commerce of Bogotá.
28. Colombia. The Supreme Court of Justice has said: "banking in its different
manifestations is a complex amalgam of service and credit where the financial
companies that practice it have enormous economic power that '." destroying the
general principles of contracting," as a renowned writer said (Joaquín Garrigues,
Banking Contracts; chap. 1, num, 11) allows all of their kind to enjoy a dominant
position by virtue of which they can unilaterally predetermine and impose on
users the conditions of the active, passive and neutral operations that they are
authorized to carry out, as well as manage the entire contractual scheme put in
place in this way, but despite this, it is necessary not to lose sight of the fact that
in the exercise of these prerogatives, which in themselves reveal a significant
inequality in the negotiation, the interests of the clients they cannot be
underestimated; if this happens because the credit institution, to the detriment of
its client and deviating from the trust placed in it by the latter in the sense that it
will safeguard said interests with reasonable diligence, exceeds its limits by acts
or omissions in the exercise of those prerogatives, incurs abuse of the preeminent
position it holds and, therefore, under the terms of article 830 of the Commercial
Code, is obliged to compensate" (Cassation ruling. M. Q. Carlos Este
ban Jaramillo Schloss, Oct./94). ,
29. Colombia. The same article 98 of the EOSF establishes that ".in carrying out
the operations of its purpose, said institutions must refrain from agreeing to
clauses that, due to their exorbitant nature, may affect the balance of the contract
or give rise to an abuse of a dominant position." . In relation to "Credit Cards",
the same statute considers as unsafe practices the offering of credit quotas
without the cardholder's request, the imposition of unauthorized charges, the
sending of advertising flyers for goods or services or legal business offers with
assignment of acceptance effects for omissive behavior, silence or absence of
rejection within a certain term. (Art. 326) For its part, the Statute of Public Home
Services obliges companies providing services to inform their clients about the
general conditions of contracting and to give them copies and establishes the
prevalence of special conditions over the uniform ones, in case of conflict and the
interpretation of the contract in accordance with the principle of free competition,
the prevention and exclusion of the abuse of any dominant position. (art. 30 L.
142/94, declared exequitable by Sent. C-066/97).
30. Directive 93/13/EEC, art. 3. Colombia. In the press of this book, Bill W
115/01 was being processed in Congress by which the "Consumer Statute"
aspires to be issued. Spain. The Law of April 13, 1998, on general contracting
conditions, which transposes the Council Directive 93/13/EEC, of 5
of April 1993, broadly develops the European Directive and has been
complemented by numerous provisions of Banking Law on matters such as
consumer credit.
Colombia. The intervention of the Banking Superintendence in this matter is
today limited to exceptional cases of fiduciary contracts, when they are precisely
models intended for the massive provision of a service of this nature and in
particular, in the so-called investment fiducia, to the Prior approval of the
regulations of the Investment Funds that the trust companies manage is required.
Articles 146 #4 and 153 EOSF.
32 Colombia. Article 98, paragraph 3 EOSF.
33 Spain. Law 7a/1998, of April 13, on general contract conditions
tion. Specifically its article 11, which establishes: "Registry of General
Conditions". 1. The Registry of General Contracting Conditions is created, which
will be in charge of a Property and Commercial Registrar, in accordance with the
provision rules provided for in the Mortgage Law. The organization of the
aforementioned Registry will comply with the rules issued by regulation. 2.
Contractual clauses that have the character of general contracting conditions may
be registered in said Registry in accordance with the provisions of this Law, for
which purpose the copies, type or models in which they are contained will be
presented for deposit, in duplicate. , at the request of any interested party, in
accordance with the provisions of section 8 of this article. However, the
Government, upon a joint proposal from the Ministry of Justice and the
corresponding Ministerial Department, may impose mandatory registration in the
Registry of general conditions in certain specific contracting sectors.
34. See NIETO BLANC, Ernesto. "The predisposed general conditions and
exoneration clauses of liability in banking businesses." Magazine of the Latin
American Federation of Banks, No. 74, 1989. Bogota. Panama. An example of
Codes of Conduct for financial entities is presented in Panama, which in response
to this issue issued Interbank Agreement No. 17 of 1984, "by which the Code of
Conduct relating to Banking Operations is established." Colombia. The
association of fiduciaries, which brings together companies of this nature,
adopted a Code of Conduct for its members since the mid-nineties.
2.5. BANKING SECRECY

In the past we mentioned it as one of the duties towards clients, along with
information. By opening a section on professional contracting, we will limit the
present to studying this classic duty in banking activity. 35
Banking secrecy, a professional obligation, is, in essence, the need to preserve

the privacy of the sources, destination, amount, etc., of the operations carried out
on behalf of its clients, as well as that of the financial statements and particular
reports. about their commercial activities that clients ordinarily present to banks,
as a requirement for the processing of different operations.
This professional obligation is not absolute. It is understood, for example, that it
does not contain data and information that can also be obtained from other
sources available to all people, as would be the case with acts or contracts subject
to the public registration requirement or with the financial statements or balance
sheet figures that , due to a legal obligation or by the simple will of the merchant,
are published in documents of unrestricted circulation. Nor does this obligation
cover the provision of confidential information that banks usually do about the
commercial experience they have had with their clients and which includes some
data indicative of the volume of credit they have granted without specifying the
figures. It also excludes the information that banks are legally obliged to provide
to state officials in judicial investigations of a criminal or tax nature or to
individuals indirectly when involved in a dispute with them and the exhibition of
their books and papers is appropriate, so that Through them certain figures or
situations can be known that in themselves would be subject to the
aforementioned reservation.
The so-called "legitimately obtained negative information" has also been
excluded from the notion of banking secrecy, understood as information that
records the inadequate management made by clients of the facilities or services
offered by the entities, including mismanagement of the account. current -for
unauthorized drafting of overdraft checks; frequent writing of checks without
fulfilling the formal requirements registered or required by the account holder
himself to regularly make the payment, such as stamps or plurality of signatures;
repeated and unjustified revocation of checks drawn, etc.- 0, dD..¡l.¡?lgQ de
debts incurred through credit operations. In these cases it has traditionally been
considered that, above all, the community is protected in this way because by
knowing who are bad and therefore undesirable clients of the system, the rest of
the participants are prevented from being unnecessarily linked to another entity.
The management of the growing volume of information that is generated,
together with that of the credit centers, has allowed the construction of databases
that can be consulted, both by banks and, exceptionally, by other entities that
pursue trade protection purposes or that They can use them as criteria, in turn, for
their own hiring decisions.
But just as there is no doubt about the reasonableness of the construction of
these bases, there has been no shortage of those who formulate criticisms
of various natures about
Yo
the legitimacy of their scope and the effects on the individuals who use them.
integrate can occur. For the first aspect, the concerns are multiple and reflect both
the enormous technological capacity that exists today to have "intelligent"
databases, which not only record but also analyze the data, as well as to
interconnect them with others, until collecting and concentrating information of
such detailed nature that it would violate the secular guarantee of privacy. In fact,
consider to take the example to the extreme that the information from the
banking databases, including those that record the consumption of plastic cards,
would be added to that of the health system and the most frequent commercial
ones. The result would be a "naked" subject since all his essential data (marital
status, age, number and sex of children, education of the person and his family,
blood type, illnesses, address, profession and activity, banking, personal and
commercial property, real estate and personal property that you own, etc.) could
be considered together with your habits (sports and frequency with which you
practice them, places where you take your vacations, airlines you use, times
during the month you go to the movies, to a restaurant, to the doctor, to
entertainment places, frequency with which you buy a suit, type of gifts you give,
insurance you have contracted, accidents suffered and claims that have been
successful, etc.) The list could be almost infinite and the cross-analysis of The
information would allow the subject's profile to be constructed with such
precision that the result would be a true intrusion into his or her privacy.36
But, additionally, the rating and classification provided by banking databases can
have severe effects for an individual, even if they are true. Needless to say, then,
of the hypothesis that they turn out to be incorrect due to error or bad faith and, to
dramatize, that the person from whom the references taken from the bases are
given ignores their origin and finds himself, at a moment , in a "Kafkaesque"
situation, rejected, for example, in your application for a job, to rent a home, to
enroll your child in a private school or to receive a loan, to imagine easily
presentable situations.
Well, for some time now in the Nordic countries and then over time in many
countries,37 rules have been issued that protect those who enter the databases, in
general, and those of "negative information" from the banking systems, in
particular, not only so that they can know the source from which the information
comes, but to be able to complement or correct the base, if it is insufficiently
supported or if the information is not true, through the legislative enshrinement
of the so-called habeas. data38 which, ultimately, seeks to make effective the
right to computer self-determination. Especially because it may happen that the
information is partially true or excessive compared to the legitimate purpose
sought with its collection or, more than objective records or in addition to them,
it contains value judgments or that it is read incorrectly, devoid of reference to
the circumstances. of time, manner and place within which the events occurred
or, simply, that having
After an appreciable period of time has elapsed, the reprehensible conduct, at the
time, cannot be estimated in isolation without taking into account the subsequent
behavior of the person to whom it refers.
Remember, at this point, the delicate balance that, in any case, the bank must
have since neither the reserve or banking secrecy, as a general duty, nor the
weakening that results from the exercise of habeas data can affect the basic
information that, of course, On the other hand, you have to keep in order to
comply with the mandate that the contract is of a very personal nature and that,
especially by virtue of anti-money laundering campaigns, it is imperative that
you know your client and be able to account for the circumstances in which you
linked it. .
2.6. INTERNATIONALIZATION
Even though it is a general characteristic of Commercial Law, it makes itself felt

in a special way in Banking Law. There are fields in which contractual regulation
is informed in a high percentage in provisions that, without having been
incorporated as internal laws, constitute an international custom assimilated and
invoked in legal transactions, as is the case with the uniform rules and uses
regarding documentary credit. . They are compiled by the International Chamber
of Commerce and disseminated and endorsed by different organizations such as
the Latin American Federation of Banks and translate into the existence of
practically uniform legislation from the point of view of applicable contractual
law.
The demonstrations have grown in recent years in number and importance as we

noted in detail in Chapter I of the work. UNCITRAL and UNIDROIT have
played an important role in the results obtained, through draft model laws and
conventions that, when adopted by various
countries expand the trend towards legislative uniformity. Among the most
Importantly, we mention the conventions on the international sale of goods; bills
of exchange and promissory notes; international financial leasing; international
factoring; guarantees and standby letters of credit; insolvency; international
credit transfer and electronic commerce. There we indicate, in footnotes, the
status of the ratifications of the Latin American countries at the close of this
edition.39
Special mention deserves the reference to the activities of the Basel Committee,
which we already referred to in Chapter II of the book, whose influence on
regulatory standards and the conduct of supervisors has been persistently
growing. As we said then, despite the valuable contributions made in both fields,
the effect on the banking of the countries of the region and, in general, of those
with less relative development, has earned us more than one reservation.40
-------------------------------------------------------------------------------
35. Ed. Excelsior, Bogotá, 1984. SOARES DA VEIGA, Basque. Op cit., pp. 225
And ff.
36. RIERA ESCUDERO, Manuel. "Right to Information vs. Right to privacy".
XX Latin American Congress of Banking Law. Asuncion, Paraguay. October
2001 notes: "Despite the difficulty and risk that definitions entail, the following
definition of the Right to Privacy is attributed to ALBALADEJO: 'power granted
to the person over the set of activities that make up his or her intimate, personal
and family circle. , a power that allows him to exclude strangers from interfering
in him and from giving him publicity that the interested party does not desire'
(Civil Law, t. 1, vol, 2nd, p. 65). For its part, IGLESIAS CUBRIA says: 'Intimate
is what is reserved for each person, which is not lawful for others to invade, not
even with knowledge, and what is part of privacy? everything that a person can
lawfully withhold from the knowledge of others. RIERA ESCUDERO adds:
"The doctrine has established the concept of sensitive data, to refer to those that
have to do with racial or ethnic belonging, political preferences, individual state
of health, religious, philosophical or moral convictions; sexual intimacy and, in
In general, those that promote prejudice and discrimination, or affect the dignity,
privacy, domestic intimacy and private image of individuals or families. These
questions are outside the general interest, except when it concerns a public man,
whose actions and decisions affect a nation."
37. Convention for the protection of individuals with respect to automated
processing of personal data (Strasbourg Convention, 1976) Privacy Act. (USA
1974) Loi relative to I'informatique, aux fichiers et aux libertés (France. Law of
January 6, 1978).
38. Colombia. It has given it the status of a constitutional principle, giving people
"the Right to know, update and rectify the information that has been collected
about them in data banks and in public and private archives" (ar!. 15 CP). As
such and as a consequence of the review of tutela rulings, the Constitutional
Court has ruled on numerous occasions, specifying the scope of the figure, the
rights of citizens and the correlative duties of financial entities, starting with the
special diligence and good faith in the conservation, management and
dissemination of credit information concerning its clients. To this end, it has
mentioned as an unavoidable duty that of obtaining their consent for the
reporting, processing and consultation of the information required to achieve the
purpose of the Central (Sen!. T-022/93, M. Q. Ciro Angarita Barón). It has
reiterated that it has the obligation to ensure that the information is truthful,
which means, by definition, that it is complete. Speaking about a loan, he said: "a
bank would not provide complete information if it limited itself to stating that the
debtor no longer owes anything and concealed the fact that payment was
obtained through an execution process, or that the obligation remained in
arrears." for a long time. Likewise, it would not be complete if it were not
reported from when the client is safe and sound" (Sen!. C-089/95, M. Q. Jorge
Arango Mejía). He added that "there must be adequate proportionality between
the means used and their real effects on the fundamental rights of the data owner,
especially with regard to the content of habeas data, that is, the Right to know the
information provided to him." refer to: the Right to update such information, that
is, to update it by adding new facts, and the Right to rectify information that does
not correspond to reality." This means that the registration, conservation and
circulation of a client's data beyond the legally established term for the exercise
of judicial actions aimed at collecting obligations is abusive (Sentences T-
303/93, M. Q. Hernando Herrera Vergara and C-089/95, M. Q. Jorge Arango
Mejía). Additionally, the Court has developed a concept called "Right to be
forgotten" closely linked to the duty that entities have to keep information about
their clients updated. In fact, it has been said that negative information does not
have a perennial vocation, so once the causes of a piece of information have
disappeared and within certain assumptions, it must disappear (V. Sentences T-
160/93, T-220/93 and T-086/96). Despite how attractive the notion may be for
some, it seems to us that it should be interpreted with great caution, since it can
go as far as ordering the physical deletion of the registry in the database, which
seems anti-technical and inconvenient, as well as very difficult to control given
the ease to keep duplicates of files. In our opinion, it would be enough for the law
to order not to provide negative information after a certain time and if certain
concomitant circumstances exist, such as non-recurrence of the offense, to give
an example. -A recent law, whose disruptive effects are still to be defined, has
established that: "people who, within the year following the validity of this law,
bring themselves up to date on obligations for which they have been reported to
the data banks of that this article deals with will have a relief consisting of the
immediate expiration of the negative historical information, regardless of the
amount of the obligation and regardless of whether the payment occurs judicially
or extrajudicially" (L. 716/01, art 19). It should be noted from now on that the
expiration of a history of bad behavior, far from being a justified reward for the
bad client, constitutes an anticipated threat for the community that is asked by a
law to "forget the reality of what happened." effect whose perversity is obvious.
39.V. Supra Chap. 1, 1.3.3.3.
40.V. Supra Chap. 11, 2.4.1.
41. We use the expression "electronic", as it has been the most widespread in the
language of the sector. Strictly speaking, however, this new bank is supported by
the important developments in electronics, including microcircuits, with their
logical processing and information storage capacity; but also, in the development
of communications that has allowed the construction of different types of
networks, and for them different protocols; and of course, the development of
computing, as such, since the programs or applications have obtained levels that
contribute to the two previous factors to the global transformation.
3. ELECTRONIC BANKING 41
3.1. REASON FOR ITS INDEPENDENT MENTION
The study of banking activity in general, and that of banking contracts in

particular, makes it essential to constantly refer to technological developments
that, especially in the field of communications, have undergone a dizzying
transformation in recent years, changing not only the possibilities of bank-
customer interaction, but generating a culture of communication and access that
is essentially different from the one that has been generated for centuries,
practically since banking was organized as a business.
This transformation is ending the paradigm of the personal and direct provision
of the service and, in addition, replacing the traditional symbol that identified the
provision of banking services with the building, the physical site, particularly
safe, if not luxuriously equipped, to which users, fundamentally, to carry out their
deposit and payment operations. For this reason, the organization of the banking
apparatus revolved around the physical space, that of the main office with its
branches and agencies. That necessary to process the operations required for the
provision of services (back office) and that of the service "halls" or spaces
intended to serve customers (front office). and in that purpose he gave absolute
prominence to all the elements linked to the site, from the security (bars, vaults,
guards, television control systems, etc.), to the location of the offices near the
busiest sectors, as those in which the main industries, businesses or economic
activities of the squares were concentrated.
For years, and until not long ago, the second half of the last century, a
fundamental criterion for authorizing the opening of offices was to analyze in
what way or in what way the sector was served by other entities, to discourage
the presence unnecessary of an excessive number of offices, in a certain place in
the city. And since everything revolved around the office, banking services
required the presence of numerous qualified personnel, hours of customer service
and internal work, and opening and closing days, with which, in some way, the
reality on The foreseeable work in a week was established based on banking
hours. There was even no shortage of legislation that 19. they would take as a
frequent reference to know if a day was a business day or not.
Well, everything has changed very quickly. The possibility of providing services
through new communication channels between the bank and its clientele has
broken the paradigm and is beginning to eliminate the symbol. The service is
increasingly less personal and direct. Fewer and fewer offices and fixed service
points are required. The physical presence of clients or the third parties who
contract with them in the banking halls is increasingly desired. Locations are not
required, but schedules do not have to be respected either. There are no holidays
or geographical distances. Communication through different means allows, above
all, not only to have much more efficient system support than ever before, for the
provision of these services, but also that they can be done remotely and using
mechanisms that, even, They begin to suggest that the traditional link between a
client and any banker is unnecessary, given the possibility that the client can
obtain, through the new media, commercial responses that at a time, or at least
for some services, seem make it useless.
Therefore, the first approach to the notion of electronic banking starts from
breaking the form of communication between the bank and the client through
paper messages exchanged in the banking "hall", to replace it with a data
transmission that allows the interaction using electronic impulses, whose point of
origin is disconnected from the physical space where for centuries it was
necessary to express the negotiating will. 42
This reality is modifying the cost structure. In effect, fixed costs tend to be
reduced to the extent that they were generated, to a high degree, by the existing
network of offices and the specialized personnel required to serve the clientele,
and the variables directly linked to the operation become increasingly
increasingly marginal, this has a smaller weight in relation to the total, because
the new communication systems and the massification of services make the
intrinsic net value required to operate infinitely lower.43
What does not allow, however, to ignore that, unfortunately, the costs of certain
types of fraud have increased and that the contingents for the risks derived from
bad faith linked to electronic banking operations tend to grow significantly.
Now, going to the bottom of the book, the first warning that we have to make is
the following: the use of new communication systems, fundamentally the use of
resources that have been generically known as those of electronic banking, has
changed This way deepens the possibilities of providing services, but it does not
imply per se a change in the conceptual support of the legal relationships that link
banks with their clients. That is, from the point of view of law, the business
relationship continues based on the existence of an agreement of wills, by virtue
of which, the bank is obliged to provide the benefits or offer the services derived
from the contracts that, in accordance With banking laws, you can celebrate.
What we would call the substantial scheme of banking contracting is not replaced
then. The way in which the business is carried out is not changed nor is the
regime for providing the derived obligations modified. What happens is that both
the will can be expressed in a different way and the responses are produced very
quickly, that is, simultaneously, in most of the times, and of course, a series of
technical, operational questions arise. and legal about the effects that this new
reality can produce.
From the above, we could then say that technological advances, especially
expressed in electronics, communications and computing, with the possibilities it
offers to design information systems that operate with efficiency and speed
unknown until now, have led to banking becoming transform it into a triple
plane: from the point of view of its internal support, this is from the operating
systems to provide better services to its clientele, secondly from what it says with
the very provision of its traditional services to clients, in development of the
previous contractual relationship and thirdly, as it touches on the gigantic
possibilities that open up to effectively support electronic commerce, which
needs a currency and which naturally turns its eyes towards traditional banking,
which finds there a really important development opportunity.44 It could even be
said that there is no third level and that what we describe as such only reflects the
new capacity of banks to serve their clients in this way. But we highlight it
because electronic commerce can generate its own dynamic of broad spectrum
and growing acceptance, which seeks its own answers, as in fact it is beginning
to do within the "web", so banks must prepare better than never to compete and
remain as leading players in this new scenario, where the risk of being displaced
would mean an obvious loss of market.
What the bank can offer its clients today involves several communication
possibilities: the existence of private networks, which was perhaps the first way
in which the bank offered its most important clients direct, online access, that is,
in real time, not only to obtain information, but to make transactions; then the
existence of a public network, usable by its clients or by third parties, through
agreements concluded between banks (Web desk banking) and also, a possibility
of providing banking services through the Internet that today has produced a true
virtual worldwide communications system, given the penetration of this
particular access device.45
For this reason, in each of the chapters of the book we will make reference to
these technological variables, inherent in the notion of electronic banking, that
may affect contracts, but we have decided to make this general presentation that
will necessarily be simple and descriptive, to facilitate the reader of the work, to
have a vision of what at this moment, at the beginning of the 21st century, can be
found in the matter, with the certainty, which we anticipate, that the pace of
changes will make it mandatory to update this chapter, with faster than any,
compared to the others.
3.2.
POSSIBILITIES FOR CUSTOMERS
An interesting exercise regarding banking contracts, at their current level of
development, would be to ask how many and how they can be carried out
through electronic communication systems, thereby replacing direct contact
between the bank's client and which ones, therefore At least at this point, they
seem more difficult to do, but without a doubt, they will be possible in the near
future with some combinations and adjustments that are coming.
3.2.1.
cashier service
Without a doubt, the fundamental service of banking as a leading participant in a
payment system is to provide cash service to its clients, by virtue of which they
can use it to deposit payments made in their favor and to order from their funds,
the payment of debts owed to third parties. The daily settlement of hundreds of
thousands of monetary operations is now possible, especially through the
electronic transfer of funds. But for the first service, obtaining or depositing
money, that is, physically depositing or withdrawing money, there are automatic
teller machines or dispensers, known in English as ATM (Automated Teller
Machines), which we will see later. It is then no longer necessary to stand in line
to carry out one operation or another in the banking hall.
3.2.2. Getting credit
As far as obtaining credit is concerned, the possibility of connecting with a

central office through any form of public terminal, but especially the possibility
of direct connection of the client with his bank, in effect using the identification
keys (ID), makes it probable that a good part of the active businesses that we will
see can be carried out in this way.
3.2.2.1. Mutual
For example, a practically automated application is already being developed, by

virtue of which the client only needs to provide basic information, or even to a
third party who would like to be linked in this way, which includes data about
their address, profession, experience and job stability, family situation and
average income, so that the bank can authorize the disbursement of a loan
extremely quickly, crediting it to your current account.
Commercial or mortgage loans, for now, would require a more complex

intervention by the bank, sending documentation, analysis of sectoral risks, or of
the operation, study of the viability and repayment capacity, etc., which suggests
that they will be the subject of further development.
3.2.2.2.
Credit opening
Obtaining a line of credit will be equally feasible through electronic
communication, even for those countries in which it is required that the contract
be in writing, because as we will see when talking about the electronic contract,
the legislation that has been dictated In this regard, following the Uncitral model
law, they assign to the electronic signature and the document constructed based
on it, the same legal effects that the signing of a paper document would have.46
3.2.2.3.
Letter of credit
The mandatory presence of documents for the exercise of the beneficiary's rights,
as we will see later, makes this contract an interesting challenge and forces us to
highlight the existence of a pilot project, started in 1994, called "Bolero" (Bill
oflading electronic register organization), whose purpose is to provide importing
and exporting companies, their banks and maritime transport companies,
worldwide, the ability to electronically exchange, through the Internet and in a
secure manner, information and documents typical of a commercial transaction ,
in order to reduce as much as possible, and if possible eliminate, the exchange of
physical documents, which can bring an obvious benefit in streamlining
transactions and reducing costs. Within the activities of "Bolero Net", there are
efforts aimed at the creation of electronic documents, including bills of lading,
with which it will be possible to use an electronic platform to exchange the
document "on-line", in accordance with an agreement international that
incorporates the rules to carry out such exchange.
The agreement must be signed by the users, so that the parties know that from
that moment on they are committed, or can be committed electronically, and the
defined obligations are enforceable.
Perhaps it is appropriate to indicate, in this particular, that for relationships with a

vocation of permanence, the physical signing of prior agreements still seems
highly recommended, even if they are derived from general contracting
regulations. Electronic mechanisms or systems can thus support operations to the
maximum, without necessarily replacing traditional contracts at the beginning. In
this form
ma, rapid execution becomes much easier in the future.47
\ YO
There are competitors to the system, the main one, the New York Based Trade
Cart, which, like BOLERO, is supported by a series of banks worldwide. It has
the backing of Chase Manhattan Bank, Societé General City Bank HSBC ABN
Amrof3ank, Bank of Tokyo, Mitsubishi and Deutsche Bank, that of Time
Savings Bank of New York, Comerica and the Bank of the East Asia Group.48
Therefore Others, as noted by experts, there are still obstacles of a different
nature, both legal, economic and cultural, since not all jurisdictions accept
electronic signatures, and the sending of electronic documents is resistant to
physical paper, which is add up the existing differences between more and less
developed countries that are normally linked in these documentary credit
operations.49 It is interesting to note that recently the International Chamber of
Commerce of Paris (ICC) has published a document in relation to the expressions
of documentary credit used in electronic commerce, under the reference eUPC
500, which shows the contribution and natural concern that this center has for the
support of electronic operations in documentary credits.
3.2.3.
Transfer Service
As we saw at the time, the trend of modern banking was to transform its merely
intermediary activity into one of service provision. And in it, on a massive scale,
an intermediation in collections and payments, fundamentally supported by the
notions of the mandate contract. and that, from a technical point of view,
translates into the electronic transfer of funds in a maswa manner.
Naturally, it is an absolutely fertile field for the use of these new systems, and it
allows it to be done in one of two ways. Because the recipient of the payments
authorizes the bank to receive into his account those made by third parties, as
frequently happens, for example, in the provision of public services, or because
the client authorizes his bank to make payments to third parties with a debit in his
account, as if the client decided to order his bank to pay all the companies
providing public services, his children's school, his landlord, etc. By one means
or another, that is, at the initiative of one or the other, the bank can finally offer
the provision of these services, and naturally order them through the respective
electronic communication.
3.2.4. What will come
It can be stated that the trend will be to be able to do everything and that
probably the contracts whose relative development can be done through
electronic services are, at this point, those by virtue of which credits or debt
documents are mobilized, including, of course, portfolio and securities
subscribed by clients or by their clients' clients. This will happen with the
discount, factoring, advance payment and repo to name the most important ones,
which in all events involve the transfer of this type of documents. Now, this
limitation is merely temporary, because the clear trends, as we will see in this
chapter, are aimed at dematerializing debt documents as much as possible. That
is, the traditional paper documents, even the most representative ones, securities,
whose possession and display were essential for the exercise of the rights
incorporated therein, and among these, the most important from a banking
perspective, checks, tend to be seen affected by two clear manifestations:
dematerialization from their birth or immediately after it occurs and/or the
truncation of their circulation starting from a certain moment.
That is to say, there may not be any more paper documents; if they are born that
way, they will be placed in a centralized securities depository, from which they
will no longer circulate in their original form and in any case, even if kept on
paper, As in the case of checks, current trends in electronic clearing, as we will
see, truncate their circulation and leave them in the hands of the depositary bank.
Well, to the extent that this occurs, it will then be possible to even carry out
contracts such as those mentioned, for example, discounting the portfolio with
the banker if it is deposited in a central office that dematerialized it, since in In
that case, simultaneously with the request for the discount, the order will go to
the headquarters, so that it registers those credits as transferred to the bank within
the contract.
The above means that practically everything can be done in the future, using
electronic access and replacing, from an operational and support point of view,
the traditional mechanism based on the existence of paper documents and the
physical intervention of the client, in the face of bank offices, including, of
course, new and even commercial banking operations hitherto unthinkable by
banks that turn them into providers of services other than financial ones. 50
33. ROUTING NETWORKS
At the moment when a client intends to make a payment, whether by check,

credit card, debit card, funds transfer order via the Internet, etc., a whole series of
technological devices are activated and new participants come into play with . in
order for it to be carried out effectively, that is, the amount paid is credited to the
creditor's account and the same amount is deducted from the debtor's account
(drawer of the check, cardholder, Internet user, etc.). One of the main
technological devices is the routing of electronic transactions,51
In order to understand the relationship between the various participants that make
up the Network, below will be a brief account of the history, reason for
be of the companies and a description of their operating process:
The modernization of Latin American banking, following what happened in the
United States, occurred as a consequence of the technological innovations that
were developed starting in the 1970s when the automation of processes and the
updating of information were facilitated. . At the beginning of the 1980s, several
banks and financial entities had great progress in the area of systems, which
placed them in a situation similar to that of the most developed countries,
achieving a radical change in the philosophy of providing services. services in
the field of electronic funds transfer and in the modernization of payment
systems. Therefore, qualitative improvement was sought in the provision of
services, providing customers with facilities through self-service terminals and
ATMs.
Initially, some individual banks created their own networks that connected ATMs
(technically called Automated Teller Machines).
of its property, to provide services to its own clients. This implied that the user of
Bank A could only use those ATMs that belonged to Bank A's network, despite
the fact that Bank B already existed in the market, which also had its own
network of ATMs in different places in the same bank. city.
When the volume of cards and customers increased, it became inefficient for
each bank to have an independent network, so through an alliance between two
banks that will interconnect their own networks, a user from Bank A could use
the ATMs of Bank B. and vice versa. In this way, coverage was doubled and the
costs that would arise from increasing the own network in the same proportions
were saved.
The alliances worked while two or three banks participated, however, when
others joined, management became more complicated. This problem was solved
by connecting the banks' networks to a central SWITCH. The SWITCH is an
electronic computing system that exchanges data at very high speeds between
various points, in this case, between any of the banks that belong to a network.
Later, some networks and banks installed Dataphones (technically known as

Point of Sales) in various commercial establishments. POS, in general terms,
were nothing more than points of origin of a transaction, within commercial
establishments. When a Cardholder paid for a good or service in a commercial
establishment, they used the POS, originating a transaction that, passing through
the SWITCH, was emutated to the Issuing Bank, who was in charge of giving the
authorization and in turn emutated it through the SWITCH, back to the point of
origin, in this case the POS in the commercial establishment.
In this way, a client to whom their Bank issued a credit or debit card
(Cardholder), could carry out a transaction at an ATM or a POS of any of the
banks interconnected through the SWITCH. Through the central SWITCH, the
transaction was emutated to the bank issuing the credit or debit card (hereinafter
issuing bank), who after verifying its database, gave authorization for the
respective transaction, which in turn was emutated by the SWITCH to the ATM
or POS in which the cardholder had originated the transaction.
The process of creating interbank networks was simultaneously carried out by the
majority of financial entities. Then as now, there were several networks with a
central SWITCH. In order to further expand coverage, the networks made
alliances with each other, in such a way that all Points of Origin at that time
(ATM and POS) accepted any card, even from those issuing banks that were not
affiliated with the network. which emulated the ATM transactions used by the
Cardholder. In these cases, the cardholder requested the transaction at an A TM
or a POS that was not part of the network to which their issuing bank was
affiliated, the data was transferred to the SWITCH (SWITCH 1) that was part of
the A TM network. , then this switched it to the SWITCH that was part of the
Issuing Bank's network (SWITCH 2), which switched it back to the Issuing Bank
to authorize the transaction. The Issuing Bank authorized and through SWITCH
2 the authorization was transferred to SWITCH 1 who rerouted it to the ATM, or
POS depending on the point of origin.52
After the constitution of the networks, rapid development occurred and continues
to occur in the market for the routing of electronic transactions.53
The operational process carried out by a clearinghouse on the Internet, in general
terms, is divided into two large groups: third generation electronic operations
(today the vast majority) and first generation operations. These only serve to
request authorization, which is why they constitute only an alternative to what is
obtained by telephone and involve the subscription and subsequent processing of
documents for the rest of the operation. The third generation additionally allows
the transaction to be concluded comprehensively based on the electronic record.
They present a difference between credit and debit transactions.
For the credit card, the network grants authorization to the merchant, without
having to go directly to the issuing bank, since the online history of the revolving
credit quota rests in the network's systems. This is the general rule but, naturally,
it can vary between countries and between network systems, due to
circumstances ranging from security aspects to corporate policy.
For the debit card, the authorization must come directly from the issuing bank,
since the balance or overdraft of the cardholder's checking or savings account
must be debited at the time of the transaction.
Authorization in either case is done in real time but, for practical reasons,
clearing may only occur at the end of the day. In short, the network system is
born every day with a position at zero and ends with a position also at zero.
In voice or first-generation authorization processes, the clearing process is done
with the deposit of the voucher in the account of the acquiring bank, which sends
the information in electronic files to the network and clearing system so that it
can proceed to reconcile the positions between the banks.
As we saw at the beginning, so that cardholders can access the different access
devices, belonging to different networks, it is necessary that agreements exist
between them, in turn.54
-------------------------------------------------------------------------------
42. CIFUENTES, Manuel. "An introductory look at the world of Electronic
Banking." Private Law Magazine of the Universidad de los Andes. Vol. 24. April
2000. Bogota. pp. 47 to 89, states that "the concept of electronic banking, in a
broad sense, covers all the elements of banking automation that allow the
existence of a fully computerized bank that can be called electronic banking in its
own sense and, therefore, not only "includes the external projection of banking in
the market through the offering of automated services, but also... refers to
segments of banking automation that concern the internal management of the
bank and its relationships with other entities."
43. Some international studies estimate, for example, that while a transaction at
the branch costs the banking institution about one dollar, one carried out through
the Internet can be around six cents on the dollar.
Mexico. It is stated that an operation in a branch costs 8.50 pesos, while through
the "web" it costs between 60 and 70 cents. (URL:
www.condusef.gob.mx/magazine/proteja/art-bancos/banca-electrónica.htm)
Access date: September 11, 2002. Spain. It is argued that "the Internet
dramatically reduces banks' expenses when carrying out an operation. While a
virtual banking operation only costs 5 pesetas, in a traditional branch it costs 145
pesetas: the expenses are multiplied by 29. Even operations by telephone (52
pesetas/operation), at the ATM (42 pesetas/operation) or at home (7
pesetas/operation) are more expensive. (URL:
www.ediciones-deusto.es/oficina/oidsbanca1.cfm)
Colombia. Studies carried out by the Association of Banking and Financial
Institutions indicate that the cost of a transaction by cashier is $2000, by ATM
(ATM) is $1100, by audio response is $650 and by Internet is $160. (Figures
supplied as of February 27/02).
44. MALOY, Michael. "Banking in the twenty first century" 25 of Journal of
Corporation Law. 787. Iowa University 2000. Venezuela. Law to Reform the
General Law of Banks and other Financial Institutions. Art. 71. SOARES DA
VEIGA, Basque. Op. cit., pp. 11 And ff.
45. It is necessary to distinguish between the so-called points or devices of origin
and the access itself. Among the first are the telephone, the banking hall itself,
the POS, the computer and the ATMs, thanks to which the information that
requires the support of networks that emulate the information and guarantee
automated interaction is accessed. which we will see later.
46. Colombia requires that it be in writing. Art. 1402 C. Co.
47. MA, Winnie. "Lading without bile - How good is the bolero bill of landing in
Australia?" Law Review. Vol. 12. W2. December 2000. "BOLERO" means "bile
of lading electronic register organization." It is a pilot project partially initiated
by the European Union in 1994. 'BOLERO NET' is the international legal
structure, which was founded in April 1998 and began operations in September
1999. This structure is operated by BOLERO INTERNATIONAL LlMITED,
which is a joint venture between SWIFT (Society for World Wide Interbank
Financial Transaction), which is an interbank cooperative, which has provided
electronic bank transfers for years, and TT CLUB (Through transport mutual
insurance association /imited) which is a London insurance company. -
FELSTED, Andrea. "System aims to cut down on the paperwork." The Financial
Times. June 2000. URLL: htpp://www.ft.com (access date December 5, 2001).
See Infra. Chap. XII. 5.3.6.2. d.
48. ATKINSON, Helen. "BOLERO, Rivals closer to full automation of
international trade transactions". Journal of commerce. May 14, 2001. URL:
http://www.bolerto.net (access date: December 5, 2001). These platforms offer
the possibility for international buyers and sellers to safely and reliably carry out
electronic transactions, in which prices and conditions are negotiated online
and/or (including Incoterms) purchase orders and documents are exchanged. of
boarding. Payments will be made directly by the buyer's bank to the seller or
through a refund bank, acting as an intermediary. See Infra. Chap. XII Incoterms.
49. QUEREE, Anne. "Digital documents: The Bundersome paperwork of Trade
could be alleviated with e-transport standard." Financial Times. June 20, 2000
URL http://www.bolero.net (access date: December 5, 2000).
50. More than a threat, e-business represents an opportunity for banks to develop
their traditional businesses, only modifying the traditional channels with their
clients. These opportunities are basically:
1. Business to consumer: Companies can develop market strategies according to
the profile of their customers. Monitoring the behavior of each person allows the
bank to easily (since it can do so through the databases it manages and the
electronic transactions carried out by the client) infer their interests, tastes, etc.
After this work, the bank can offer you the products you request, through any
means (phone calls, via email, etc.).
2. E-business: The greatest possibility of expansion of online businesses of
Banks are these, based on digital portals via the Internet. Through them
An important effect can be obtained for financial institutions, which is the loyalty
of their customers. There are multiple services that can be provided through this
channel, for example payment for services, making investments and banking
operations, obtaining market information, among others.
3. In the long term, customer dependence on the banks' physical offices (agencies
and branches) will be reduced, increasing the corporate profits of financial
entities, since transactions via the Internet and call centers are cheaper than
traditional ones.
4. Financial institutions can even help their clients place their products and
services on online portals. Banks can start this business with medium and small
clients; Their administrative costs are reduced for them, and for the bank it
represents the opportunity to manage the exchange transactions and the treasury
of these companies.
"Financial Entities and E-Business." KPMG Financial Bulletin. October 2001.
51. Colombia. This is carried out by various agents, among which are the
networks, a category to which Credibanco Visa or Redeban Multicolor SA
belong. CIFUENTES MUÑOZ, Manuel. "Financial Law in the digital age",
distinguishes between interbank networks, networks. payment devices and
communication networks.
52. Colombia. Most of the networks were established in the late 1980s and took
the form of non-profit entities, the only form permitted by law at that time, for
financial entities to make investments. Some of the networks in Colombia that
were established at that time and continue today are Servibanca, Red Multicolor,
Redeban, Credibanco Visa and later ACH SA and Redeban Multicolor SA The
Networks were conceived by their associates (all financial entities) as tool-
entities to carry out activities related to the routing of emerging payment methods
and the provision of other automated services.
53. Colombia. Today there are countless new router agents such as ACH, the
Banco de la República through the CENIT system, the same financial entities
who route their own transactions through Home Banking (Internet), Electronic
Management (modem) or the audio response system (telephone), among others.
Every day technology advances towards new alternatives, refines existing ones,
always seeking to reduce costs and improve service.
54. Colombia. It is common to read in ATMs or POS that all cards from the
different networks are received.
3.4. PLASTIC MONEY 55
Money in the economic history of peoples has seen an evolution that is even
more accelerated the more monetized the economies become. From primitive
forms (shells, stones, etc.) we moved on to metallic currency or minted metal,
which was supposed to have a value in itself, and later to paper currency or
fiduciary currency, so called because it derived its value from -and it derives in
large part- from the trust that the sovereign - today the State - assigned him with
his support. The role of banking in the management of demand deposits made by
checks - to which the legal principle of the "simultaneous availability of funds"
between the client and the bank is applied, and the economic effect of the so-
called "multiplier banking" - has led to the creation of bank money in this way,
since depositors as a whole are enabled to acquire goods and services for an
amount greater than that which would result from adding the original irregular
deposits, or the sums that acquire such quality, not because they were real
'lized but 'for having received loans that are credited into account and which,
naturally, they can dispose of. And, finally, the technological supports linked to
the disposal and transfer of funds have made it possible to recognize and spread
the so-called plastic money,56 although it should be noted, of course, that the use
of the expression results from the enormous dissemination that it has known. and
that makes it easily recognizable, from a pedagogical point of view, but that it is
neither strictly about money nor is plastic anything more than a physical,
ctrcunstantial medium that incorporates a data authentication system, which
could quickly disappear.
It is this last factor, that is, the rise in telecommunications and information
technology, that has allowed electronic money, whose first origin is plastic
money, to become entrenched and widespread. In this regard, it has been said:
"This new money presents many more varieties and modalities than any of the
previously used forms of money (and possibly others will emerge that we have
not yet imagined), but they all have a common denominator: intensifying
dynamism, speed and the ease in the movement of goods and services, both
locally and internationally, for the simple reason of
that this greater dynamism is a mandatory imperative of the times in which we
live."57
3.4.1. Notion and development
Historically, money and all its substitutes are identified by a common

denominator: they constitute payment instruments that, consequently, allow the
holders to acquire goods and services, that is, to satisfy the economic payment
obligation that arises as consideration in the business of exchanging things for
money. But the first, in addition and exclusively, is a unit of account and reserve
of value, which is why the use of other payment instruments leads to the
provision or allocation of money to a particular operation, without the instrument
itself itself can be considered as such. 58
With this reservation made, it can be said that plastic money was the precursor
instrument within electronic banking, which has created a financial revolution,
which is strengthened with the era of the Internet and the services offered
through this medium, such as home banking.
,~
Likewise, plastic money can be divided into two large groups: plastics that are
connected through a network and those that do not require such a connection.
The products that currently make up the plastic money market are basically three:
credit cards and debit cards, which belong to the first group, and smart cards,
which are part of the second. The credit card allows its holder to make purchases
as if they were contact and pay them either upon receipt of the periodic account -
without any financial cost - or to defer payment in inst<rtaments, recognizing
interest on the balances. 59 The debit card allows the amount derived from its use
for the acquisition of a good or service to be immediately charged to the account
of its owner. A form of this card would also be the so-called wallet cards that are
prepaid (eg telephone cards) and can still be recharged by charging, normally, a
debit card. The smart card empowers the client to access the funds, without the
need for the information to be transferred between points of origin, banks, etc.,
since the plastic is equipped with a microchip that contains its own memory and
allows the processing of information. But they have also been classified into two
groups based on the origin of the funds: The credit card through which it is
obtained and the debit cards and wallets through which pre-existing funds are
available, although this criterion is of secondary importance and says more with
the birth of both forms of plastics than with their functional importance. In effect,
for the person who receives them, the origin of the funds is irrelevant, since it
only affects the cardholder's relationship with his or her banker.
From the above we can say that plastic money is made up of a series of
techniques that allow access to information through a magnetic strip (or a chip),
which can be used in electronic devices that connect through a network to
cardholders, businesses and banks, to exchange funds and information, in a first
stage.
Plastic money not only serves as a payment instrument but also allows access to
different banking services and information consultation.
'1
,
Finally, plastic money is not an instrument linked exclusively to banking activity,
as it can be developed by other businesses, as in the case of telephone cards that
represent pre-payment to their operators, by users. of the services. In fact, the
evolution of plastic money shows us not only that the appearance of the Diners
credit card was not linked to its issuance by banks, but that it coexisted with other
bilateral cards between hotels and their clients, as well as cards payment methods
adopted by railways and airlines, within closed systems.
In order to understand the various relationships that are intertwined to give rise to
payment with plastic money, it is important to understand the historical evolution
of the technological network and the operational processes used by banks in this
development.
Financial institutions have constantly sought ways to streamline their operations

and increase the productivity of their entities and internal groups, in order to offer
a better and more effective service to their clients, reduce the cost of operations
and increase institutional efficiency. This has driven the development of the
different products offered, which have undergone important changes in recent
decades.
An obvious case is that of payment instruments. Both in Colombia and in the rest
of the world it has had a surprising development during the last decades. Banks
currently offer their clients not only the traditional tools of checks, credit cards
and cash, called first generation, but also second generation such as debit cards;
and third generation such as audio response, ACH (Automated Clearing House),
that is, an Automated Clearing House, remote banking and recently the fourth
generation, whose best-known examples are smart cards and XML (Extended
Markup Language). .
Simultaneously, there has been a significant development in the technological
support of payment methods. In the specific field of transaction routing, the
traditional manual method has been replaced by an automated and electronic
method used today and in different ways by all financial entities, as we have just
seen.
With this technological development, clients have benefited from the reduction in
transaction costs, the streamlining of interbank clearing, the creation of global
interbank networks, the increase in the security of operations, the increase in
efficiency and quality in services, in addition to receiving services such as Home
Banking or remote banking that allow decongestion in the banking hall.
3.4.2. Legal nature
The first thing to note is that plastic money is not in itself a contract but rather a
payment instrument - the result of the prior execution of a contract that allows it
to be issued - by virtue of which it is possible to access financial and non-
financial services. , the product of several relationships and dozens of different
contracts. Thus, the necessary interrelation between franchisors or brand owners,
issuing banks, acquirers, businesses, consumers, among others, will be governed
mainly by the principle of contractual autonomy, for which each network system
that connects the different actors In complex legal relationships, it will have its
own particularities, which makes plastic money an atypical and changing
instrument to access services.
Plastic money is a means of having money, it constitutes a substitute for it, as a

means of payment, but, of course, it is different from paper money for various
reasons, among which we state the following:
Firstly, paper money is free to circulate and negotiable, which is why it has no
restrictions on its legal traffic within a specific country or group of countries. Its
sustenance is a sovereign definition that recognizes and regulates it. On the other
hand, plastic money has restrictions derived from the technological infrastructure
and legal regulations, to the extent that it can only be accepted if the technology
exists to do so and, if there is an agreement of will between the different parties,
to that can be used. Its support is predominantly contractual. However, a
functional advance of plastic money compared to paper money is that although
the latter is free circulation,
This is limited by the territorial scope of the countries, where it will normally
have to be exchanged for local currency. On the other hand, plastic money,
Due to the international network that supports it, it can be used interchangeably
in almost any country in the world, in businesses affiliated with the brand
systems, which automatically adapts to each currency, as soon as the cardholder
pays in the currency of your own country and reimburse in your own country in
your own currency.
. Secondly, paper money has a liberating currency, since it has the capacity to
extinguish obligations by being forced to accept it. Plastic money, of course, does
not have that characteristic, which is why it only serves as a means of payment,
when there is an agreement between cardholders, banks and affiliated businesses
in that sense, that is, even when its scope of use is very broad, it is far from being
universal, so it has no liberating power.
On the other hand, paper money has a natural circulatory vocation. Plastic
money, except in some cases of smart cards or electronic wallets, is an
instrument that can only be used by the holder authorized by the issuing bank,
after meeting certain security requirements.
Finally, note that only money, the legal currency, allows a country to free itself
from obligations and to be a "unit of account" and "measure of value",
irreplaceable functions of currency strictly considered.61
3.4.3. Credit card
3.4.3.1. Notion and evolution.
Credit cards basically operate with two different systems: the

closed system in which the relationship with the cardholder and the affiliated
business falls solely on the management company, which is responsible for
affiliating the businesses and processing the transactions. made by them, to
invoice each client and to provide authorization and fraud prevention services,
among others. An example of this system has been that of American Express,
which has placed its cards mainly through promotions carried out by mail and
agreements with certain companies so that their employees have the possibility of
obtaining the card under special conditions.62
On the other hand, in the open system, the relationship with the cardholder and
with the affiliated merchant falls on the issuing and paying banks respectively.
Under this scheme, the issuing bank is responsible for the relationship with the
cardholder, determines the value of the card commission or handling fee and
establishes the payment and credit terms. On the other hand, it guarantees
payment to the acquiring bank in exchange for receiving the financial
commission.63 The acquiring bank, on the other hand, is responsible for paying
the amount of the operation "to the merchant", less the collection of the financial
commission, which has already been discounted by the issuing bank.
An example of this system is constituted by Visa, or Master Card, each of which

provides member banks with access to a national and global payment system that
allows holders of cards issued by an entity to make payments. purchases that the
merchant may collect at any other banking entity. It provides transaction
authorization services, fraud investigation, logo protection, brand advertising and
a global communications network through which transactions are processed,
among others.
In general terms, the open credit card system operates as follows:
The cardholder purchases goods and services from an affiliated business, which
presents the sales documentation to the acquiring bank. The acquiring bank
provides the documentation or information for processing to the management
company and it processes the data and informs the issuing bank of the amount
that must be paid via compensation. Prior to the discount of the financial
commission, the issuing bank sends the respective sum to the administration
company which transfers what corresponds to the acquiring bank as support for
the payment that the latter makes to the merchant. The administration company
sends in turn to the issuing bank the settlement of the operations carried out by
the cardholder so that it can be charged. The issuing bank sends the settlement to
the cardholder and the cardholder pays the settlement to the issuing bank. The
issuance of the credit card occurs within a complex legal relationship, as we
anticipated, in which numerous independent individual relationships can be
distinguished, that is, those that link two parties together, but that allow their
integrated analysis because they are linked. for the achievement of a common
purpose.
We have studied the issuance of the card itself within the credit opening contract,
because in our opinion, as we will say later and we will reiterate it there in detail,
between the cardholder and his bank there is a typical line of credit business, by
virtue of which the bank grants the client the availability to access its coffers, up
to a certain sum, by using it in the acquisition of goods and services from third
parties. Due to this circumstance, and taking this warning into account, we will
immediately see succinctly the different relationships that arise and within which
the admission and operation of the card must be understood.64
3.4.3.2. INTRODUCTION TO BANKING CONTRACTS 221

Relationships between the trademark owner and the trademark holder
As noted above, the importance of plastic money is closely related to

technological developments and the size of the network of points of origin
connected to it, since the greater the coverage, the more possibilities there will be
to obtain economies of scale and levels. of efficiency, which make having a
plastic attractive for the user, such as for banks and commercial establishments.
And as we will repeat at the end of this point, a good part of the considerations
derived from the different relationships apply, where appropriate, to other forms
of plastic money and, in particular, to debit cards.
The more businesses that are affiliated with a brand, the more attractive it will be
for cardholders to have these cards, since in more places they can use them to
purchase goods or services. For businesses, the more cardholders there are, the
better it will be to affiliate with these brand systems because the more potential
consumers they will have. And, for banks, the advantage is enormous to the
extent that they can provide better service to their customers. Due to this
minimum critical mass essential to operate plastic money systems, there are few
actors on the scene. As it is, there are international brands accepted in most
countries in the world, such as Visa, Master Card, American Express and Diners
Club.
These entities that own the brands enter into a license agreement65 or brand use
agreement66 with the systems (Banks or other companies) or a franchise
agreement for the brand, so that licensees or franchisees can issue plastics,
affiliate commercial establishments, market the brands etc...
It may happen that the owner of the brands grants the licenses for use to a
system,67 which is responsible for affiliating the establishments and serving as a
bridge between the owners of the brand and the banks so that they can obtain the
license.
3.4.3.3. Between the card issuing bank and the cardholder
Within the complex legal business that is found in the relationships of plastic
money, it is cardinal to review the relationship between the client (cardholder)
and the bank, as a consequence of the conclusion of credit opening contracts.68 It
then has a connotation credit. In other words, the credit card is one of the
mechanisms that users have to make effective the credit opening contracts that
they have previously entered into with their banks. If plastic money did not exist
- as was the case for a long time - the consumer could obtain the resources
available under the line established in his favor with the difference that the
disbursement would have to be made in cash, or by credit into his account or by
fund transfers, to cite a few examples.
When a cardholder purchases goods and services and pays with their credit card,
the obligation between the customer and the business is extinguished. The
business is not interested in whether the consumer is paying with the proceeds of
a loan or savings, as will happen in the debit cards that we will see later.
The use of the card, within the availability granted and during the agreed period,
implies the collection of double remuneration, which corresponds to the two
moments in the life of the contract. An opening commission, for the sole fact of
the issuance, since it will be caused and charged even if the plastic is not used,
which depending on the systems could be disaggregated into an opening
commission itself and a commission for the administration of the card and a
interest on the uses whose financing occurs. The value of the commission usually
includes the insurance premium that protects the cardholder against the risks of
misuse by a third party, in cases of loss or theft.
As long as the client quickly notifies the issuer, as corresponds to someone who
guards the card well and therefore quickly notices its disappearance.
Since there is a contractual affiliation relationship between the establishment and
the issuing bank (directly or indirectly), it can be argued that there is a stipulation
in it for another, in favor of the cardholder, which grants him the right to pay his
bills upon presentation of the card.
On the other hand, plastic as an instrument of mass consumption generates that

each of the cards within the market tends to be homogeneous compared to the
others. In other words, the more similar they are to, for example, the cards
offered by Diners, Master Card, or Visa, the more they can serve as an
instrument for customers to access their use. Or if you want to see it another way,
without prejudice to the fact that in practice there is one, no specific difference is
required between one and the others, except for the most relevant one of knowing
what is the network of establishments that each one offers to its customers.
cardholders and which, naturally, constitutes a clear primary differentiation
factor. Therefore, competition occurs within the same networks, to the extent that
each issuer offers its clients different conditions and advantages, with the purpose
of maintaining its market share and attracting potential new users.
This coincidence of characteristics benefits consumers, since the greater their
number, the lower the costs of the instrument and the better services financial
institutions and commercial establishments can provide.
3.4.3.4.
Between the cardholder and the merchant
The relationship between the cardholder and the commercial establishment is
formed when the second provides goods or services and the first obtains them or
buys them and pays for them, using plastic. The relationship between the two is
materialized through a contract of sale or provision of services, the price of
which is satisfied with its use. Normally, the client must identify himself and
attend to obtaining a telephone authorization, in first generation systems, whose
number will be included in the "voucher" or promissory note signed by him, in
favor of the issuer, through whose presentation the merchant will obtain the
disbursement of the price less the commission recognized by the system. In new
generation systems, authorization is done in real time, as we have already
anticipated.
3.4.3.5. Between the issuing bank and the merchant
This relationship is direct if the bank is the franchisee or owner of the brand that
affiliates the business or indirect, if such conditions are held by another, think of
an administrative system - which has authorized the affiliation. As a consequence
of this relationship, the establishment is obliged to receive the cards in payment,
not to discriminate against their holders or charge the user with the total or partial
value of the commission, to consult the printed media or bulletins that block
cards (in the consultation systems telephone) or use the electronic terminal
through which you obtain payment authorization and accepted only for the sale
of goods or services of your company - not others - and exclusively to implement
a transaction. real commercial operation and not, for example, to provide cash to
a client.
In exchange, the establishment acquires the right to be paid, a deduction made

from the commission that the system charges it. This remunerates a service, the
content and scope of which would not even remotely be assumed without loss, if
the merchant assumed them in his head. In effect, when selling "cash" there is no
portfolio generated, nor is it necessary to carry out prior or judicial collection
procedures, nor, therefore, pay the premium for credit insurance - if it were
obtained -. But, in addition, it has the support of gigantic advertising, which
encourages the use of the card and with sophisticated and effective union security
mechanisms, so there is a natural preselection of the clientele. This commission
price is negotiable with the issuers, but will depend, to a large extent, on the
monthly volume of expected operations. Obviously, a small business under a
first-generation scheme (telephone consultation, authorization number, manual
completion and signing of the voucher) is not the same as a large company
equipped with electronic terminals at all its points of sale, since the Operating
costs and implicit risks are of diverse nature.
Now, once the cardholder uses the access device with his credit card, the
establishment manually or electronically requests authorization for the
transaction from the issuing bank, which grants it once it verifies whether the
necessary quota exists, if the plastic has not been stolen, etc. If the business is not
online, as has just been said, you must request authorization by telephone from
the issuing bank or whoever it designates (for example, the network that manages
the switch), in which event the customer will sign the voucher. which will bear
not only the payment made by the purchaser but also the collection made by the
purchaser to the issuer.
Later it will charge the issuer the value of the operation.
3.4.3.6. Between the acquiring bank and the merchant
The acquiring entity, within the structure of the complex legal business
developed by plastic money, is understood to be that financial entity in which the
affiliated business has or opens an account so that the value of all transactions
carried out from and to is paid. whenever cardholders purchase goods or services
from said business. The merchant, when the transaction has been made in a first
generation scheme (voice authorization) must deposit the vouchers with the
respective authorization number in its acquiring bank, which will be in charge of
preparing a magnetic file that, a.. Your turn will have to be sent to the clearing
center managed by the system administrator, so that, in conjunction with the
electronic transactions, the daily clearing can be carried out.
3.4.3.7.
Between the issuing bank and the acquiring bank
The issuing bank, charged to its client's revolving quota, credits the account of
the acquiring bank, and the latter credits that of the commercial establishment.
For practical reasons, this process is not normally done in real time and for each
transaction. The usual thing is that the clearing center accumulates the credits and
debts between the banks and, at the end of the day, reconciles the accounts and
determines the balance that some banks ( debtors) must pay others (creditors).69
3.4.3.8.
Between the banks (issuer and acquirer), the merchant establishment and the
switch (Network)
For all of the above to be possible and the actors to be connected, it is necessary
that there be a Network that is responsible for connecting and transmitting data
between the different points of origin, authorizing transactions, providing and
maintaining dataphones, reconciling and clearing transactions between Banks,
etc., as we will see shortly.
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55. A good part of the academic concepts expressed here correspond to the
studies that we have prepared in recent years for our clients in the sector or that
have been included in "anti-trust" processes before the Superintendence of
Industry and Commerce in specific cases. We warn, therefore, that they may
coincide for long periods with documents issued by "Rodríguez-Azuero
Asociados".
56. About the future of money he says: Imagine a world full of places where you
don't need cash for anything: not for the taxi, not for the post office, not for the
corner market. A world with an easier and safer way to pay... But where you
have immediate access to your cash anytime, anywhere. That is the future of
money. (...) http://www.mastercard.com/ us es/about/ 2002/01/14. Colombia.
Regarding the physical characteristics of integrated circuit cards with contacts,
ellcontec has dictated the NTC 3451 standard.
57. ROMANACH, Pedro. He also states that "until the end of this century, it
could be thought that the history of money would not continue to evolve or, at
least, that it would not be subject to major changes; but we had not counted on
the incredible rise of telecommunications and cybernetics. "In the last four
decades we have seen the beginning of the fourth era in the history of money."
hllp:// www.visa.com.arfuturo/historiadeldinero.htm 2002/01/14.
58. CRANSTON, Ross. "Principles of banking law." Ed Oxford University
Press, First edition 1997. The author studies credit, debit and other cards, within
the chapter on means of payment and the subtitle of payment cards, which
establishes that this type of cards fulfill one or several functions, but the main
one is serve as payment instruments. CHAiBAINOU, El Hadi. "L'informatisation
de la Banque sur le text du Conseil Economique et Social", Avis et Rapports, JO
du 11 June 1982. It could be said that plastic money is made up of a series of
techniques that allow access to information through a magnetic strip (or a chip),
which can be used in electronic devices that connect cardholders, businesses
through a network. and banks, to exchange funds or information.
59. Colombia. and. 007/96, EE 002/97, EC 97/98.
60. Routing of electronic transactions is the transport of data originating at a
point of origin (hereinafter Point of Origin) which can be an ATM, dataphone or
POS (Point or Sales), modem, computer, telephone, among others, up to a central
system of a financial institution or a switch (in the previous point the concept of
switch was defined). The financial institution or Switch will issue an immediate
response that will be transported back to the Point of Origin. This response may
be an authorization to carry out a transaction with a Credit or Debit Card,
information on account balances or latest transactions carried out, credit to third-
party accounts in order to pay for goods or services (public services, cell phones,
etc.) , among many.
61. The use of "plastic money is not neutral with respect to monetary policy. It
not only affects the "speed of circulation" but also the "volume of credit" in the
portion of its uses that is financed. See ZULETA, Luis Alberto. "Possible
economic effects of the smart card."
62. This system has begun to enter into agreements with banks, which, without
being its issuers, offer the card to their clients and receive a commission for it.
63. Colombia. In this system, the financial commission is the amount charged by
the franchise to the business affiliated with some "network", understood as the
provider of access, transportation, routing and compensation services carried out
by cardholders through POS, ATM. audio response systems "and Internet", for
each of the transactions made with a debit or credit card. This charge is income
for the card issuing entity. The networks for their
Some of them charge an administrative commission to the issuer for the services
provided.
64. See Infra. Chap. XI which corresponds to the "Credit opening",
65. Colombia. Licenses for use and transfers of trademarks are regulated by
decision 486 of the Andean Community Commission, articles 161 and 163, in
force since December 11, 2000.
66. Some of the obligations that can be found in alliance contracts are:
commercial cooperation, contributions to market the brand, exchange of
information, technology, affiliation of businesses, universal acceptance of
plastics.
67. Colombia. For franchise purposes. The licensee systems Credibanco Visa,
Redeban Multicolor SA, Master Card, Banco de Occident, Credencial Master
Card, Banco Superior Diners Club and American Express are the main acquirers,
but they can also be issuers to banks that are not members of the franchise. .
68. Colombia. The legal relationship between the issuing bank and the cardholder
is understood within a type of credit opening contract, which as such turns out to
be atypical. However, through Decree 2048 of 1996 modified in some aspects by
Decree 1664 of 1999; Resolution 19 of 1988 issued at that time by the Monetary
Board of the Bank of the Republic; Circular Letter 11 of 1988 issued by the
Banking Superintendency and External Circular 007 of 1996 issued by the same
entity, regulate aspects such as maximum terms for credit card operations,
interest rates and financial costs, credit study user, credit quotas, increases and
limitations of these, and aspects concerning the security of transactions carried
out with these instruments. Of the pre-printed contracts investigated and used to
prepare the study, it was found that in all cases 'in an "adhesive" manner the
future cardholder formulates a commercial offer of a contract for opening and
using a credit card, which can be for local use or international, which is explained
because by express provision of the Banking Superintendency contained in
article 3.1 of external circular 007 of 1996, authorized financial entities can
freely offer the credit opening contract, through the card system for which and in
order to ensure an adequate risk analysis in the execution of this type of
contracts, the corresponding credit study must be carried out. One of the main
characteristics of this contract is - like banking contracts in general - that it is
intuitu personae, since the delivery of the credit card is made in consideration of
the personal qualities of the cardholder, which makes the instrument and the
position are non-transferable and consequently the user cannot assign it under
any title or be replaced by any third person.
This generates a necessary consequence that, upon receipt of the card by the
client, he has an obligation of surveillance and custody so that no person can
misuse it, which is why, even though the card is the property of the issuing
entity, it is They transfer the risks to the user of any improper use made of it,
which is why they must notify the theft or loss of the plastic. There is a natural
parallel with the care and good management of the checkbook, in the bank
checking account contract.
Among the obligations to give or do borne by the cardholder is paying the
minimum amounts indicated in the monthly settlement according to the chosen
term, without the need to formulate any requirement. Compared to this obligation
of the cardholder, the purely discretionary power that the issuing bank has,
consisting of demanding full payment of the obligation owed along with default
interest, takes precedence in the event that the respective facility is not canceled
on the indicated date and which is accompanied also the power that the issuing
entity has to suspend at any time the cardholder's right to use the instrument. It is
worth mentioning as usual just causes for terminating the contract for opening
and using a credit card by the issuing entity, one of a generic nature which is the
failure to comply with any of the obligations borne by the cardholder and others
of a specific nature such as They are, non-payment within the terms and
conditions granted in the account statement; improper and unauthorized use of
the card, which includes purchases and uses above the credit limit granted or the
writing of checks in favor of the bank that are totally or partially unpaid or if the
cardholder is prosecuted or his assets are prosecuted. They are seized, also in
case of preventive agreement, forced liquidation, bankruptcy or bad economic
situation of the cardholder.
69. Colombia. In the event of insolvency of a financial institution that issued the
card and given the impossibility of sending it the charges for the amounts against
it derived from the uses of its cardholders, since given the composition of the
estate, it would not be able to pay them, it was understood that The acquiring
bank had paid its debt, so it was subrogated to the right of collection against the
debtor cardholders. On the other hand, it was clear that the money received at the
intervened bank, from clients who were able to pay, should be understood to
have been received on behalf of and in the interest of the acquiring banks, which
is why it was possible to transfer them to them without expecting them to attempt
recognition and collection within the bank. of the liquidation process.
3.4.4. Debit Cards
3.4.4.1. Notion
We can define it as plastic equipped with a magnetic strip that

serves as a means of payment through its use in POS and other access devices
and as an instrument to dispose of funds in a checking and/or savings account, to
overdraw or to find out balances. or other information at the points of origin. Its
characteristic is the use of a personal number or password that. It therefore allows
the card user to be authenticated, in the form of a signature.
The debit card operates within a scheme very similar to that of the credit card,
which is why what is stated in the previous point applies, where appropriate.
Perhaps the biggest difference, at first, is in the relationship between the
cardholder and the issuing bank, since the legal basis of the credit card is a credit
opening contract, which allows obtaining resources, while in the debit card The
contract that gives rise to the funds being available through the plastic is the
current or savings account, which means, therefore, having available funds, either
because they were pre-constituted by the client, or because there is an envelope.
transfer authorized by the bank.70
3.4.4.2. Electronic terminals
If the revolution in obtaining credit occurred through the issuance of cards of this
nature, which allow the credit availability granted to be used to acquire goods
and services at different points of sale, the revolution in balance dispositive
mechanisms, which by years had been dominated by the check, came with the
creation of debit cards. As we have just seen, their fundamental characteristic,
from the point of view of the bank-client relationship, is the pre-existence of
available funds, so that what the holder does is precisely request their
reimbursement, which corresponds to the fundamental obligation of the bank.
depositary.
Now, it can be decided from now on, not only that debit cards can even be used
to obtain credit, as stated above, but, in practice, the access devices that we will
discuss below, although they were born linked to this type of card, they soon
evolved to also receive credit cards, since technically, it is clear that both can
benefit from the facilities derived from the use of the point of origin. For this
reason, among other reasons, the contemporary trend is to think that only "one"
access card is required, to express in that way the possibility of having a "multi-
application" card, despite the fact that for reasons linked to the origin or the
collection of various commissions, among others, keep the product differentiated.
c/a) ATM (Automated Teller Machines or electronic teller machines)
What is known as an ATM or automatic teller machine is simply an external and
remote device, by virtue of which the client can contact their bank. In this way
and by having access to the files, you first obtain information that begins with
your account statement and you can based on it, or with the prior knowledge you
have of your balances, obtain cash delivery from their deposits.
As the equipment evolves technologically, the possibility of providing a whole
series of complementary services expands, as we have mentioned before and
which include orders for payment to third parties or permanent transfer of funds
and which may later be complemented with instructions for portfolio investments
and practically to carry out all the operations that we have explained in point 3.3
of this chapter. Access to the ATM involves the combination that uses the
respective plastic card and a user identification number and works by virtue of
the real-time connection with an authorization center, which has immensely
multiplied the possibilities of all users, to through the existence of networks that
we referred to in the previous point.
b) POS (Point of Sale System or Payment Center)
To the existence of the so-called ATMs, which by definition not only

decentralize the service and bring it effectively closer to the customer, as they are
available at any time and place in the city where they are located, are added the
agreements made with large sales centers , in which electronic terminals have
been installed, by virtue of which it is possible that the purchaser, when
purchasing his goods or services, authorizes debiting his account or has his credit
in the bank for payment thereof, all of this
I again in real time. The immense advantage derived from the use of the
mechanism is obvious. Indeed, its use means - at least in theory - the
simultaneous debit to the client's account and the credit to the account of the
selling entity, so, from the point of view of accounting support, everything is
settled in a single operation.
These terminals not only have a great operational capacity, but they can be
shared between different systems, which reduces costs and, additionally, they can
be incorporated into the electronic cash register systems of the respective seller,
so that they are merged there again. the operation, when by swiping the card, the
debit and credit operations are carried out, but also notice is left in the accounting
records for inventory purposes, credit of points for internal promotions in favor
of the clients, etc. that correspond to the company's inventory and marketing
program.71
3.4.5. Smartcards
Smart cards reflect a new technology of plastic money.
3.4.5.1.
Notion
The smart card is a plastic with a chip called a contact plate and an integrated
circuit that in some cases is a microprocessor, which is ultimately what gives it
the "smart" character. 72
Among the cards that have a chip, there are fundamentally two categories,
memory cards and microprocessor cards. Within the memory cards there are
disposable ones like telephone cards and rechargeable ones that can be
replenished through the microchip.
Cards that have a microprocessor can contain anything from an application such
as some electronic wallets to those that technology and the storage utility allow.
In other words, information about the owner of the card, about his bank, about
toll payments, among many others, can be stored within the microprocessors,
which constitutes, in truth, a new and broad field of application that is about to be
develop.
Electronic wallets are purchased from a bank or a merchant to be downloaded as

they are used. In some, it is possible that the cardholder can recharge their card
either through an additional charge to their checking or savings account, or
through the use of their credit card. For some, they could be the primary
manifestation of a smart card, if that means simply not having to go to an
authorization center, although it should be noted that as applications they could
simply be equipped with a magnetic stripe, for example.
In reality, so-called smart cards are characterized by having a processor, that is, a
device capable of reading information at the time of making the transaction; for
being able to integrate banking and non-banking applications into a platform, and
for providing security in what it says with authentication, which reduces handling
risks.73
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70. Colombia. In this sense, article 1382 of the Colombian Commercial Code
states that "through the deposit contract in a bank current account, the current
account holder acquires the power to deposit sums of money and checks in a
banking establishment and to dispose, totally or partially, of his balances by
writing checks or in another manner previously agreed with the bank' (bold
letters outside the text). The disposition of balances by debit card is one of the
possibilities that can be agreed with the bank for this purpose.
71. Colombia. Analysts have expressed concerns because the software
incorporated in this type of equipment allows reading confidential information on
the card, which does not appear in the simple use of POS, but which introduces
an obvious risk of fraud committed, for example, from duplication.
72. ZULUAGA, Carlos Alberto. Technological Trends in the financial sector for
the 21st century. Banking and Financial Entities Association of Colombia. April
1999. "The evolutionary process of cards begins with optical cards, which had
information visible to humans or special readers such as bar readers, then moving
on to magnetic stripe cards, which allowed greater storage and more security.
Then cards with memory chips appear that, together with the terminal, allow
access to the information prerecorded in the memory and change the state of that
information; This is the case of prepaid cards, where each of the memory
positions corresponds to a predetermined value, and the terminal, according to
the application it handles, such as public telephony, changes the state of that
memory position in the extent to which you need to discount a value for a service
provided. Then cards with a memory chip and microprocessor appear, where
more autonomy is achieved to carry out transactions thanks to their greater
storage capacity and greater security."
73. Some countries like Brazil and Mexico are beginning to use them for this
reason. OíAZ 74. ORJUELA, Luis Carlos. Internet Banking, "A New Style of
Service." Published in Technological trends in the Financial sector for the 21st
century. Asobancaria, 1999.
75. In truth, it should be noted that the telephone connection generates risks that
may be equally or more important than those that we have predicted about
private or public networks to access the bank's headquarters through other means.
3.5. REMOTE BANKING OR HOME BANKING
Without a doubt, the other great revolution occurs by allowing the client to
directly access their bank from outside. The potential of this market with the
development of telecommunications and new technologies is immeasurable.
Remote banking has several advantages that allow us to foresee its expansion in
the market in the coming years, among them: provision of a service 24 hours a
day, access from multiple locations, cost reduction, elimination of waiting and
inconvenience. of going to the Bank and quick access to financial information
without having to wait for statements or verbal information from the Bank.74 In
practice, access results from the use of various technological communication
platforms.
3.5.1. through the phone
The fact that the client can access a banking center, providing his account
number and a personal code that identifies him, allows him to obtain fundamental
information services and issue management orders, since naturally he cannot
obtain, unlike than what happens with ordinary ATMs, cash. Normally the
system works combined with a telephone exchange, which can give successive
instructions so that once the protocol established therein has been completed,
there is the possibility of recording the instruction.75
This has led banks to make very important developments in this form of
communication, which, although it does not have the advantages of the universal
access that the Internet provides, in exchange has more precise elements of
security and monitoring of the operation. It of course implies an internal
organization that monitors it and guarantees that the operation has reached its
end. The operations carried out in this way will be part of the permanent or
periodic statement available to the client. It is a first way to organize a virtual
bank, without having to run the risks that still exist on the Internet and that
allows, as a marketing strategy, to include in that channel complementary
services that were previously sold by catalog or that were known by mail. such as
ticket sales, subscriptions, etc., which tend to show customers that their bank is a
provider of services and that it includes some "courtesies" let's call them that,
which are usually highly appreciated by them. And given that in general the
granting of credit usually implies relatively similar interest rates in the markets,
these elements that differentiate the service and add new features for the client
contribute to enriching the quality, vital in a service market.76
The operation of this remote access, which begins by telephone, has led to the
creation of specialized centers. It is noted that in the United States, starting in the
late 1980s, the use of the telephone for collecting personal debts increased, so
banks found that by virtue of contact with their clients it was also possible to
improve the quality of service provision. Indeed, in that contact it was inevitable
to hear opinions, recommendations, especially complaints, which, when well
managed and channeled within the institution, allowed for the design of a
response strategy to such needs. This led to the finding that telephone contacts
could be more effective means than visits or information through traditional
communications. In this particular, it has evolved, for example, to move from
manual dialing systems to predictive dialing systems.
While in the first, an operator who has access to a database successively calls a
series of clients with the natural risk of finding busy lines or not getting answers,
in the second a program that has been previously fed by a number of recipients ,
constantly scrolls through the list, establishing conversations and when it obtains
a response, it automatically switches the call to the person in charge of the center
that is available, so that he or she can then interact with the client.77 The author
points out that experience shows that the main application in the United States
The United States was the one for outgoing calls, since they took care of the
collections, while in Europe the main one was for incoming calls, because the
bank officials cannot call a person if there has not been prior contact on their
part. . The system is also complemented with what has been called mixing or
fusion of calls (call blending), which allows several agents in a system to be
simultaneously managing incoming and outgoing calls, thereby recording, not
only making more productive the system, but it also reduces the monotony of
work, an aspect that frequently conspires against employee motivation. As we
already noted, these centers not only allow us to offer certain free services that
customers highly appreciate, but they can also be enabled with enormous agility
to promote the sale of the bank's products, especially consumer credit such as
credit cards and from then, debt payment reminders. And it also serves in fraud
detection processes for cell phone and credit card buyers and to design an
effective customer response system.
Probably, nothing discourages a customer or user in general more than the

feeling of not being able to contact their bank, especially when they have to
resolve a problem. Having an "audio-response" service is, then, a positive aspect,
since you find an interlocutor, who may have their own name, to whom you can
ask a question and from whom you hope to obtain a response; which enriches and
complements the benefit of obtaining a whole series of services in this way.78
3.5.2. Through the computer
. But naturally, it is possible at this time that access is achieved through the
computer mainly in three ways:
3.5.2.1.
direct network
The first experience that the banks made was to provide their most important
clients with computer terminals, which, equipped with the appropriate software,
would allow direct access to the status of their accounts and especially their
investment portfolios, combining here the possibility of directly obtaining
banking services with the to operate in the stock market. In fact, this is a service
that is maintained and that adds to that of telephone communication, the visual
element of being able to control the status of the portfolios on the screen, which
is added to the auditory information and additionally, of course, allows for
assembly. through that channel a much broader form of services.
3.5.2.2.
Internet
But, of course, the appearance of the Internet, as a network that has expanded
with such dizzying speed, means that many clients reach their bank through this
means, so that if they can obtain services there that are fundamentally identical to
those that result from the use of the direct network, they must submit, in
exchange, to the risks that we have mentioned in point 3.2. former.
3.5.2.3.
Through other means
In truth, there are very numerous possibilities that continue to open up, using the
various technological platforms available, among which it is worth mentioning,
wireless access, through satellite connections that today can be obtained from
even mobile phones; stores or video centers, in which the bank can be reached
from a non-fixed point, in the office or at the client's home, the use of television
as a terminal or access device, etc.
Among other things, analysts rightly note that it is advisable to strongly

encourage and not allow mechanisms other than the Internet to be weakened,
since the universalization of the system, despite the fact that it has generated a
necessary reaction to quickly define universal security protocols and systems,
Although this means an advantage, it has the enormous disadvantage that by
concentrating a very significant volume of the remote operations carried out by
banks, it can make the system enormously vulnerable.79 Recent experiences with
the so-called "hackers", and in general all those that address the risks of
identification of participants in the market, authentication of their interventions,
confidentiality, security, completion of the operation, etc., which we already
mentioned, show that there must be alternative systems that, within the same
principle of physical separation of the client from their bank, do not depend so
heavily on a single medium.
3.6.
ELECTRONIC FUNDS TRANSFER
The existence of hundreds of thousands of payment orders, aimed at making
payments for a client or authorizing the bank to receive payments from its clients,
has led to the need to use extremely useful complementary mechanisms to
guarantee the service.
3.6.1. SWIFT (Society for world wide interbank communications)
In 1973, this company was organized under Belgian laws to guarantee worldwide
interbank operations fundamentally related to foreign trade, given the growth,
evident since then, of cross-border payment orders, of which the most important
banks in the world are part. world, and that allows real-time communication of
international financial transactions. The company currently supplies or provides
messaging and interaction software services to more than 7,000 financial entities
in 196 countries.8O
As a third and specialized entity in relation to financial agents, it plays an

important role as a provider of messaging services to banks, securities brokers
and investment agents.
3.6.2.
Automated clearing houses or ACH (Automated clearing houses)
The birth of automated clearinghouses results precisely from the recognition of a
reality, by virtue of which, while for many years the immense volume of banking
transactions was supported by checks, it was therefore necessary to set up a
clearing mechanism that would allow it to be done the most efficient way,
normally with the presence of the Central Bank, the growth of electronic
transactions and transfers of financial institutions has forced the design of a
mechanism to permanently liquidate, that is, compensate between them, the
positions resulting from such interaction.81
In particular, it has been said that the ACH (Automated Clearing Houses) is "a
payment network, in which an automated clearing house makes electronic
payments or electronic fund transfers; that is, the ACH is the one that carries out
the processing and electronic transactions to make payments in entities".82
Compared to other mechanisms for implementing means of payment, ACH
constitute a bidirectional system, since the flow of funds can originate from the
debtor or the creditor, the grouped permanent compensation leads to costs being
significantly reduced, it has been said that It can be just 102% of the value of a
traditional payment, and allows not only to collect funds on a specific date,
making it very useful for public service companies but also to complement
activities in credit cards, telephone and personal banking or debits at the point of
sale, but more importantly, providing customers with multiple payment services
to people linked to different banks, which until not long ago was practically
impossible.
Perhaps it is worth illustrating this topic with an example. If a large company had
to pay thousands of employees monthly and wanted to use the support of its bank
and eliminate as much as possible the documents, checks, receipts, etc., inherent
to the operation, for a long time it had the only possibility of inducing its
employees to open checking or savings accounts in the respective bank, so that
you could make such monthly payments by simply transferring your account to
theirs. But, naturally, to the extent that the number grew and it was not possible
to concentrate all the employees in the same bank, the problem became more
complex because it led to the company having to open as many accounts as there
were banks for its employees, which was inefficient, and in any case partially
neutralized the advantage of bank support for periodic payments.
Well, with the presence of the ACH the system is substantially transformed
because by getting closer to the needs of the company and the employee -
ultimately both consumers who find it satisfactory that they are given an
adequate response - the company can obtain from its employees, in the At the
time of linking or when the system is set up, the identification of the bank in
which you have your account. If not all of them are there, there will be a
fundamental list of the main banks, which will collect the vast majority of
employees and in this way, through their own bank, give a monthly debit
instruction for payment to all of them, grouped in the different banks. where they
have their accounts. In this way, the company's bank makes the transfer via
ACH, which is responsible for paying each of the recipient banks and they do the
same to the employees' accounts.
This mechanism can be seen in the same way in reverse, that is, that at a given
time the clients of numerous banks want to pay monthly for their electricity or
telephone services through the system, and it allows them, without the energy or
telephone have accounts open in all banks, each of them debits their clients'
accounts, transfers the funds to the ACH, and it credits the service company's
account with the total value of the operation.
The ACH system was developed in the United States starting in 1974, with the
creation of what is known as NASHA (Automated Clearing House Association),
which has become a great animator of the system by bringing together the most
important associations of ACH members, which in turn represent the most
important financial institutions. The processed transactions include both direct
payments (Electronic Data Interchange - EDI), as well as payroll, dividends and
pension payments that correspond to the example we have just presented. The
benefits of ACH seem evident, by facilitating the offer of products and services
with advanced technology, increasingly replacing a paper-based system with one
of electronic processing and for financial entities, it allows complementing
services that, because they are masses necessarily demand responses of this
nature.83
Evolution will probably lead to integrating electronic compensation mechanisms,
so that the different payment orders are brought together, and can be managed in
a single way, but an interesting service is already appearing and that is the
administration of automated payments, which made by the audio-response
systems in financial institutions and that allows the client to connect with the
telephone exchange, through a simple system of records, to take note of their
order, accumulate it and process it of course through the ACH, thereby An
initially more important segment of the market will be able to be covered by the
simple consideration that there are still a greater number of people who have a
telephone than there are individuals who have access to a PC.
There are many other relationships necessary to develop plastic money and the
network system, such as those derived from software contracts, insurance,
security, loan of maintenance POS, etc., but they escape this simple presentation
of the topic. .
3.7. RISKS
3.7.1. Variables that generate it
Now, this dizzying transformation is not free of risks, which are certainly
inherent to banking activity, but which in this way are manifested in an
absolutely novel way and not yet sufficiently controlled, although we will refer
later to the first responses that tend to to minimize them. Although it is about
carrying out direct operations with your bank, where the risk is relatively lower
due to the possibility of identification that the bank itself can establish, having
assigned its own password to its client, but especially when it comes to using
online banking. support of electronic commerce, it is evident that serious
questions are raised, especially about the following factors. 84
Firstly, about the authenticity of the parties who claim to be involved in the
relationship. If a person goes to a business on its virtual page to order a purchase,
both parties assume the risk of ignorance, that is, they need to be certain about
the people with whom they are going to carry out the negotiations.
Secondly, the parties that communicate through this system have a risk of
confidentiality, insofar as the volume of information that runs through routers
such as the Internet is such that it is very likely that many people can find out the
content of the messages, so there is a natural danger if they are in bad faith.
Thirdly, insecurity arises from the fact that due to the novelty of electronic
transformations, regulation and knowledge of them are still surrounded by
vagueness, that is, there are not always clear rules that resolve the technical
problems or the legal consequences that arise. derive from their presentation.
'"
Additionally, in relation to risks, it is evident, as we will see shortly, that there is
an enormous task to develop for their prevention, since in this field there is
practically no room for reaction. Arguably, to put it better, real-time operation
generates real-time damage. While in traditional systems for the provision of
resources through the writing of a check that turned out to be forged, to take the
most representative example, there would be a whole series of real spaces for
defense, and even immediate reaction, trying to prevent fraud from prospering. ,
as when the bank, in a prudent attitude, calls the customer to see if it has been
issued for a certain value, or when a discerning teller discovers signs of
adulteration, so that it is possible to move quickly; Today one of the risks
inherent to electronic banking is linked. with the extemporaneity of the reaction.
When the actors on stage realize the damage, normally, it has occurred and,
without prejudice to legal actions that can always be attempted, the economic
effect and the impact it has on whoever has been affected, will occur immediately
without There is practically nothing to do at that moment.
In fact, and to continue with the topic of electronic commerce, where they appear
more sensitive, it is clear that security problems can appear in many places, both
in the consumer's offices or organizations, as well as in those of the merchant, or
in the of the financial institution that must provide the resources, or in the
network communications systems.
Therefore, we could say that if the bank has risks associated with the direct
provision of banking services to its clients, they increase significantly when they
occur in support of electronic commerce.
3.7.2.
Nature of risks
It has been said then, in accordance with the studies carried out by the Basel
Committee, that there are, in principle, three levels of risks, an operational risk, a
reputational risk and a legal risk, as the most important categories for electronic
banking and for electronic currency. "Operational risks include security risks that
include both internal and external attacks, as well as improper uses of the bank's
computer system"85 and of course, this can generate liabilities derived from
fraud committed against the interests of its clientele. Added to this is a
circumstance, which is that experimentation with new software and with different
communication and access systems, but especially the lack of training of some
clients to access certain types of systems, can lead to, without any intention, ,
begin to operate in a low security environment. A second level of risk, he says
naturally, with the image that the bank has in front of its clientele, because
usually what is known is the bad news and given that the bank continues to live
based on the high level of trust granted to it by the community, any manifestation
that shows it to be unsafe, unprofessional or incompetent; The fact that errors,
forgeries or fraud may occur by third parties will have an impact on the image
that the bank has in the community. And since it is a very valuable asset, banks
have to achieve a delicate balance between the need to be present in the new
world, and in supporting electronic commerce, where they warn that they can be
displaced with some ease, and the need not to lose the standards by which the
clientele that uses them maintain the greatest confidence.
On the other hand, there are legal risks because, even though much progress has
been made, and we will see this later, regarding regulations regarding electronic
commerce, electronic signature, contract formation, etc., the issue is still under
construction.86 Therefore, the rules to regulate the contract in each country are
not clear, nor in the different ones that are affected by international negotiations,
which may affect the way in which the rights and obligations derived from the
business will be fulfilled. In fact, the starting problem is an absolute mismatch
between cross-border operations, by definition, difficult to locate geographically,
such as cyberspace, and timid local responses, insufficient, on their own, to face
the challenge, so the efforts directed
to generate responses of the same level through model laws and international
treaties must be encouraged to the maximum.
Here again, the slow process of discussion, replenishment, subscription and
progressive entry into force in the different countries will have to be carried out,
knowing that, in the meantime, hundreds of billions of operations are being
carried out outside of effective regulation.8 ? To which is added the concern
about the way in which in this massive and automated provision of services, the
consumer protection that has been a clear concern of modern legislation can be
effectively guaranteed, and that naturally applies to banking activities such as We
just saw it in this same chapter.
,!
In summary, we could say that while exclusive communications between
financial operators and their clients are reasonably protected by current security
systems, the intervention of third parties, which is multiplied by dozens with the
development of electronic commerce on the Internet, potentially increases the
risks. significantly.88
Finally, there are obvious market risks that should concern regulators and
bankers alike. It would be enough to think, for example, of what is happening
with the issuers of prepaid cards for the use of certain services, such as mobile or
cellular telephony, which in this way place hundreds of thousands a day and
"capture", so to speak, immense resources. of consumers, intended for the
provision of the service as a form of advance payment for it. With the
aggravating factor, to use the expression pejoratively, that financially it could be
considered a form of "self-loan." And on the other hand, the fact that highly
technologically developed companies begin to design products, such as electronic
wallets, which we will see later, without banks as direct generators of the product
and even going so far as to create a parallel system. of means of payment,
through networks, with a presence far from the banks, if it subsists.
3.7.3.
Current responses
In truth, there is a whole movement aimed at adequately providing electronic
banking and electronic commerce in general with security mechanisms. In an
open environment, what is known as "Secure Socket Layer" (SSL) has been used
first and later, especially for transactions, the so-called "Secure Electronic
Transaction" (SET) has been developed. It is noted that SSL is not expensive,
and is easily accessible through different networks, but it does not verify the
authenticity of the cardholder who is placing the purchase order. In exchange, the
SET uses a much more secure structure that fundamentally tends to cover the
risks of authenticity, confidentiality and prevention of damage in this way.89 The
difficulties of implementation, however, seem to have led to less use .
In summary, the answers could be summarized like this.
3.7.3.1. Encryption
One of the most used instruments so far is cryptography, which aims to keep
communications private.9O The etymology of the word, of Greek origin, comes
from the words "crypts", "lagos" which means hidden word. That is why it is
stated that cryptography is the art of transforming the contents of a message in its
original form, into a message that cannot be translated or decoded by the parties,
except by using a special key1.91 The Language Dictionary Spanish, in turn,
defines the crip
tography as the "art of writing with a secret code or in an enigmatic way."92
With this concept, cryptography fulfills very important functions, because it
identifies and attributes the message to a precise party, since to establish
communication it is necessary to have exchanged information. Furthermore, only
the other party can send the message, to the extent that the third parties to the
relationship have no cone
foundation of the key. This, of course, contributes to the confidentiality function.
that must be provided.93
Encryption is then a general security mechanism to allow the management of
data on the Internet, by virtue of which, the original message is converted into a
language built based on algorithms based on mathematical formulas, so that if
someone intercepts it in the way, its content is directly unknown, since it is
necessary to decipher it upon receipt at the destination. In practice, symmetric
keys have been used that allow both encrypting and decrypting messages, as well
as public and private keys, therefore different, with one of which the initial
function is carried out and with the other it is concluded.
The electronic signature has different modalities, such as biometric systems,
quantum cryptography and other electronic methods. And the digital signature is
a specific kind of electronic signature.94
3.7.3.2. Certification
Here there is an answer to the problem of authenticity, which is linked to the

entities that will provide that function and the certainty that results from the pre-
existence of funds, through the creation of electronic wallets or electronic
certificates, that is, electronic money. Without prejudice to returning to the matter
later, let's simply say that the certification of the signature and who gives an
order is very important so that later, when it comes to electronic commerce, for
example, the selling merchant is able to demand compliance. of payment, if you
have not received it at that time. But this difficulty is overcome in advance, if the
person intending to make the purchase has managed to establish an available
electronic fund from their account, so that nothing has to be charged but rather
the payment is made automatically, this is also in real time.
Regarding certification, specialized companies have been created, which,

independently of the direct participants in the system, are dedicated to providing
digital certification services, in order to provide security to communications
carried out through open networks. Through the digital certificates that are
issued, certain information is offered to network users about the person with
whom they are interacting.95
3.7.3.3.
Technological instruments
Naturally, the same technological development has generated response
instruments to avoid or reduce risks. The most important, without a doubt, is
linked to the possibilities offered by the so-called "artificial intelligence" that has
allowed the creation of expert systems through which analytical capacity has
become automatic and allows, through numerous programs, that the same system
detect, without any human intervention, the presence of risk indicators, making it
possible to obtain much more effective responses than traditional controls.
Consider, to take the same example with which we highlighted the risk, that by
virtue of this type of programs it is possible to identify behaviors of current
account holders that could suggest the presence of fraud, such as when checks
issued appear for sums significantly higher than those that the program has been
recorded as habitual of his behavior. Or in file conservation technologies on
liquid screens that allow access to the consultation of practically identical and
three-dimensional reproductions of the checks processed as a precursor to the
electronic exchange and even compare the printed signatures with the registered
models.
3.7.3.4. Legislations
The regulatory contribution must address two levels: the one that says with the
existence of clear rules that begins to be reflected in laws, projects and models
such as those referring to electronic commerce, electronic signature and
electronic transfers of funds, to cite a few examples, and the one that It deals with
the repression and control of certain particularly risky activities that include both
administrative powers and the classification of criminally punishable conduct.96
Among the first, it is worth highlighting the European Directives relating to the
protection of consumers in the field of distance contracts and the establishment of
a community framework for electronic signatures;97 the so-called "Patriotic
Law" recently issued in the United States on the occasion of the tragic events of
September 200198 and the Uncitral Model Laws on international credit transfer
of 1992 and electronic commerce of 1996 which, as their name indicates,
constitute an obligatory reference for the legislation that is being adopted on the
subject in different countries.
The possibilities are naturally very broad since they range from the issuance of a
statute with all-encompassing claims to the promulgation of laws on various
matters, each of which is responsible for including particular provisions, as
would happen with banking laws, international trade laws and the capital market.
values.99
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76. CASTELLI, César. "Analysis of successful Home Banking cases How to
develop a successful project? Modernization of Payment Methods."
ASOBANCARIA. Bogota, 1997.
77. PENNABACKER, Bil!. "Call centers as a competitive advantage in the
financial sector." In: Modernization of payment methods. ASOBANCARIA.
Bogota, 1997.
78. For this purpose, a versatile application has been developed that is today
known as CRM (Costumer Relationship Magnagement).
79. In truth, the issue is not simple. In fact, the Internet was created in response to
the easy sabotage that could occur in private networks and has been developed so
that messages can use the most varied means or communication routes available
(telephone, satellite, cable, fiber optics), precisely with the purpose of giving you
security against possible attacks from third parties. However, it is evident that the
enormous volume that continues to be taken from the market generates the
potential risks of concentration, among which those derived from viruses, the
natural surcharge that occurs in the market, the deliberate and intentional
congestion of sites for the purpose of blocking them and any other similar sites.
Consult with advantage MINARDI PAESANI, Liliana. "Direct and Internet." Ed.
ATLAS, SA Sao Paulo, Brazil. 2000.
80. Over the past three decades, SWIFT has grown to become a business that
routinely processes 7 million messages a day, representing payments
cumulatively worth US$6 trillion. The central purpose of the company continues
to be payments between banks as well as compensation related to securities
transactions and other procedures typical of financial transactions.
There are, in this way, three payment segments:
1. Market Infrastructure consisting of communication between financial
institutions and their members. Among the interveners are payment clearing
systems (they would seem to be payment settlement systems), central banks and
others.
2. Interbank or intrabank consisting of communication between financial
institutions and their correspondents, counterparties or co-contractors and
subsidiaries or controlled entities. Includes the traditional payment initiation
message. 3. Bank - client consisting of communication between financial
institutions and their corporate clients.
SWIFT specifically offers the following:
1. Connection
2. Messages
3. Standards
4. Transaction processing.
81. See Infra Chap. 111, 3.12.1 and Chap. IV.
82. SERRANO, Tony. “Impact of ACH Technology on Modern Banking.”
Published in "Modernization of payment methods. Colombian situation and
international experiences. Bogota. Asobancaria 1997. pp 70.
83. Colombia. The Bank of the Republic has developed an electronic fund
transfer system, called CENIT, to which credit establishments and the National
Treasury Directorate of the Ministry of Finance and Public Credit may be linked
as authorized entities, whose operation will be marked by the following:
established in its rules. (R. 31/92, D. 2520/93, D. 1207/96, CE August 28/01).
84. MARCUCHI, Jackeline. "The Brave new w9rld of Banking on the Internet:
The Revolution of Our Banking Practices." 23 Nova Law Review 739, 1999. He
has maintained that: "The Internet is 'inherently insecure' and generally the
person who uses the Internet is insecure about the risks, since the majority of the
information handled on the Internet is retrievable. Transactions namely, over the
Internet, are carried out through a public network that is open and available,
including criminal ones. A cybercriminal can transfer funds from one account to
another, make unauthorized purchases, as well as obtain money from third
parties. The volume of transactions traveling over the Internet is so large that the
entire data transfer can potentially be read or monitored by a third party. These
risks can occur both in a legitimate environment for managing networking and in
an illegal one for activities such as the theft of credit card numbers or passwords.
The SANS Institute and the FBI have identified the 20 most critical security
vulnerabilities on the Internet, among which the most important are having non-
existent or incomplete backups; not fully filtering incoming and outgoing
addresses; maintain non-existent or incomplete records; have vulnerable CGI
programs; buffer overflow in ISAPI extensions; maintain unprotected, shared
protocols on networks under Windows; allow information leakage through
anonymous connections (NULL); have weak passwords; etc Cf.
www.semana.terra.com.co/ciudad/visualizacion/ articulo_plla.asp?tipo=3.
Access date: February 13, 2002.
85. MARCUCHI, Jackeline. Op. cyl.
86. GUERRERO M., María Fernanda. "Virtual Contracts: an Approach to Legal
Risks."
87. Among the many technical-operational problems, with delicate legal effects,
is the problem derived from the lack of time synchronization in the global
context. The result is that there are fractions of a second or "gray zones" of time,
in which electronic contracts would be executed by one of the parties, but not by
the other. As a solution to this conflict, Coordinated Universal Time was defined
since 1972. (UTC) which takes midnight on the Greenwich meridian as a
reference and is regulated by an atomic clock of extraordinary precision.
Colombia, Adopted UTC reduced by 5 hours as legal time in the territory of the
Republic (D. 267/93), The Superintendence of Industry and Commerce is the
entity whose conservation is the atomic clock that allows the dissemination of
said legal time,
88. Security of electronic money, www.bis.org/bubl/cpss18c.html(access date:
September 11, 2001),
89. ORFEI, Stephen W. "Electronic Commerce - SET". SSL is inexpensive, it is
available in most Explorer-type web browsers on the market, so it is easy to
obtain. The messages are infiltrated, which is much better than doing business
without any protection, but SSL does not authenticate the identification of the
parties. Any cardholder can be impersonated from any terminal, because SSL
encrypts the channel between the customer and the merchant, but without
verifying whether they are a cardholder, or rather a criminal. Therefore, SSL is
not backed by banks, nor is it guaranteeing the transaction. If something doesn't
work, it's basically the merchant's problem. For its part, SET uses industrial
strength encryption, digital identification, with public and private infiltration
keys made with algorithms based on mathematical formulas; It also validates the
entire transaction from the point of view of the cardholder, the merchant and the
banking entity. Any merchant can give the public keys to their client, who will
send them encrypted data, so that the message can only be read using the private
keys, equivalent in a digital identification, to a personalized digital signature."
90. IBAZCANO, Daniela, Op. cyl. These services can be provided through
Cryptography, "a discipline that includes principles, means and methods for the
transformation
"data processing in order to hide the information contained, establish its
authenticity, and prevent its detection."
91. GLOSSARISH. RGC 1999. "Contributions to electronic commerce: what law
enforcement and revenue agencies can do." Report to AUSTRAC. Canberra,
Australia URL: http://www.austrac.gov.aun/publication. Taken from E-
Commerce and the law. Work cited pp. 91.
22 edition. 2001. pp 684.
92. FURTHER, Jake. Chap. IV. Op. cit.
93. SABET. Op ci! There are four security services that can be found regarding
electronic data exchange.
In the first instance, Confidentiality, which assures both the person who sends
and the person who receives the data that the information sent could not be
understood by unauthorized third parties. This service is provided through the
encryption mechanism.
94. "In traditional cryptography for the transmission of communication, the
sender and receiver of a message used the same key and method to encrypt and
decrypt, the
The downside is that these secret keys had to be transmitted in some way (often
insecure). It is the so-called symmetric or "private key" cryptography,
To avoid its obvious risks, a system that is intrinsically inviolable was developed
in 1976: public key cryptography, and its two basic applications (digital signature
and encryption). In this system, each person is provided with a digital certificate
and has a pair of keys, a public one that is made available to every possible user
of the system, and a private one, which only the certified person has. In this
system, the only requirement is that each public key must be associated with an
identity following a reliable recognition process (which is why the Chambers of
Commerce, as registration authorities, play a great role).
Through this system, a person can send a message signed with his or her private
key to another, and the second person will know that it was really the first person
who sent it, since the signature in question was the only one that could be
verified with the public key of the person. sender (which the receiver must have
obtained in order to verify it. There are public directories of certificate issuers for
this purpose). Likewise, a sender can encrypt a message with the public key of
the receiver, so that the latter is the only person who can read it, since only he has
the private key that allows it to be deciphered. In this system, the private key is
mathematically related to the public key in an unrepeatable way, making the
system very secure."
"In the cryptography and public key certification (PKI) structures, the private key
is the secret element related by mathematical procedures to the other element
(public key), and kept by the certified person with security guarantees. It is
basically used to decrypt received messages, although it is also used to create the
digital signature.
In cryptography and public key certification (PKI) structures, the public key is
one that must be made available to any person who requires it through the
repository of the certification entity. This key is related, by mathematical
procedures, to the other element (private key), and always kept by the subscriber.
The public key is used to receive encrypted information, although it is also used
to verify the digital signature in a document." Taken from www.certicamara.com
(access date: February 28, 2002).
95. Colombia. Pursuant to the provisions of Law 527 of 1999, an open
certification entity called "Sociedad Cameral de Certification Digital Certicámara
SA" has been created whose fundamental purpose is the issuance of digital
certificates. These are digital identity documents issued to a person by a
certification entity. This is issued when the identity of the applicant has been
fully verified, although the issuance and identification do not always fall to the
same entity. Any person attached to a chamber of commerce in the country
(whether an entity or a merchant) can request a certificate; they must
subsequently physically identify themselves at the respective Chamber. Once the
procedures provided for in the Declaration of Certification Practices are
completed, which is a document that includes the procedures that must be
followed to achieve the identification and issuance of digital certificates, the
process ends with its delivery. These certificates are valid for one year, once
expired they can be renewed.
The benefits provided by digital certificates are mainly:
. They serve to identify yourself to third parties, preventing identity theft on the
Internet.
. They guarantee the identity of the sender and receiver of the information, as
well as the inalterability of the message that is transmitted.
. It provides confidentiality, to the extent that only the sender and receiver can
read the information stored in the document (the communication is encrypted).
Certificates can have different degrees of "quality", depending on the
identification work of the certificate subscriber. Each entity must publish the
procedures followed for the identification and issuance of certificates, in order to
demonstrate that quality.
Each participant within the digital certificate issuance scheme has a different
responsibility, as follows:
. The certification entity is responsible for issuing the key pair - public and
private - in a secure and unrepeatable manner, as well as storing its own private
key and guaranteeing the technical quality of the computer system.
. The registration authority is responsible for completely identifying the user,
directly from the data it certifies.
. The certificate holder must notify changes to the certified data, the loss of the
smart card where the certificate is stored or any other incident known to him or
her. Cf. www.certicamara.com
96. GUERRERO, María Fernanda; SANTOS, Jaime Eduardo; SANCHEZ, Julio
César; ZULUAGA, Víctor and CUERVO, Abel. "Criminalization of Computer
Crime." It raises an interesting debate on the need to regulate this matter that
includes a proposal for articles to classify various behaviors as criminal.
97. Directive 97/7/EC and 99/93/EC. The latter defines the "electronic signature"
as "data in electronic form attached to other electronic data or logically
associated with them, used as a means of authentication" and qualifies it as
"advanced" when it meets the requirements of being linked to the signatory. in a
unique way, allow its identification, have been created using means that the
signatory can keep under its exclusive control and be linked to the data to which
it refers so that any subsequent change thereof is detectable.
98 This law directed fundamentally against terrorism assigns the broadest powers
that can be remembered and with the purpose, among others, of fighting against
criminal activities including money laundering, establishes a lengthy and
complex regulation that affects all electronic transfer mechanisms of funds and
trade of this nature, the scope and effects of which will have to be measured in
the near future.
99 Colombia. At the closing of this edition in April 2002, a draft framework law
for the securities market was being processed in the Congress of the Republic,
providing, among other things, in separate chapters for Electronic Entry in
Securities Accounts (art. 23) and the Promotion and remote placement of
securities (arts. 79 et seq.)
3.8. ELECTRONIC OR COMPUTER CONTRACT
3.8.1. Notion
Begin by noting that until now we have studied the use of different technological
resources to provide services to clients, but as we have noted, there is an obvious
relationship between the operation as such and its conceptual support, that is, the
contract or agreement of wills, by virtue of which obligations arise whose
purpose is to give, do or not do something. It is a matter, then, of analyzing, as is
possible, not only using this technological support for the adequate provision of
the services derived from the consequential obligations, but taking a step back,
reviewing the volitional process that is developed, using "in integrum" " of that
computer support. 100
We would say then that the electronic or computer contract is the agreement of
wills expressed, through or with the assistance of these particular means of
communication, from whose perfection the obligations inherent to the legal
transaction are derived.
In other words, what characterizes the electronic or computer contract is not its
content, but the way in which its perfection is implemented. 101
3.8.2. Contract formation
Given that the perfection of the agreement itself is extremely fast, the existence
of a pre-contractual stage in which there is complete clarity and information
about its content is essential, not only because of what is relevant to the business
that is intended to be formed, in particular, but because such prerequisites tend to
prevent terms globally established by one of the parties from violating consumer
rights.102
In truth, there are innumerable contracts that can be concluded in this way, which
frequently leads authors to confuse the generic possibility with the specific
manifestations. In these, those that have seen the greatest development to date
say with the purchase and sale of merchandise, through the public network,
including software, although their participation seems to be of lesser importance,
within those that have been called "web -wrap agreements" .103
Probably, then, many of the reflections that are formulated touch on this type of
product, but they must be mentally transferred to all the hypotheses of possible
legal transactions, and of course, to those that clients enter into with their banks
to directly demand the provision of banking services.
Regarding online sales, it has been argued that the quality of the information is
fundamental - which is obvious - and must include the legal identity of the seller
and its physical location, the total price of the goods, the conditions of payment,
any restrictions or conditions on purchases, including guarantees, money refund
conditions, the extension and validity of the offer, and mechanisms in case of
complaints and compensation.104 In relation to this information, although it is It
is true that the uses seem to make it convenient, for clarity, that it be supplied, it
should be known that except for the fundamental requirements of the offer, the
others could be fulfilled by local laws. But naturally, this is one of the most
delicate problems, since there is no certainty about the jurisdiction or the
substantive laws applicable to the contract. So and for this reason, the tendency,
following the Anglo-Saxon experience, is for the scheme to be
omnicomprehensive of all the elements that are considered important for the
relationship.
In reality, it should be said that the fundamental thing for continental European-
inspired systems will be to see if the requirements of the offer are met, which as
such is a unilateral legal act, including the essential elements of the contract, such
as the price and nature. of the property in the case of sale. 105
It has been stated that transactions in this way imply that a contract can be
formed by the interaction of electronic agents of the parties, even if no person has
reviewed the actions of said electronic agents, or even the terms of resulting
agreements or can be formed. by the interaction of an electronic agent and an
individual, who acts on his own behalf or on behalf of another and in which
actions are executed by the latter, the execution of which is free, that is, which
could be taken or rejected, with the knowledge that the agent electronic will
complete the transaction or action, that is, it is designed to perfect the
agreement.l06
Unless otherwise agreed, the contract is formed where and when the acceptance
of the offer is communicated to the person who made it, which would establish
the thesis of reception. 107 Now, it is necessary to specify whether the
presentation of the products and information on the Web Site really constitutes an
offer and whether acceptance is effectively communicated by that electronic
means. 108
It is generally held that presentations through electronic means cannot be
considered strictly as offers. The offer would be constituted by the person who
responds to the invitation or "special offer of an electronic page." This is the
moment that the seller has to accept or reject the offer of his potential buyer. This
position coincides with the general position of commercial codes, which enshrine
bidding as a simple general announcement to the market of the existence of
products, and opens the door for interested parties, themselves, to make an offer.
In other words, to the extent that it is not an offer addressed to a specific person,
but rather a general, indeterminate proposal about the possibility of placing goods
or services, it must be understood that it is not mandatory and that the business
comes to be formed at from the initiative of the generic recipient, who is
individualized when he expresses his intention to negotiate. 109
It should be remembered that under the Uncitral International Convention on

Goods and Related Transactions, which applies as we know, more to the
purchase of goods in commercial businesses than to domestic purchases, it has
been provided that acceptance of the offer is effective in the moment in which
there is assent from the recipient, and that it will take effect at the moment in
which the indication of the assent reaches the offeror (Art. 18). With which the
reception system is being adopted as the one for perfecting the contract. In the
same Convention it has been added that "the offer, declaration of acceptance or
any other manifestation of intention 'reaches' the addressee when it is
communicated orally or delivered by any other means to the addressee,
personally, or at his establishment or address." postal address, or if you do not
have an establishment or postal address, in your habitual residence" (art. 24).
Naturally, what this reiterates, ad nauseam, is that it is simply a matter of
perfection by unequivocal agreement of the parties, so Article 11 of the model
law on electronic commerce of Uncitral itself must be taken into account, in the
sense that "the offer and its acceptance may be expressed by means of a data
message." 111
Regarding the place of formation of the contract, the issue is by no means simple,
because as noted, the protocols for transmitting data messages between different
information systems usually record the moment in which a message is delivered
from a information system to others, or the moment in which the recipient
actually receives and reads it. However, transmission protocols do not usually
indicate the geographical location of communication systems.ll2 This is a
delicate aspect that we will discuss shortly, when talking about conflict of laws
and jurisdictions.
3.8.3.
Existence and validity of the Electronic Contract
It should simply be known that in electronic contracts it is also necessary to meet
the requirements of existence and validity that are generally established in
domestic legislation and in private international law, for the formation of
contracts. Among the first, the imposed form of particular interest would have to
be considered for the topic we are dealing with and the existence of an
unequivocal agreement of wills on the object of the contract. Among the second,
the absence of defects that mean that even though the contract is born, its effects
may decline. 113
Regarding perfection, an obvious complication is that some local statutes
introduce special requirements for certain types of contracts. They are, for
example, that it must be in writing, that it must be signed in the presence of
witnesses or that it must be made a public deed before a notary or notary public.
Although not all of these forms can be replaced, a clear example of this would be
the last requirement, it is important to insist, in accordance with the model law on
electronic commerce, which has been adopted by different countries, "a contract
will not be denied validity or binding force. for the sole reason that a data
message was used in its formation", so it is possible that under this orientation,
which does not require a particular form or a certain method of communication,
the space is clearly opening up, in the countries that adopt it, so that it can be
held, supplying or fulfilling most of the formal requirements established by law,
starting with the written form.
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100 GUERRERO, María Fernanda. Op. cit. Virtual contracts are those that are
"concluded by e-mail" or through a "web-site" on the Internet. These contracts,
along with 'distance' and 'digital' 'telematic' contracts, are nothing more than
widely spread negotiable forms or instruments whose strength lies in the ease of
putting buyers and sellers, located anywhere in the world, in contact. "so that
competition is achieved in accordance with a market that is today massive and
totally globalized."
Contractual good faith and the duties of diligence, information, advice, warning
do not vary due to the fact that technology is flooding legal institutions. It is
precisely the law that must adapt to social reality and even more so in the face of
current requirements suggested by globalization, universal service and the use of
information technologies based on computing and telecommunications.
101 UNCITRAL. "Legal Aspects of Electronic Commerce - Electronic
Contracting", 38th Period of Sessions. March 11-15, 2001. The expression
"Electronic Contracting" has been used to refer to the "formation of contracts by
means of electronic communications or data messages", From that point of view
it is considered as "a method of forming contracts and not as a subset based on
any specialized subject", Therefore "it is not thought that electronic contracts are
fundamentally different from paper-based contracts..., an international
harmonization effort must be aimed at removing legal obstacles to the use of
modern means of communication, more not worry about substantive legal issues.
Some adaptation of traditional rules on contract formation may be necessary to
accommodate the needs of electronic commerce." URL: hllp://uncitral.org.
Consultation date: January 16, 2001.
Colombia. "In the formation of the contract, unless expressly agreed between the
parties, the offer and its acceptance may be expressed by means of a data
message. A contract will not be denied validity or binding force for the sole
reason that one or more data messages have been used in its formation" (art. 14).
102V. Supra 2.4. Colombia. "This law (on electronic commerce) will be applied
without prejudice to current regulations on consumer protection" (L. 527/99, art
46).
103. The antecedent of "clickwrap" contracts is found in "shrink-wrap
agreements". The latter took this name and began to use it in the last decade of
the last century to designate agreements on the general conditions of contracts,
established by the seller of software products.
However, the term wrap expanded its scope and began to be used to designate all
contracts entered into when acquiring software, whether online or offline. Thus,
when talking about web-wrap agreements, for example, it refers to agreements
that are concluded online and that indicate the scope of software licenses,
establish the law applicable to the contract, the limitations of the seller's liability,
etc.
Shrink-wrap agreements are agreements by which the general conditions of the
sale or transfer of rights relating to the software are established, and where the
purchaser's acceptance results from opening the packaging of the software or
using it, or from performing other predetermined behavior in contract. Thus,
there are various types of shrink wrap agreements: Box-top agreement (a license
reference is written on a piece of paper located under the cover of the box
containing the good), Envelope agreement (it is in an envelope inside the box ),
Referral agreement (refers to a label attached to the disk containing the software
with a legend that states "do not open it before reading the license" or "before
using this software, carefully read the license agreement for its use." Today the
name "shrink-wrap agreement" is also used to designate the multiple mechanisms
by which software sellers impose certain conditions on buyers, that is, for
example when they indicate that "the general conditions have been read and
accepted by the seller." client, expressing his agreement with them".
The clickwrap agreement is a mechanism frequently used in electronic commerce
and is defined as a "contract for the purchase or use of products or services
offered through an online seller."72 The online buyer, for his part , accept the
terms of the agreement by clicking (usually on an icon labeled "I accept").
At a minimum, a clickwrap agreement must contain:
- Buyer agrees to pay collection fees if the company backing their credit card
refuses (for any reason) to do so.
- The buyer agrees to provide sufficient information (name, address, email, etc.)
to the seller, so that the seller can verify the legitimacy of the transaction. - The
buyer agrees to take legal action only in the seller's jurisdiction, and, - The buyer
represents that he or she is over 18 years of age.
These types of agreements have various uses today:
- To purchase software, books, disks and other products that are sent by regular
mail.
- As a way to acquire digitized products (software or music) that are received
through the Internet.
- To access databases, encyclopedias or other similar sites, etc.
GUERRERO M., María Fernanda. "Aspects Related to the Fiduciary Deposit of
Source Programs 'Escrow Contracts or Agreements'". The author refers to the
possibility that companies that provide technology and own know-how are
obliged to deposit updated versions of the source programs acquired by their
users in a trust that will authorize the latter to dispose of them, in the event of
certain conditions.
104 IBAZCANO, Daniela. "Legallssues in Electronic Commerce in the Western
Hemisphere. Article published in 17 Arizona, Journal of International and
Comparative Law 219. Winter 2000.
105 Colombia. "In the interpretation of this law, its international origin, the need
to promote uniformity of its application and the observance of good faith must be
taken into account" (art. 3°.
106 SUMMER, Joseph. "Against Cyberlay Law." Article published in The 15
Berkeley Technology Law Journal 1145 Fall 2000. Although this statement is
observed, it simply warns that there must be an implicit consent that can be
alleged from the actions, positive facts whose consequence, whoever agrees, is to
oblige him, which simply reiterates a general principle of information on
contracts.
107 V. Supra. Chap. 1, 5.2.2.1.
108 FURTHER, Jake. "Electronic Commerce and the Law." Chap. III
"Contractual issues".Op. cit.
109 Colombia. "Offers of merchandise, with an indication of the price, addressed
to unspecified persons, in circulars, prospectuses or any other similar type of
written advertising, will not be obligatory for the person making them. Addressed
to specific persons and accompanied by a note that does not have the
characteristics of a circular, they will be mandatory if no reservation is made in
them. Art. 847 C. Co.
110 UNCITRAL. "Indeed, the rules relating to contract information usually
distinguish between 'instantaneous' and 'non-instantaneous' communications of
offer and acceptance or between communications exchanged between parties
present in the same place at the same time (interpraents) or communications
exchanged at a distance ( interabsent). Typically, unless the parties establish
instant communication or face-to-face business, the contract is formed when the
acceptance is sent to the offeror or when the offeror receives it. URL:
http://uncitral.org. Colombia. L. 527/99, art. 14.
111 Canada. The uniform law on electronic commerce expressly refers to
"touching or clicking on an icon or a designated place on a computer screen" as a
way of expressing consent. Colombia, L. 527/99 on Electronic Commerce.
112 Colombia. "If the originator and the recipient do not agree otherwise, the
data message will be deemed to have been issued at the place where the
originator has his establishment112) and as received at the place where the
recipient has his establishment. For the purposes of this article:
a) If the originator or recipient has more than one establishment, its establishment
will be the one most closely related to the underlying transaction or, if there is no
underlying transaction, its main principal establishment, and b) If the originator
or recipient does not have an establishment, their usual place of residence will be
taken into account" (L. 527/99, art 25).
113 See Chapter 1, 5.2.2.2.
3.8.4. The electronic signature
Without a doubt, the most important aspect discussed in relation to the electronic
contract is the existence of a signature conceived as an external manifestation of
the subscriber's will, in the sense of being bound. It is in this direction that the
doctrine has evolved over the years, to go from the primary conception of the
signature, as a handwritten expression of the full name and surname of the
subscriber, to admitting the handwritten expression of a sign or symbol that
expresses , summarize or substitute the name and surname, until reaching the use
of mechanical instruments to impose one or the other, understanding that, in all
cases, a will is unequivocally expressed. Well, under this premise it is not
difficult to understand that technology makes it possible to use equally
unequivocal means of expressing the will to be bound.114
The electronic signature, specifically the digital one, consists, ultimately, of "a
series of digits that appear unintelligible to the human observer; but what
\
However, they do have a significant amount of information." It is treated for
Therefore, a private key scheme created through cryptographic techniques that
guarantees that the constructed series or signature can only be created by the
owner of the key.115 Conceived in this way, it could also be defined as "an
electronic identifier created by a computer and attached to an electronic
document". 116
Regarding the probative value of electronic signatures, comparative law has a
series of statements directed, of course, to assigning it, among which the Uncitral
Model Law on Electronic Signatures, 2001; the E-Sign Act- in the United States,
Electronical Signatures in Global and Natural Commerce of June 30, 2000; the
European Union Directive 1999/93 on Electronic Signatures and recent laws that
have been adopted in other countries. \17
. It is essential that the electronic signature be recognized, and of course,
supported by clear provisions and safe interpretations of the courts, because
commercial transactions, electronically, will meanwhile generate a lack of
confidence in their security and legal effectiveness, and This is not surprising.
We will highlight later, in the documentary credit contract, the particular risks
that arise from the deferred compliance of the obligations derived from an
international purchase and sale contract and the role that such contract plays in
covering the risks, so it must be understood, from Now, in the event of electronic
contracts, these risks become even more sensitive. Indeed, people who offer
services on the Internet easily and continually change their facades, transactions
are carried out with enormous speed, cross-border problems increase and the
risks of fraud are much greater, to which is added the lack of knowledge of
physical identity. and documentation of natural and legal persons, and obviously
the difficulty of being certain about the authenticity and seriousness of the
communications sent.I18
An advantage, with respect to legal transactions concluded verbally, is that
electronic communications are recorded and evidence remains of them, compared
to the simple statements of those involved in a consensual transaction. They are,
therefore, "documents" under the terms of procedural legislation.119
The Uncitral model law has said that an electronic signature means "data in
electronic form contained in a data message or attached or logically associated
therewith, which can be used to identify the signatory in relation to the data
message and indicate that the signatory approves the information collected in the
data message", This means that all possible methods fit in which the identity can
be authenticated electronically, including biometric and cryptographic systems,
among others. In this way, the digital signature becomes a type of electronic
signature. IZO The latter is a way to ensure that a person is identified and linked
to the content of a data message, while the digital signature is a numerical value
that is attached to these messages. The digital signature is unique, so there are as
many of this type as there are documents signed by a person, while the electronic
one is distributed by an entity to the user, and is used in all the documents that
the user sends. The digital one is verifiable, that is, it can be verified that it
corresponds to a specific person, and that the message could only be sent by
them; and that the only person who knows it is the initiator, who puts the
signature on the electronic document. In conclusion, the digital signature is
linked to the content of a message, so each document sent has a different and
unique one and if the text of the message is modified, the signature is cancelled,
losing its quality as such.
3.8.5. Conflict of laws and jurisdictions
In light of Private International Law, a broad sector of doctrine recognizes the

possibility of separating the law that governs the formation of the contract and
that which regulates its execution and effects. Among the sources that refer to the
first stage - that is, its formation - we find the 1998 European Parliament
Directive and the UNIDROIT principles; As for the second moment, the criterion
of the "Lex Loci Solutionis" must be fundamentally followed, widely recognized
by International Law.
As regards the jurisdiction applicable to electronic or computer contracts, the

same principles that govern the subject for voluntary agreements concluded in a
traditional manner must be followed, that is, their special condition of being
carried out by another means - that is , electronically - does not introduce any
novelty in the aspect of the jurisdiction that must hear them. By making this
reference to the general rules on contracts, it can be seen that there are three
criteria to establish the competent judge to resolve the problems that arise from
them: that of place of formation (if the place where the agreement was concluded
is clearly determined), the place of fulfillment of the main obligation derived
from the contract or, finally, the place of residence of the debtor.
Of course, one of the most serious problems that arises in terms of electronic
commerce is the enormous difficulty of determining which jurisdiction is
competent to define such a possible conflict, as well as which is the applicable
substantive law. Because, as we have just stated, The protocols do not always
indicate the place where the contract was concluded, if that were the dominant
criterion in matters of private international law,121 The trend in private
international law in relation to the factor of application of one or several legal
systems to an assumption with an international element is the recognition of the
autonomy of the will. Such is the case of the Inter-American Convention on the
law applicable to international contracts122 and the 1980 Rome Convention
applicable to contractual obligations within the framework of the European
Union. If for any reason the applicable law is not designated and the designation
is not made expressly or on the entire body of the contract (as there may be a
division of the contract), it will be governed - as the previous international
instruments prevent - by the law of the country with which the closest ties exist,
as a manifestation of the prevailing principle of proximity. At the inter-American
level, the objective and subjective elements that arise from the contract are taken
into account in order for the location to be the most suitable.
There is a clear vocation within the framework of the 1980 Rome Convention to
protect the consumer123 by not allowing, in any case, the so-called strong party
of the contract to unilaterally designate the law that is favorable to it, to the
detriment of the protection that the consumer would have in his own country.
In relation to the applicable jurisdiction, a problem closely linked to that of the
applicable law, it is established in the Brussels Convention of 1968, a condition
analogous to the Rome Convention for the protective mechanism to operate in
favor of consumers.124
The above sheds some light on the conflicts of laws that may arise in the
development of electronic contracts, but leaves large gaps. On the one hand,
there are many countries that are not part of international conventions, so their
rules cannot be applicable to them. In some countries, according to the authors, in
contracts that "in integrum" or whose main obligation is executed therein, the
principle of autonomy of will could not be applied, since the principle of the lex
loei solutionis is imperatively applicable. ,125 therefore local substantive and
procedural laws should be applied.
Therefore, while arriving at internationally applicable legislation, an effective

definition of the law and the forum, based on the principle of autonomy of will,
can largely eliminate the existing gaps. As there are regulations that especially
protect the consumer,126 so that autonomy has the least resistance, it would be
important for the issue to be handled with transparency to avoid abuses by
producers or suppliers of goods or services vis-à-vis consumers, final recipients.
thereof. In practice, this would be reflected in the information being clear and
unambiguous and that there are review mechanisms to prevent an error in a click,
so to speak, from the consumer appearing to "unequivocally" express their will
when they did not intend to do so. In other words, there must be adequate
mechanisms so that the consumer can correct his error.
It has been said with certainty that the growth of electronic contracts has
generated a growth in legal claims, because even though business is carried out in
cyberspace, legal conflicts occur in the real world. And that is where they must
be resolved.
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114 Colombia. "When the law requires that an act or contract be in writing, the
private instrument with the handwritten signatures of the subscribers will suffice.
"By signature means the expression of the name of the subscriber or of some of
the elements that comprise it or of a sign or symbol used as a means of personal
identification...if the law does not provide otherwise, letters or telegrams will be
equivalent to the form written, provided that the letter or the original of the
telegram is signed by the sender, or that it is proven that they have been issued by
him, or by his order" (art. 826 C. Lame "A signature that comes from some
mechanical means will not be considered sufficient except in cases where law or
custom admits it" (art. 827 ibid), in accordance with 621 which provides in
matters of securities: "the signature may be replaced, under the responsibility of
the creator of the security, by a sign or password that may be mechanically
imposed."
115 SABET, Randy. "1 n terna tional Harmonization in Electronica Commerce
and Electronic Data Interchange: a Proposed First Step Toward Signing On the
Digital Endowed Union." Article published in "The American University Law
Review". American University 511 Magazine. December 1996.
116 IBAZCANO, Daniela. "Op. cyl.
117 Colombia. Electronic Commerce Law (L. 527/99).
118
DITOSTO, Nanette. ''Trust and Electronic Commerce". Published in "Electronic
Commerce in Practice". Chamber of international trade. 1997, p. 118. "All types
of businesses are carried out through the network and a large amount of
confidential information travels (...). Encryption technologies are available today,
however what is needed is to standardize verification and encryption mechanisms
internationally, this standardization can be called global public key infrastructure
(PKI), its objective is to establish common parameters and standards on which
encryption and services must be provided on the network, create protocols to
certify and regulate cryptographic services, regulate the role of the certifying
entities, their responsibility and control, etc. ALLAN, Richard and HORNING,
Tomlinson."Contracting Over the Internet." Published in "Electronic Commerce
in Practice". Chamber of international trade. 1997, p. 124. "As the exchange of
data over the Internet has the same value as written documents, the signature is
necessary, in the contractual case, as a mechanism for expressing the will of the
parties, unlike free-form contracts. Internet businesses have the same value as
those done physically and the handwritten signature is replaced by the electronic
signature, composed of a public key and a private key and certified by an entity
in charge of attesting to the matter. The digital signature is made up of a public
and a private one, so that messages encrypted with one can only be decrypted
with the other, the author of the message encrypts it with his private key and the
receiver decrypts it with the public key, so that there is certainty about the
identity of the subjects".
119 Colombia. Art. 251 CPC.
120 Colombia. A digital signature is understood to be "". the initiator's key and
that the initial message has not been modified since the transmission was made"
(art. 2)
121 In North American Jurisprudence, the case Compuserve Vs. Paterson in
1996, decided by the 6th Circuit Judge in Ohio, United States, questioned the
possibility that "electronic contacts" were sufficient to define jurisdiction. The
Court considered that the fact that Paterson had made a contract with a computer
connected in the city of Ohio, that is, that he had sent information to the
computer located in said city, and that he had promoted his software through the
Compuserve computers to distribute their businesses, meant that despite not
having had physical contact with Ohio, the competent judge was that of that city.
122 Art. 7°, "The contract is governed by the law chosen by the parties."
123 Art. 5.2 of the Rome Convention provides that "without prejudice to the
provisions of Article 3, the choice by the parties of the applicable law may not
produce the result of depriving the consumer of the protection guaranteed to him
by the mandatory provisions of the law of the country." where you have your
habitual residence:
- if the conclusion of the contract had been preceded, in that country, by an offer
that has been specially addressed to him or by advertising, and if the consumer
had carried out in that country the acts necessary for the conclusion of the
contract or,
- if the contracting party or its representative had received the order from the
consumer in that country (oo.)".
124 MALDONADO ELVIRA, Sergio. "In this line, (consumer protection) it is
important to highlight the important discrepancies that exist within the EU itself.
While in Germany there is high control over direct marketing operations (and
consequently, over 'spamming' via email), in France commercial communications
are prohibited and, therefore, those that are part of a "web" page. of alcoholic
products (under article 169 of the "Evin" law, inspired by public health reasons)"
(URL: hllp://www.derecho.org/unidad/maldonado)
125 SUESCUN MELO, Jorge. "Private right. Studies in Contemporary Civil and
Commercial Law. Chamber of Commerce of Bogotá and University of Los
Andes 1996", p. 117. Colombia. That would be the case according to current
regulations (C. c. arts. 19 and 20. c. Co. art. 869).
126 Colombia. Law 527 of 1999 gives priority to consumer laws over those
established for electronic commerce (art. 47).
3.9. ELECTRONIC MONEY
Probably the most disturbing aspect for the traditional banking system is linked
to the existence of a global network that opens the space for non-banking
operators to establish and manage, in practice, efficient payment systems in
commercial transactions. This means that, at least in theory, it is not necessary to
go to the bank or that its presence is only required at the beginning of the
operation, or ultimately, that it continues to function as a backup for eqa, but
increasingly distant, to the extent in which a good part of the transactions are
carried out with their presence greatly diminished.
3.9.1. electronic check
In this case it would be an instrument that simply replicates and uses the current
account relationship between the client interested in purchasing and the bank, and
would constitute only an instrument to support electronic commerce. It would be
a classic way of disposing of the balances without using, for this purpose, the
check or checkbook forms delivered by the institution that are frequently
required as a requirement, for that order to be considered as a security,127 and
replaced by the electronic instrument. created as a check to dispose of the funds.
In this case and in the process of commercial negotiations, when there is a
specific offer from the consumer interested in purchasing, his computer presents
him with a check format with blank spaces, which must be used by him,
including within the document an electronic signature. As a digital document, it
is transmitted by the consumer to the merchant, and the latter sends it, by the
same electronic means, to the financial institution, where the potential acquirer
has his account. If accepted, a subsequent compensation will then occur between
the consumer's bank and the seller's merchant's bank, with the respective
allocations of the buyer's and merchant's accounts, if applicable. In this case, of
course, what is achieved through the use of the mechanism is the certainty for the
seller that payment is being made against an effective account and the bank's
intervention is essential, because it is simply limited to authorizing the payment
of a check issued electronically.128
3.9.2.
Digital money
In its creation, the process of distancing that we initially mentioned begins to
occur. Digital money or "digital cash" means certain software programs based on
the exchange of information, which lead to the existence and availability of
money in the possession of an interested party. These types of systems are
described by different names, such as "network money", "digital currency",
"cybermoney" and "electronic money". Digital money is distinguished from
electronic wallets for different reasons, particularly its use, since while these
require the use of physical instruments such as POS, digital money is managed
through the Internet. 129 Current configurations frequently involve financial
institutions, which have the franchise of the product and are responsible for the
operations that occur in customer accounts through the use of the system. For this
reason, it is usually required to open a special account, where the available
money is used exclusively for transactions made with digital cash. Examples of
digital money are cybercash, netcash, digicash, on disk.13O
In general, the term electronic money refers to "a variety of mechanisms that will
facilitate payments in warehouses and on the Internet, through computer-based
communication technologies." In practice it may involve the generation of an
electronic currency in a digital currency house, which is located online with the
client's financial institution. This validates the currency, to which an electronic
signature is attached, and is returned to the client to be saved in a special program
on the computer's hard drive, which will function as a kind of wallet until it is
required. When this occurs, the client transmits it to the merchant, who directly
obtains the transfer to his own account on the network. This is where an
accumulation of values can begin to occur in the merchant's account, which can
be used for other exchanges on the network without having to go to the bank.l3l
Although there are many advantages assigned to these new manifestations, there
are many risks linked to their use. On the one hand, the nonexistence of a central
transaction system and the fact that records begin to be managed in a space other
than that controllable by central banks, which is that of commercial banks, will
lead to disturbing concern, for those regulators, to know in what way and in what
form they can have information and control over the money and if some type of
regulation is necessary that restricts such possibilities to the banks, or if, and this
is a risk that they themselves take, being left behind , a vacuum is produced that
is occupied by private companies that generate an economic reality that is very
difficult to control later. This is a particularly delicate aspect, because given that
political decisions are required to be made, it must be remembered that they are
slow and heavy, they must be discussed with local governments, which are going
to encounter a reality in a field that is practically uncontrollable, since it operates
in a space geographical area that is beyond their competence and where it will
then be necessary to obtain international cooperation very quickly and
effectively, if they want to take measures at a global level that can be effective.
We must add to the above, the concern that arises at the level of scholars of the
subject, because the handling of this form of money, often anonymous within the
purpose of seeking total security for it, can lead to it being used for money
laundering or tax evasion, or different forms of fraud or forgery.132
Specifically, in relation to money laundering, the growing existence of these
electronic money mechanisms can make conventional systems for monitoring
funds useless, since transfers between individuals would allow a de facto
circulation of monetary species and their distribution in many hands, without the
possibility of recovering information or knowing origins and recipients, since, as
we have just noted, the same technological advances that tend to consecrate
anonymity as a form of security for those involved, conspire against the
effectiveness of the processes. 'research. 133
It is not unnecessary here to insist that the sole circumstance that there are non-
banking entities today recognized worldwide and in some way legitimized by the
intervention of central banks, shows how traditional banks have been losing the
possibility, which would have been obvious , of being the very originators of
electronic money and not just its necessary supports, at least under some
hypotheses.
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127. Colombia. "The check can only be issued on printed check forms or
checkbooks and issued by a bank. The title that is issued in the form of a check in
violation of this article does not produce the effects of a security title" (art. 712
C. Co.).
128 AKINDEMOWO, Olujoké. "Electronic Commerce and the Law." Chap. V.ln
electronic payment systems and cyberbanking. John Wiley & Sons. Australia.
2001.
129 Recent applications allow the use, for example, of mobile or cell phones,
which transmit an infrared ray to equipment that recognizes them and follows
their instructions. Think of dispensers for drinks, magazines or cigarettes, which
are "paid for" in that way and which are then charged to the periodic bill that the
user receives.
130 AKINDEMOWO, Olujoké. Op. cyl.
131 EHRLlCH, Timoty. "To regulate or not? Managing the risk of money and its
potential
application in money laundering change". Arl. published in 11 Harvard Journal
of Law and Technology 833. Summer 1998. "The FATF (Financial Action Task
Force on Money Laundering) classifies electronic money according to 4 models:
a) Model of the issuing merchant (who issues the card and sells the goods and
services is the same person); 2) Model of the bank issuer (for closed and open
systems, in which the merchant and the card issuer are. different parties, while
transactions are carried out through traditional banking mechanisms); 3) Issuing
non-bank model (where users buy and spend e-money from issuers using real
money, spend e-money with the participating merchant, and finally the issuer
redeems the merchants' cash) and 4) the Issuing Non-Bank Model peers (the
banking institution does not issue the electronic money, which is subsequently
transferred between users, without interference from a financial institution except
at the initial moment of issuance and redemption, if any, of the electronic money
by individuals or merchants).
There are different systems that have developed these models like this:
DigiCash, an example of the issuing bank model, uses PCs to store values that
can then be transmitted by buyers from remote locations to carry out various
transactions. First, the user purchases digital currencies with unique serial
numbers, associated with a specific amount of money from their own bank.
Subsequently, when the user requests electronic cash for a subsequent
transaction, the bank debits the user's account in the requested amount and the
user's computer subsequently generates and stores the value as a series of random
serial numbers with the desired values and denominations. . Then, when the user
wants to make a purchase online, he simply orders his computer to transfer the
coins to the merchant's website or bank account. Finally, the merchant validates
the coins and the exchange is completed.
CyberCash operates under the non-issuing bank model. In this system a user can
load coins from either a bank account or a credit card into a "wallet" stored on
their computer. When the user loads the wallet, funds are transferred from their
bank account to an account at a federally insured bank maintained by CyberCash.
When they find something they want to buy online, they only need to select the
item on the screen to complete the transaction. It is an almost instantaneous
process in which the user's electronic "wallet" on the computer is activated; coins
are taken from the wallet to update the user's balance; The coins are sent by
CyberCash to the merchant as payment, and the product is sent to the user, either
electronically over the Internet or via email. Finally, all information related to the
transaction is passed through a data center maintained by CyberCash, but the
files are not accessible to CyberCash unless the user downloads them with their
private key.
Mondex's electronic wallet model involves the use of pre-programmed smart
cards that can be repeatedly loaded with the amount to be paid for items either
online or in person, nominally by swiping the card through special readers at
points of sale ( POS). It is said to be a hybrid between the issuing non-bank
models and the peer model, according to the FATF classification. The model
begins with an entity called the "Originator", which issues and redeems Mondex
securities in the local currency to distribution entities, called the "Members". The
latter, in turn, will pay the originator for the issued security and the originator
will earn the investment income and maintain the sum paid by the member
during the time elapsed between receipt of payment and the future placement of
the money. Members then sell Mondex value to users or collect it from users.
This system allows, through smart cards, the holder to make purchases on
websites, withdraw cash from a bank, an ATM or a network, and pay for
merchandise in stores. Likewise, it allows transfers between cards using
electronic wallets without any interaction or knowledge on the part of a third
party. This is because there is no centralized system for transactions. Instead,
when a transaction occurs, the value is subtracted from one card and added to
another to be used in another transaction. While the cardholder of that value can
transmit the relevant information to the issuer and receive payment, the
expectation is that the electronic value will simply circulate between individuals
and entities participating in the system.
132 IBAZCANO, Daniela. Op. cyl.
133 EHRLlCH, Timoly. Op. cyl.
3.10. DATABASES
3.10.1. Notion
Several caveats must be raised at this point. Firstly, databases as

such have a very broad field, as they mean the possibility of collecting
information, organizing it on computer media, making it accessible to the
compiler or third parties, and based on it being able to provide it in appropriate
and timely manner, in relation to a specific matter. Considered in this way,
naturally, it allows for the most varied possibilities in the entire field of human
knowledge.
From this point of view, databases are exclusively a mechanism for organizing
and supplying information that is normally managed through a means of
electronic communication, since that is where their greatest possibilities for
contemporary development appear. 134
Secondly, it should be noted that the processing of databases is not so important

because of the technical support element, nor even because of the legal
consequences of their management, even though there are naturally peculiarities
in the contractual relationships that their administration generates, but rather ,
especially because through the general construction of said bases, but in
particular of certain types of them - and here those built by banking systems
appear - the privacy of the people involved has been put at risk and a reaction has
been generated. legislative, by virtue of which special protection mechanisms are
granted to individuals under the principle called "Habeas Data", which we will
complement with some technical aspects since we already referred to the topic in
this chapter, when dealing with banking secrecy, therefore We refer the reader to
what was said there. 135
3.10.2. Classes within banking activity
3.10.2.1. Central risk
Because we find it more didactic, we divide the presentation

into two manifestations that appear in the financial system, those that relate to the
stock market and those that concern the credit market.
to)
Stock market
The origins of credit bureaus are in the United States and their development is
linked to the issuance of bonds or debt papers, which public and private entities
began to increasingly carry out. They correspond to a philosophy that has had a
good influence on the market for negotiable papers, by virtue of which, in
addition to state controls or even in the absence of them, no one controls a market
better than the actors themselves on the scene and specifically than the
investors. . But for this to be possible, they require having the best and most
information possible about the companies, their operations and their future. This
has given rise, as we have said in another passage of this Book, to the authorities
being inclined to require paper issuers to "disclose" their balance sheet, that is, a
detailed presentation of the different auxiliary accounts that make up the balance
sheet and which, together with detailed opinions from the tax auditors, should
serve to have the first approximation to the real state of the companies.136
Well, to complete this information about the company, it has been established
that the securities traded on the market must be subject to qualification by a
specialized company, which carries out a critical evaluation of each issue, which
measures, Ultimately, its credit risk and that in practice, and without going into
those that the most well-known companies use in the world, would allow two
levels of risk to be recognized: speculative, where there are factors that can
eventually lead to a default by the issuer in the payment of capital or interest and,
that of investment, where all indicators suggest that the debt will be paid in full.
Naturally, this rating usually reflects the weight of the intrinsic returns of the
papers, at the time of going on the market, since institutional investors and
portfolio managers, at the time of their formation, also require papers that,
although of greater risk , offer greater profitability from the start. Ultimately, it
will depend on the profile of the fund or the product they offer to their clients,
whether it is advisable to include risk papers up to a certain percentage.
This information, which relates to the quality of the issue and not to that of the
issuer, tends to be concentrated in centers that the market can access to have not
only updated but also universal information on those listed on a market.137 In
our case, we have studied in the book two hypotheses, which normally involve
the need for qualifications of this nature, firstly, the "Issue of bonds, debentures
or debentures" described in Chapter VIII and then the placement of papers , as a
consequence of a process of "Securitization, securitization or securitization"
referred to in chapter XXIII of the work.
b)
Credit market
These record the volumes of debt that a natural or legal person has with the
financial sector, or that it may have had during a certain preceding period. They
are usually identified by a number - that of the citizenship card or the social
security number - and are normally provided through abstract, but sufficiently
indicative, reports. For example, it will be said that the person identified with the
reference number has a total debt with the bank of so many digits, that it is
backed by his sole signature in a certain percentage and with specific guarantees
on the difference, that its current relationships are with such a number of entities
in the financial system, that the credit experience that such entities report,
qualifies it in a certain way and that at the moment it has or does not have
overdue obligations with the sector.
These types of centers are extremely useful for the global evaluation of
references and their information is the basis that the bank must have before
granting credit to its client, as it illustrates it in various ways, but in particular it
indicates the level of your credit exposure to the sector and, in some way, you
can get an idea about the behavior that your colleagues have adopted in relation
to it 138
3.10.2.2.
Negative credit information centers
We have expressly qualified them this way to highlight that these fundamentally
banking construction centers can recover and offer to their affiliates or third
parties, under certain conditions, information regarding relevant conduct that
could be classified as banking mismanagement, and that, in this way, They
constitute a warning for the rest of the market. Indeed, if a person tries to connect
with a bank, normally by opening an account, the bank must know whether or
not their history as a client of the system raises any concerns.
to)
Canceled checking accounts
The first negative information that is usually collected and that has been
considered excluded from banking secrecy, is that which relates to the
management of your current accounts, meaning not only that it is legitimately
obtained but that its eventual disclosure tends to protect the community. than to
punish the person.
If for centuries, and its use now tends to decrease, the check has been the usual
way of disposing of balances by customers, its handling reflects and usually
constitutes a very faithful and suggestive indicator of commercial habits and the
principles that The respective owner applies to the management of their
relationships with third parties, through this payment instrument. In effect, a bank
will find impeccable behavior in its client's conduct when they always draw the
same against balances available in the institution, but, on the other hand, it will
see with concern that they frequently do so without having obtained overdraft
authorization, but what is worse, he additionally uses tricks or stratagems that
bankers easily discover, such as deliberately using a signature that does not
correspond to the one registered or repeatedly omitting the use of a seal that he
has registered as an integral part of your signature on the bank cards, or use
mistakes that cannot be accidental, by expressing the amounts of the check in
letters and numbers in a disparate way, which can generate apparently justified
returns of the checks. Well, anyone can make mistakes or even inadvertently
write a check without funds because, for example, they have poor records of their
balances, at a given time. But when it is obvious that it is a habitual and repeated
manner, and not an exceptional mistake, the bank will normally proceed to close
the account. 139
Well, the existence of this type of information in a central office allows, for
example, that if a person requests to open an account in a bank, the bank has the
possibility of knowing what their behavior has been. 140
In banking technology, a distinction is normally made between the expression
"settled current account", which indicates its closure at the will of the client or
the bank, but without any negative connotation, and the so-called "cancelled
accounts" which obey the decision of the bank. bank and that implicitly carry the
presumption of poor management of the account by the owner.
b)
Punished portfolio
Another hypothesis of absolute receipt consists of the compilation and collection
of reports on portfolios written off by banks. In some way, this information could
be sent to the Credit Market Risk Center that we just mentioned, but it can be
handled independently. By virtue of such circumstance, banks can agree that
whenever they have to write off portfolio, that is, discharged from their books
due to the impossibility of being recovered, in that event the information is
reported to the headquarters. 141
In some countries, this information must even be reported to the supervisory
authority, because it is interested in knowing the behavior of the banking
system's clientele, for whose stability it must be responsible. 142
Well, interbank agreements, if they exist, usually establish a rule for the
operation of these centers, according to which, when any person intends to be
linked to a current account, or even more, obtain credit facilities, the parties
involved in the agreement are They require you to consult it to find out if the
person has records that indicate that in loans granted by other entities it has been
necessary to write off the portfolio, that is, if they have not honored their
commitments. Normally, the information will also be sent in a relatively abstract
manner, that is, identifying the client by their ID or social security number and
indicating whether there is a written-off portfolio in one or more institutions and
by how many digits. Once the information is received by the consulting bank, it
must transmit it to the client so that they can proceed to go to the headquarters,
where they will be given the information of the banks that have reported the
write-off of their debts.
Consequently, it will be as a consequence of the arrangements reached with the
creditor banks that it will be possible to download it from the central office and
enable the possibility of making a link to the consulting bank, or receiving a
credit from it.
3.10.3.
Habeas Data
We have referred extensively to the subject,143 but we would simply like to add
that, from the point of view of comparative law, a whole series of protection
mechanisms have been repeatedly established, which seek to guarantee the client
access to the registry, possibility of updating outdated data, correcting inaccurate
information, ensuring its confidentiality, so that there is no improper consultation
and canceling information on aspects that have no direct relationship with the
objective validity of the information. is preserved.
To this end, a guarantee has been developed that in some countries has
constitutional consecration, through the expression "Habeas Data" which would
mean etymologically, due to its origin from Latin, in the first part habeas,
"preserves or keeps" and in English , "data", information or data, that is, a set of
principles that protect the storage of a person's data.144
Some countries and legislation initially distinguished between two categories,

sensitive data and common data. The former would be related to political
opinions, religious beliefs, health, etc., and the latter would not directly affect the
individual's intimate sphere. As we saw in the respective point of this book, this
classification has lost importance, because the possibility of analyzing the data
and interconnecting the bases means that, even when they are not originally
sensitive, they end up being so by being able to build an intimate profile of the
respective person.
The comparative law vision enshrines numerous laws in countries such as
Australia, Denmark, Germany, Canada, Ireland, the United Kingdom and the
United States, which protect the individual, or even some such as Austria,
Sweden, France and the Netherlands, which also protect legal persons.
Some authors have dedicated themselves to studying what the real problem is,
which in terms of privacy is generated by databases. It has been discussed
whether it is the possibility that through them, the Government has total control
over the life of the individual, whose data it has ("Big Brother Metaphor") or if,
furthermore, the problem lies in the lack of control over the various ways in
which the data are used ("Kafka Metaphor"), allowing, at any given time, the
person to find themselves rejected in numerous commercial or civil relationships
that they propose, without knowing that the cause of the refusal to contract
results from the existence of information that disqualifies him and that may be
inaccurate, exaggerated or untimely, but whose very existence he may be
unaware of. 145
The commercial exploitation of databases required the recognition of a series of

participants, starting with the person who is in charge of the conception of the
project and who gathers the information, prepares the data, organizes and
coordinates its production. Once available, it can be accessed either directly or by
using terminals.
As a consequence of this process, the producer-distributor has relationships both
with the software providers, if he is not himself, and especially with the users to
whom he must efficiently supply the information offered.
It has been highlighted by the authors that, outside of the common obligations of
any contract, the duties of information and advice, compliance with delivery and
start-up deadlines, and the obligation to maintain and supply accessories required
to be able to consult must be enshrined in them. efficiently the base. In truth, if
analyzed, as we have also seen in this chapter, when talking about the
professional services to which bankers are linked, the duty of information today
constitutes an obligation that must even be assumed in the pre-contractual stage
and that particularly binds, not only to the managers of other people's interests,
but to the permanent service providers, as would occur with the administrator of
a database in relation to its clients. Regarding the duty of advice, French doctrine
has maintained that it is only enforceable when it has been agreed upon, as in this
case, it is suggested that it be done for database contracts. As regards the
obligations regarding delivery times and maintenance and supply of accessories,
they do not seem to be particularly new, but rather flow naturally from the
contract and the economic purposes pursued with it. In any case, it is highlighted
that particular breaches due to the nature of the product, such as those linked to
the transmission of "inaccurate, incomplete, late or prohibited data" or those that
violate copyright, because they are constructed and disclosed without recognition
of the corresponding intellectual rights, may generate obvious liability towards
users or authors, in their order. And of course, not to repeat further, there is
responsibility towards those who may be affected by the recovery and disclosure
of confidential information, which affects their own privacy.
------------------------------------------------------------------------------
134 ALTARK, Daniel R., MOLlNA QUIROGA, Eduardo. "Legal regime of data
banks" in computing and law. Contributions of international doctrine. Vol. SAW.
Palma Publishing House. Buenos Aires, 1998. They define them in their work as
"a set of information, relevant and non-redundant, on a given topic and managed
by a set of appropriate programs."
LÓPEZ MUNIS GOÑE, Miguel. Legal data banks, describes them as "those sets
of basic legal documents - legislation, jurisprudence and doctrine - stored on
magnetic media or any other material and capable of being treated, recovered and
transmitted in whole or in part, through computer procedures and means. , which
with the application of techniques derived from the use of legal information
technology, are intended to be used for the purpose of public and generalized
dissemination of its content. Cited by: AL TARK MOLlNA.
135V. Supra. Chap. 111, 2.5.
136 Unfortunately, very severe scandals have been reported, precisely in the year
this book appeared, 2002, when large North American companies have
apparently manipulated their balance sheets and resorted to heterodox practices,
such as the creation of role to transfer their bad investments to them, have not
only produced enormous disappointment at the level of analysts, and of course, a
tremendous impact among those who invest, but also questioned to a very high
degree the role of tax auditors, which had already been the subject of debates at
the end of the last century, in the face of the notorious bankruptcies of companies
that, until shortly before going bankrupt, had received good ratings from their
external reviewers.
137 Risk centers can be defined as "Specialized companies that are primarily
dedicated to analyzing fixed income issues, in order to evaluate the certainty of
timely and complete payment of capital and interest on the issues, as well as the
legal existence, the financial situation of the issuer and the structure of the
issue, to establish the degree of risk of the latter".
(URLhttp://www.valoramos.com/unversióncolombia. Access date: January 17,
2002).
138 Colombia. Strictly speaking, this service can be provided by supervisory
entities, by professional Associations, such as the Banking Association, or by
private entities specialized in information and risk management. Among the
latter, for example, "Data Crédito" offers an interesting "scoring" service through
a scoring model thanks to which it is possible to predict the expected behavior of
a potential credit subject, which allows the financial institution or the supplier of
goods or services on credit, define the level of risk it is willing to assume.
139 See Infra. Chap. V where the subject can be studied with advantage.
140 Colombia. The existence for many years of an Interbank Agreement
forces the country's banks to follow the conduct that we suggest in the text and,
consequently, even refrain from opening current accounts for people who have
been sanctioned, until a certain time passes, imagine a year, since the closure of
the account or two years for each of the closures, starting from the last one, if it is
a plural event, and therefore it is a client who has relapsed into misconduct, for
which another entity also had have to close your account.
141 Overdue loans have been understood as "those in respect of which collection
procedures have been exhausted without any results, which gives rise to fear that
the credit right will not be recoverable...because they have written off against
their portfolio provision or directly in the statement of profits and losses, as the
case may be. URL:hllp://www.kpmg.com.co Access date: January 21, 2002.
142 Colombia. It must be sent quarterly to the Banking Superintendency
143 V. Supra Chap. 111,2.5. Colombia. At the time of publication of this work,
Bill W 124 of 2001 on Habeas Data was being processed before Congress.
144 Habeas Data can be defined in its current expression as "the right that assists
every person (identified or identifiable) to judicially request the exhibition of
records (public or private) in which their personal data or those of others are
included." your family group, to become aware of their attitude; to request the
rectification or deletion of inaccurate or obsolete data or that implies
indiscrimination" "Habeas Data and the right to privacy" at URL:
http://www.digitaldesign.bariloche .net.ar/xiijo\(enab/ComDerCib Access date:
September 7, 2001.
145 SOLOVE, Daniel. "privacy and Power: Computer Databases and
Methaphors for Information Privacy." Article published in the 53 Board of
Trustees of Leland
Stanford. Junior University. Stanford Law Review 1393. July 2001'L
3.11. CENTRALIZED SECURITIES DEPOSITS
3.11.1. Notion
A possibility that arises from the creation of electronic databases

refers to the management of securities that circulate in a market. Given the
growing volume that is issued in a sustained process of strengthening the capital
market, and given that this growing circulation brings with it a circulation of
risks, from the physical possession of the titles themselves to their possibilities of
falsification or adulteration, the appearance of centralized securities depository,
has offered a double advantage to the markets: on the one hand, being able to
keep them safely in the hands of a professional custodian and secondly, avoiding
physical circulation, at least of the original title, replacing it with electronic
certifications issued by the depositaries, which allow, in practice, the rights
derived from the title to be exercised, but which do not entail the risk of its
disappearance or alteration.
"A centralized securities depository is a specialized entity that receives securities

managed through a highly secure computerized system. Its objective is to
eliminate the risk that the management of fixed securities represents for holders,
streamlining transactions in the secondary market and facilitating the collection
of capital and interest returns."146
3.11.2. The securities deposit contract
3.11.2.1. The truncation of the circulation of securities
We could affirm that securities have been considered the most complete
documents of commercial law, to indicate that they constituted and still remain
very representative examples of commercial legal evolution, which allowed the
creation of assets in which it was possible identify the right with the title itself, so
that, based on the so-called principle of incorporation, the exercise of the right
meant, by definition, the display of the title in the hands of a legitimate holder.
This holder is the one who has the title, if it is a bearer instrument, who must
additionally be a beneficiary or endorser of the same, if the title is to order and
who, ultimately, must appear in the books of the issuer, if It is a nominative title.
But with these simple and clear requirements, securities have the natural vocation
to circulate in a market. As the doctrine has said, they allow the quick, safe and
efficient transfer of movable wealth.
Well, central securities depositaries begin by breaking that paradigm because, by
virtue of their existence, the circulatory process of a security is truncated or
suspended from the deposit in the entity authorized to receive it. That is, the
truncation arises from what the doctrine has called the dematerialization of the
instruments, by virtue of which their physical recognition is replaced by an
electronic certificate that accounts for their existence, and the recognition of the
person authorized to exercise the respective rights. Consequently, this
dematerialization can occur at any time.
In fact, it may happen that securities that are circulating in the market are
deposited in a central office and from that moment on, they dematerialize. It may
happen that the titles are created, but before the issue is placed on the market, it is
delivered to the centralized depository, in which case, from that moment on, the
possibility of circulation will be curtailed. And it could even happen that they
were never issued on paper, but rather that said issuance was done from the
beginning, in electronic form, so there would be no actual documents to
deliver.147 Naturally, this will be in many cases a result of the evolutionary
process of use of the service.148
3.11.2.2.
Main rights and obligations of the parties
We could briefly say that by virtue of the deposit contract entered into, the main
rights and obligations are the following:
to)
The central securities depository
The main obligations are to guard and preserve the deposited title, which entails
both physical and legal protection, which also guarantees that they cannot be
used by third parties and that they will be provided with the required securities;
restore the title as a result of the expiration of the term established in the deposit
contract; issue, at the request of the depositor, certificates that fully identify the
title and that allow the holder to exercise the rights that were deposited therein;
and maintain a reservation regarding such operation, with the exceptions
resulting from the Law.
b) - From the depositor
Whoever makes the deposit guarantees the authenticity and integrity of the
deposited values, is responsible for the identification of the last endorser, and
must pay the price of the operations, as well as reimburse the expenses incurred
by the centralized deposit, if applicable.
3.11.3. Responsibility
As a general rule, centralized securities depositories are liable for even minor
negligence in the performance of their functions.
3.12. INTERBANK OPERATIONS
3.12.1. Check Clearing

Strictly speaking, this possibility is immersed in the broader settlement and
clearing of payment methods, which we have been dealing with at different
points, in particular, when referring to the electronic transfer of funds. We have
separated it in this section, due to the importance that checks still have in the
disposition of balances linked to bank checking accounts.
Even though their percentage share of global payment methods has decreased,
tens of thousands of checks continue to be issued a day, requiring the
compensation that we will refer to in Chapter V of this book, which, when not
the result of a direct operation of the interveners, is ensured by the presence of
the central bank, as the natural administrator of the Interbank Clearing Houses.
The traditional system, which can still be maintained in many countries and
cities, involves the physical sending of all the checks that each bank receives in
charge of its counterparts and the reception, in the same way, of those that they
present in charge of your clients.
But, precisely, the growth in volume, with what this means in administration
costs and even physical risks of displacement, has led to the design of electronic
compensation systems,149 characterized because it is not carried out based on
the reception physics of the instruments and based on the totalization sheets of
the movements, but based on the information directly sent, by electronic means
or by files incorporated into diskettes. The first advantage derived from such a
possibility is that the compensatory process does not have to be limited to a daily
operation, but rather several times can be established in which it is carried out
during the day, thereby, in some way, The interbank operation becomes more
immediate and real, and the risks derived from payment systems are reduced. For
the system to work, it is necessary that there is a proven technological capacity in
the central bank and that, naturally, commercial banks can have the necessary
equipment and software to access the system.
Normally, this assumes the existence, in each private entity, of a consolidation
center, which records the total information of its offices in the country and which
is capable of being transmitted at the scheduled times to the Central Bank, under
files or records that conform to the standards established by the bank itself.
Of course, the regulations must establish the way of sending the files that
correspond both to the sending of information and to the cancellations that it may
generate and, in particular, to the returns that occur due to the impossibility of
payment, that is, the existence of a just cause for return, on the part of the drawn
banks.
The entities authorized to use the system are, of course, obliged to guarantee the
quality of the information, endorse the checks, as we will see shortly, adjust to
the schedules, procedures and techniques established with the bank, have funds
available against which the multilateral net position can be liquidated, supervise
that the checkbooks received by its clients comply with the standards required by
the Center, pay the fees established by the bank and in general, preserve all
records of checks and other instruments of authorized payments, in which you
have participated for the minimum time required in accordance with the Law.
Among the obligations that are reiterated is that of complying with the provisions
on money laundering and other criminal activities, which today constitute a
permanent concern of the control authorities and the Central Banks.151
For its part, the Central Bank undertakes to provide all the technical support that
the operation requires, including the validation of the records, carrying out the
clearing and settlement of payment instruments, in the opportunities provided for
in the regulations, leaving available for verification and subsequent review of
their operations, to name the most important ones. It may be interesting to
highlight how the circumstance that the check eventually does not circulate, that
is to say that it is truncated, means that their approval has to be, by necessity,
electronic, that is, the issuing bank does not have the physical instrument to
verify some of the details, which would be linked to possible falsifications or
adulterations of the instrument.
In this first possibility, the entity must verify, based on the electronic information
received, that the respective account exists and is current, that the instrument
number corresponds to that of the account against which it was drawn, that the
check or related instrument has not has been paid, that there are available funds,
that there is no non-payment order issued by the account holder or by competent
judicial or administrative authorities and that the account holder is not in
liquidation.
In general, it could be argued that the automation with which compensation is

handled makes it possible to reduce processing costs by eliminating the
duplication of classification, microfilming, etc.; accelerates operational
processes, simplifies the visa, reconciliation and compensation process, and
reduces the risk of fraud, reduces collection time and will shorten the exchange
cycle, allowing optimization of treasury management, by anticipating
information about the expected result in the exchange.152
However, the truncation of checks raises many legal questions, which must be
resolved, since the checks would have to remain in the possession of the
depositary bank, and not the drawee, and increase the risks of forgery or
adulteration, given that the electronic visa Precisely, it has to be done without the
support of the physical instrument, it is no less true that the immense advantages
that have been previously explained can be obtained. And with the lowest costs
assumed, it would be perfectly possible for banks to define a self-insurance
mechanism or take on technical insurance coverage for the risks derived from
such a circumstance. 153
3.12.2. Other electronic services of the Central Bank
Given the very important interaction that the Central Bank carries out with the
financial systems, it has the possibility of developing numerous services, as in
fact it has done in many countries.
Among the most important, we can mention those with centralized securities
depository, those with electronic trading systems, those that support open market
operations, those that manage electronic fund accounts and those with national
and international compensation. of financial operations to name the most
important ones.
Probably, few entities like the Central Bank can more vigorously stimulate the
development of these operations. 154
4. LEGISLATIVE SOURCES
In Latin America we find two types of laws or legislations that touch on the
subject matter of our study. There exists or usually exists in all countries
legislation that we could call banking, in which the possibility of creation and
existence of banks is recognized and the functions that each group can perform in
the development of its corporate purpose are indicated. And, on the other hand,
we have the legal provisions that specifically regulate the contract, that is, they
define it, indicate its main elements, the parties involved, the obligations carried
out by each of them, the modalities, consequences, etc. That is to say, the law
that recognizes the possibility of providing certain services and that which
typifies the contract and regulates it usually flow through different channels. The
first is usually a law on financial entities or banking law and the second is a
specific law or a set of provisions within a code of Private Law.
We raise the last possibility in a generic sense to make the following
observations: in many countries there is no classification of certain contracts as
banking but their regulation has been left to the initiative of the entities when
preparing their regulations or to the application of the common legislation that
regulates the fundamental archetypes. Many times there are contracts that are
barely regulated by common legislation, that is, by the Civil Code and that are
not even mentioned in the Commercial Code. Therefore, when we talk about
legislative sources we are referring to the laws that we were able to have at our
disposal, both those that classify and regulate some contracts as banking and the
commercial ones that regulate others without classifying them as banking. The
point is illustrated with an example: there are codes that regulate the deposit
contract in a bank current account while others limit themselves to regulating the
deposit as a commercial contract, without making a specific reference to the one
entered into by the banks or leaving them free to establish the regulations. that
they consider appropriate.
The table that we present below summarizes the provisions that we were able to
consult in each country, both those that authorize banks to provide certain
services and those that regulate contracts from a legal point of view. 155
ARGENTINA
BANKING LEGISLATION COMMERCIAL CODE
- Law of Financial Entities Banks, Argentina compiles in its Commercial
Code a
- Non-Bank Financial Entities: Law 22,871 (08- series of laws, which make
up its body.
VII-1983) U RL: http://secretjurid.www.5.50megs.com/leyes/
- Law on Non-Banking Financial Entities: Law Iyscom/codcom_menu.htm
22.267 Http://www.pelaez.com.ar/pelaez/powe r/Otros/
- (14-VIII-1980) Cod i gode Com erci o/Code d eCom merci o/Code
- Check Law: Law 24,452 (11-22-1995) deComercio.html
(U RL: http://www.nat.law.com/argentina/topical/bk!
Http://lineajuridica.com/ar/biblioteca/codigos/defondo/
arbk.htm trade/default.htm
BOLIVIA
- Law of Banks and Financial Entities - Law 1488 Decree Law 14379 -
Effective as of January 10
(14-IV-1993)1978 ro
http://www.geocities.com/bolilaw/legisla.htm
PANAMA
- Decree Law 9 of February 26, 1998 - By the It is available for purchase at
which the Banking Regime is reformed and the http://www.legalinfo-
panama.com/leyes.htm
Superintendency of Banks.
- Law 52 of 1917 - Law on Nego Documents -
ciables
-------------------------------------------------------------------------------
146 Superintendence of Securities. "Centralized Securities Deposits." March
1997. Q32. URL:http://www.supervalores.gov.co/ley2790.HTM. Access date:
January 10, 2002.
Colombia. "Through the securities deposit contract... a person entrusts one or
more securities to an entity authorized for this purpose, who undertakes to guard
them, manage them when the depositor requests it in accordance with the
regulations that each deposit issues and register the liens and transfers that the
latter communicates to you. Only the Centralized Securities Depository
Management Companies, especially authorized by the Superintendence of
Securities and the Bank of the Republic, may manage centralized securities
depositaries.
PAR.-The administration of securities by the centralized securities depository
will include the powers to present them for acceptance or payment,
extrajudicially or judicially, in the latter case when so agreed or provided for in
the regulations. For these purposes, the depository may extend the certificate
issued for this purpose. Once the value has been fully paid, the depository will
deliver the respective title to the person who canceled it. In the event that, in
accordance with the Law, the amount paid is included in a global title, the
depository will issue a certificate regarding said payment and make a note of it in
the account opened in the name of the
headline". Decree 437 of 1992, article 4 in accordance with Law 27 of 1990.
147 GUERRERO, María Fernanda. "The dematerialized securities market
(technical-legal aspects)". Thirteenth Latin American Congress of Banking Law,
Latin American Federation of Banks, FELABAN. Santiago de Chile, 1994.
When explaining how "dematerialization" is conceived as the replacement of the
physical document with the accounting record, the author presents as possible
modalities the so-called mandatory total dematerialization, optional total
dematerialization and dematerialization of the circulation of the title.
148 Colombia. The deposit contract is perfected by the endorsement in
administration and the delivery of the titles to the entity that manages, the
centralized securities depository, so it does not acquire the titles as property.
Securities registered in the National Securities Registry may be subject to this
endorsement. In the case of registered securities, the issuer must be notified by
the centralized securities depository so that the corresponding registration can be
carried out. The order to transfer a deposited value produces the effects of
endorsement without the responsibility of the transferor, unless otherwise stated
(L. 27/90, art 16; d. 437/92, art. 5").
149 GALLEGO SÁNCHEZ, Helmut Mauricio. "New Challenges of Colombian
Financial Law." First Congress of Financial Law. Asobancaria. Bogota, 1998. "In
the automatic execution of payments, the processing of the forms containing the
orders is carried out by digitizing the respective payment instrument, so that later,
from the computer centers of the consignee bank, the physical delivery of the
instrument is carried out. of the recipient bank, but the transmission of data
contained in the instrument (data message), to the recipient banks, either in direct
communication (on-line) or offline (off-line) or through the use of magnetic units
like floppy disks."
150 Colombia. The external regulatory circular DSP 2001 of the Banco de la
República regulates the electronic clearing system for checks and other payment
instruments -CEDEC- and has established that files must be sent under the
standards established in the document "CEDEC - Format for Exchange
Electronic Check Information System (NACHAM)".
151 See Supra. Chap. 111 2.5.
152 QUEEN ANDRADE, Eduardo. Unpublished Conference.
153 Colombia. The current electronic compensation system has provided that the
same
may be carried out with the transfer of the files, directly or on diskette, but it has
contemplated that the physical instruments continue to circulate and arrive at the
issued banks, until a regulatory protocol for truncation is defined by agreement
between the banks themselves. which was just being studied when this edition of
the book appeared.
154 Colombia. To this end, we have taken the experience of the Banco de La
República, where in addition to the centralized securities depository that we
mentioned, the SEN is managed. (Electronic Negotiation System) that
fundamentally seeks to boost the public debt market and give it greater liquidity
and depth, thereby contributing to transparency and price formation, because it is
a blind and anonymous market, which allows the availability of offers. and
closures are carried out in real time; the CENIT (National Interbank Electronic
Clearing) which allows supporting a system of electronic fund transfers,
mentioned in point 3.7 of this chapter and the SOL (International Operations
System).
Chapter IV
BANK DEPOSITS
This chapter, unlike the following ones, is not intended for the study of a banking
contract but rather for the analysis of a set of generalities about bank deposits.
This will allow us to outline very important aspects of some topics that we will
not touch on again, such as the irregular deposit of securities, and to establish a
general framework of reference for the different deposit contracts studied in this
and the last part of the book.
1.
CONTENT
It can be stated that deposits constitute the main source of external resources for
banks and, consequently, the contracts that precede the execution of these
operations are the most important instrument to achieve them.
However, the expression "bank deposits" is broad and misleading from a legal
point of view, since the fundamental term used, deposit, does not correspond, in
the most important cases, to the general concept that exists of this contract in the
Laws. Civil and Commercial. In effect, bank deposits corresponding to the
classic deposit contract are the least in the development of banking activities and
on the contrary, in most cases "bank deposits" correspond to a peculiar type of
deposit that, In the opinion of some, it should be called differently. In other
words, the expression bank deposits in money or securities includes two clear
possibilities: the receipt of goods in simple deposit, properly deposit, which, as
we will see below, has been unnecessarily called "regular deposit", to
differentiate it from the others. and the receipt of goods in deposit but in such
conditions that legal consequences arise for the parties that are different from
those that would have existed if it had really been a deposit and that the doctrine
has described as "irregular deposits."
2.
REGULAR AND IRREGULAR DEPOSITS
2.1.
REGULAR DEPOSITS
The deposit is a contract by which one person delivers a movable thing to another
so that the latter keeps it in their possession and returns it when the depositor so
requires. The laws consider it as a typical real contract, that is, one of those that
are only perfected by the delivery of the thing.' The fundamental obligation of the
depositary consists of preserving and guarding the thing that has been received
and returning it at the request of its owner or better of the depositor. When it
comes to civil deposit, it is usually free of charge, because only one benefit is
derived for the depositor. When the deposit is commercial, however, it is
remunerated, since the depositor recognizes a commission as consideration for
the service provided by the depositary.
The deposit in its traditional form has a limited application in terms of banking
services and the execution of the respective contract does not lead to the
obtaining of resources by the banks. In other words, a first observation that
explains why the simple or regular deposit is studied in the fourth part of the
book and not in this one, lies in the fact that the bank does not acquire ownership
of the goods it receives in deposit, but is obliged to keep them. and return the
same and therefore the receipt of such goods does not constitute availability or
resource for the entity.
2.2. IRREGULAR DEPOSITS
We have seen that regular deposit involves the delivery of a movable thing with
the obligation for the depositary to preserve and return it, so that it acquires an
obligation of a certain type or body. He cannot use the good he has received, but
above all he cannot consume it, nor dispose of it. That is why the form that
ordinarily corresponds to the regular deposit is to deliver a non-fungible or
consumable good. The question then arises as to what happens when, on the
contrary, the object of the deposit contract is an asset of this nature.
Legislation and doctrine, when studying the deposit contract and finding
themselves faced with the possibility that we have just mentioned, that is, the
receipt of a fungible or consumable thing, understood that it was possible to
maintain the deposit scheme by replacing the main obligation of the depositary,
of return the same good, for a type consisting of returning an equivalent amount
or quantity of goods of the same kind and quality. By separating then from the
central requirement applicable to the object of the deposit contract, that is, its
non-fungibility and admitting, instead, the generic obligation to return an
equivalent amount, the need to classify these deposits with the name of "
irregular deposits".
They are characterized because the depositary acquires ownership of the goods
he receives and can freely dispose of them, as his obligation is reduced to having
to return an equivalent amount. If it is cereals, for example, whoever receives a
ton of wheat in deposit, with certain generic characteristics of humidity, quality,
etc., can dispose of it or consume it, since his obligation is simply to deliver the
same quantity of wheat of the same quality. than the one you have received. This
is what happens, moreover, with general warehouses, auxiliary credit
organizations, that when they receive this type of products in silos or warehouses,
specially enabled for this purpose, they do not acquire an obligation of kind or
body towards the client. true but only a gender obligation.
Well, if the banking business revolves around the administration of monetary

resources, it is easy to imagine that the deposit of true importance, in banking
contractual law, is the irregular deposit and, within its possibilities, in a very
prominent way, the deposit' of money. Both in the case of irregular deposit of
securities, and in the more frequent case of irregular deposit of money, the
circumstance that the object of the obligation is a fungible asset, replaceable by
another without detriment to the creditor, allows recognition of the advantages
and enormous importance that irregular deposits have in attracting resources.2
3. IRREGULAR MONEY DEPOSITS

3.1. NOTION AND CHARACTERISTICS
They constitute the main source of resources for commercial banks and
explain, from a legal point of view, their intermediary function. If they can
capture monetary deposits from their clients and receive them as property, it is
possible to dispose of them and obtain from their placement the profit essential to
pay the remuneration they generate and the costs of their administration, which
represent a very important percentage of the expenses. banking. Furthermore, the
irregular deposit of money allows us to recognize the existence of a typical credit
operation, since there is a current transfer of the property by the depositor to the
bank with the latter being responsible for returning it later, on a fixed or
determinable date, or on the moment the depositor so indicates. In any of these
hypotheses, however, there will be a more or less long time during which the
bank will derive a benefit from the use of the money deposited.
The above has allowed some authors to maintain that the most important
characteristic of these deposits lies in the existence of a double availability.3 Said
availability is predicated, simultaneously and as a curious consequence, of both
intervening parties. In effect, the client can dispose of the resources as soon as
there is a credit in his favor, which will be payable immediately in demand
deposits and which, even in the case of term deposits, could allow him to do the
same if he resigns. to the interests derived from the term, in the opinion of
numerous authors, although the position is not peaceful. Simultaneously, the
bank can and does dispose of the resources, placing them in active operations
from which it derives its profit as a financial intermediary.
This legal concept of double availability explains, on the other hand, the
economic phenomenon called the "banking multiplier." When, based on its
client's deposit, the bank grants a loan and pays the resulting sum into another
account, the initial resource is multiplied, since there will be two clients who can
have, to a certain extent, the same sum simultaneously. Which in other words
means that, by virtue of this principle, banks influence the economic world
through the creation of means of payment, by enabling the community to acquire
goods and services above the monetary availability with which they counted in
the beginning.
An example will illustrate what has been said: a person deposits one hundred
pesos on demand in a bank and, consequently, can dispose of them at any time as
a creditor. At the same time, based on the existence of this resource, the bank,
after leaving twenty percent to meet the ordinary demands of its clientele, lends
eighty pesos to a second client and credits it to their checking account. Well,
between both clients they can now have one hundred and eighty pesos when the
initial deposit was only one hundred, with which the bank has expanded the mass
of available resources. And it can continue to do so because the eighty account
subscribers increase their deposits or available resources by that amount; If he
then makes another deduction, which will be sixteen pesos, he can lend a third
client the sum of sixty-four pesos and so on, successively, until the balance is
exhausted. Operations, all, carried out based on the first and without a new
effective income to the entity's coffers.4
3.2. LEGAL NATURE
If we have accepted, for the purposes of the presentation, the thesis of the so-
called irregular deposits, this does not mean that it is definitive and
incontrovertible. On the contrary, there are numerous opinions according to
which the irregular deposit, more than a deposit, even with the adjective
irregular, is a mutual contract. In effect, if mutual or consumer loan is understood
as the contract by which one of the parties delivers to the other a certain quantity
of fungible things with the obligation for the borrower to return as many others of
the same type and quality, it is worth asking whether This definition does not
correspond to the notion of irregular deposits that we have just mentioned. To
which we could add a direct criticism against the use of the expression "deposit"
because it could not be spoken of, even irregularly, if there is no true custody, a
fundamental cause that leads the parties to contract in this type of legal
transaction. .
To provide some clarity on the subject, it is necessary to distinguish bank

deposits of money between demand and unpaid deposits and term and/or paid
deposits. In relation to the former, there may be several differences between the
mutual and the bank deposit of money that we have described as irregular;
differences that would support the possibility of maintaining this qualification.
The first is that in the mutual there is a period in favor of the borrower for its
return, while in the demand deposit it is payable at any time by the depositor. On
the other hand, we have that, at least in the case of commercial mutual insurance,
it is naturally remunerated; The person who enters into the contract lends a sum
of money and receives an interest rate in return. On the other hand, in bank
deposits there is no remuneration in favor of the depositor, except in exceptional
cases, or it is not always of the nature of the contra!Q. Therefore, as long as there
is no remuneration in favor of the depositor, there is, at least, a clear difference
with commercial mutual insurance.
It is more difficult to find a difference when it is a term deposit of money or with

remuneration in favor of the depositor, because here, as in the mutual, there is not
only a structural identity, transmission of ownership over the fungible thing, but
that, in addition, the term and remuneration elements of commercial mutual
insurance appear. How then to find a difference, if there is one? In relation to the
term, it has been observed that while in the mutual, the mutual must necessarily
respect it, since it has been established for the benefit of the borrower, in the
deposit, even with remuneration, the term continues established in favor of the
depositor and, therefore Consequently, he would be in a position to demand the
immediate return of his money by waiving the remuneration that would
correspond to him if he had persisted in the original agreement. However, the
conclusion is neither evident nor absolute in all countries.
Some distinctive features have also been sought regarding the interest rate. It is
noted that, in a good number of countries, the remuneration received by the
depositor is usually much lower than what could be obtained by entering into a
mutual contract with an individual. An observation that has the defect of being
eminently circumstantial, because in countries in which the remunerative rate of
term deposits was similar to that of mutual funds in the market, it would have to
be concluded based on identity.
Another difference between the mutual and the bank deposit, in general,
would be that the former is made at the request of the mutual. A person receives
a
mutual sum of money and pays interest on it because he needs it. It is necessary
for some purpose of an economic nature. In the deposit of money, however, there
is no compelling need for the bank to receive it, even when it can use it to
advantage. Even if the bank has excess liquidity at a given time, it will not
always be easy for it to reject deposits from its customers. There, rather, it seems
to be the depositor who has an interest in contracting with the bank in a manner
different from the mutual case, at least when it comes to demand deposits. The
depositor seeks, in truth, purposes different from those that would derive from
the execution of a mutual contract. He wants, for example, the custody and
conservation, if not of his money in kind, then of the amount equivalent to the
money given; purpose that you obtain when the money is received by a bank, for
its seriousness and prestige and for the severe and jealous controls that we have
already had occasion to mention. It also seeks to provide services derived from
the simple constitution of the deposit. In effect, when the deposit is constituted as
a current account, the bank will attend to your cash requirements, collaborate
with you in the management of your accounting by sending you a periodic
statement, serve as a commercial reference for the development of your
activities, etc. .
With these differences marked, only the apparent identity remains in the term
deposit hypothesis where the depositor does seek remuneration and this is his
main motivation. Well, despite everything and the fact that in relation to this it
can be admitted that it participates in the legal nature of the mutual, 5
maintaining the classification of deposit is due, ultimately, to the circumstance
that in any case the depositor enjoys the guarantee derived of the particular
capacity of the bank to safeguard and preserve the equivalent of its credit,
derived from the execution of the deposit.
In summary, the bank deposit of money seems to be different from the mutual
deposit and can be classified as an irregular deposit when it is transferable,
although in the hypothesis of the remunerated term deposit, dJ the conceptual
closeness that exists between both figures cannot be denied. Therefore, the use of
the term deposit in this case has to be based on its didactic convenience,
stimulated by the legislation and banking practice that qualify them as such and
by the consideration that, deep down, every depositor expects adequate
conservation and custody. of the amount equivalent to that of the good that has
been delivered.
3.3.
BANK OBLIGATIONS
Let us briefly list the obligations that arise for the bank as a result of receiving an
irregular deposit of money.
3.3.1.
Refund of the amount received
Fundamental obligation, common to any of the modalities, is to reimburse the
depositor for the amount delivered or a part of it if that is his will. The
opportunity will depend on whether the deposit is demand or term, that is, on its
enforceability. The bank satisfies its obligation to return the deposit by delivering
an amount of monetary species that corresponds, quantitatively and formally, to
the initial amount received, in local currency or foreign currency. This means that
in monetary obligations, and specifically, those arising from deposit in a bank,
the risks or advantages derived from exchange situations exclusively harm or
benefit the creditor or depositor, as a general rule. Thus, if in the interregnum
between the date of creation of the deposit and its reimbursement a devaluation
occurs and the currency loses purchasing power, the bank is oblivious to that
circumstance and fulfills its obligation by returning the same amount of current
pesos or another currency that would have received in deposit. If, on the other
hand, in that interregnum what has occurred is a revaluation, the greatest
purchasing power corresponds to the creditor and will result from receiving the
same amount of money that was deposited at the beginning.6
It should be added that legislation tends to create some special protections in

favor of depositors. This protection may consist of the fact that in the event of
bankruptcy of the banking establishment or administrative liquidation, in
countries where these entities are removed from the common bankruptcy regime,
a privileged position for the banks is recognized within the: allocation of
available resources. depositors.7 The protection can go so far as to exclude
depositors from the bankruptcy or administrative liquidation regime, that is,
paying them with absolute priority and without the need for the process or at least
the completion of part of the requirements required for the other creditors, so that
they are removed from the quota law applicable in bankruptcy proceedings.8 Of
course, saying that depositors are excluded from the bankruptcy, insolvency or
liquidation regime implies enshrining the highest degree of privilege, placing
them as creditors in the first place and in such a way that they receive the
deposited sums even with priority to labor, tax credits, etc.
Experience shows, however, that given that the highest percentage of a failing
bank's liabilities is usually made up of bank deposits, it is quite possible that,
even if it enjoys an exclusion regime, this will only lead to produces a pre-mass
distributable among the depositors, to which the quota law will necessarily have
to be applied, if the assets are insufficient to pay all of them. From this point of
view, the credits of the depositors would have the recognition equivalent to that
of a first class or, better, that of a preferential class, satisfied which would return
to the common regime for the other creditors. All of the above is due to the same
fundamental consideration: when banks manage a large part of the national
savings, the State, in order to protect the interest of third parties and the
economic stability of the country itself, has to establish the necessary regulation
and control mechanisms. to guarantee the good and due use of its resources and
in the remote event of an economic upheaval of the institution, establish
privileged conditions for those who have channeled their savings into the
banking sector, trusting in the security provided by the permanent and zealous
intervention. state.
It has been complemented by the appearance of organizations that contribute

both by supporting the financial system with resources that allow it to address
structural or soundness problems, and by managing deposit insurance, aimed at
protecting the largest volume of depositors, basically the of lesser resources.9
3.3.2.
Custody of deposited monies
Perhaps by making an effort to support the classification of irregular deposits, it
can be argued that the bank has a generic custody obligation, that is, it is not
specific in the sense that the assets make up a replaceable and mutable mass in
their items. individual, which reflect the relationships between one or more
specific clients and the bank. However, in relation to the whole it could be found
in the banking legislation of each country and in the
monetary provisions, regulations aimed at ensuring maintenance, with
......
conservation and investment of the resources raised. So if the legal mechanisms
and the traditional seriousness of banking establishments seek global custody of
resources, this translates into a guarantee for creditors, in relation to the
equivalent part, whose subsequent delivery will satisfy the obligation contracted.
Just think about the following considerations: banks, for technical reasons, have
to establish liquidity reserves or reserve requirements, freezing part of the
resources collected and leaving them in their own coffers or in the coffers of the
central bank. There is, then, a percentage of the goods received in deposit that for
this reason is safe from any contingency.
Furthermore, the rest of the resources are placed in a more or less restricted
manner, within parameters established by the authorities such as the so-called
"individual credit quotas" aimed at preventing a person from receiving an
excessive volume of credit with respect to the capital and reserve of funds. the
institution; principle that on the other hand contributes to the dispersion of risks,
avoiding concentration. It is prohibited, as a general rule, to carry out operations
that exceed a certain percentage of the capital and reserve, without real
guarantees being constituted in favor of the banking institution. Accounting
provisions are imposed to cover debts after a certain time of maturity so that the
profit and loss statement is not artificially improved, when the possibility of
having to write off any volume of bad debts hangs. We could cite many other
cases in which the bank, better than any other merchant or individual, fulfills its
obligation to safeguard the goods received in deposit, because it does not arise
only from its individual responsibility but from a legal and control organization
directed to let it happen.
3.3.3. Interest payment
We already mentioned that the payment of interest corresponds, in principle, to

term deposits, in which the existence of a sacrifice borne by the depositor fully
justifies the remuneration or payment of interest. The same usually happens with
savings deposits, even demand deposits, to stimulate small savers, but frequently
linking the remuneration rate to a certain permanence of the deposits.
Demand or current account deposits, on the other hand, are not remunerated in all
countries, among other things, as an indirect instrument for people to place their
term savings in banks, so that they enjoy certain terms. that allow them to
transfer resources to productive sectors, for more or less long periods and to
attend to activities whose maturation is, almost always, slow.
That is, in financial intermediation, demand or short-term resources must also be
provided in the short term. Therefore, it does not seem technical, prudent, or
practically possible for banks, with short-term resources, to be in a position to
finance capital goods or medium-term amortizable projects. 10
Finally, it is estimated that in demand deposits the consideration that the client
receives exists, although an interest rate is not recognized. In effect, depositors,
especially those who take their resources to the bank in the development of a
deposit contract in a bank current account, enjoy prerogatives inherent to the
services that the entity provides them for that sole circumstance. And the
fundamental thing, of course, is the cashier service that allows the client to
channel the
all of its collections and payments through the account and that continues to rely,
to a large extent, on the versatility that results from the disposition of its funds by
writing checks. As in general these services are not charged by the bank, it is
understood that in this way there is a kind of remuneration.]!
In any case and in relation to the payment of interest, it seems useful to draw a
parallel between what happens in the civil deposit, the commercial deposit and
the irregular bank deposit of money, particularly when it is a term deposit. The
civil deposit is, as we said, naturally free. The depositary provides the service to
the depositor for different reasons frequently linked to the knowledge and trust
that exists between both parties. The commercial deposit, on the other hand, is
naturally remunerated, that is, the person who constitutes the deposit pays the
depositary for the service provided. This is what happens with general
warehouses regarding the goods they receive in their warehouses, where, in the
case of a commercial contract, no one would understand that individuals request
the service without recognizing that they have to bear a cost. The same occurs in
the case of simple deposits received by banks: the client recognizes a commission
from the bank for the management and custody of the goods delivered to them.
Unlike what happens with the commercial deposit, including the regular bank
deposit, in the irregular deposit of time money there is remuneration, but no
longer from the depositor to the depositary for the service that the latter provides
when receiving the goods in custody. , but of the depositary, that is, of the bank
in favor of the depositor, its client. And the reason for this investment in terms of
remuneration is that, when the bank receives a term deposit, although it provides
a service to the client, it is capturing part of the raw materials that it uses to carry
out its work. intermediary Therefore, if you want to present the problem in terms
of equilibrium, the bank obtains a greater advantage than the client, because by
enduring the sacrifice of temporarily depriving itself of its money it allows the
bank to become its owner and use it lucratively. Thus, the recognition made by
the bank of the interest rate, consideration for the sacrifice of its client, means
that, in parallel terms, it is the depositary who in this case remunerates the
depositor.
3.4. CLASSIFICATION
To have the appropriate frame of reference that we wanted to seek, it is now

convenient to make a quick classification of the irregular deposits of money in
the
banks.
3.4.1. Due to the way it is handled
For this aspect we could say that they are classified as simple and current
accounts. Simple or made-to-order deposits are those that are not available
through checks and for which the usual thing is to record in a document in which
the nature and amount of the deposit appear, without it constituting a security.
These are generally individual, isolated operations. Deposits in a bank current
account or checking account are not only made massively and permanently, but
as contracts of duration or successive tract, they are linked to an uninterrupted
series of operations, either to increase those initially constituted or to decrease
them. and, in general, to do one thing and another in succession. In this way,
deposits and withdrawals are made, one after the other, obtaining a permanent
balance in favor or against the client; This last assumption in the systems within
which it is possible to meet your overdraft orders.
3.4.2.
Due to its demandability
From this point of view, deposits can be demand deposits, on the one hand, or
term or notice deposits, on the other. Demand deposits are those that can be
demanded immediately, from the moment of their constitution and are
represented, in their highest volume, by bank checking account deposits. Term
deposits are those in which a period has been foreseen, upon expiration of which
reimbursement can be demanded by the owner. We already mentioned that some
authors maintain that the term is always adjustable at the request of the depositor,
in which case it would be enough for him to waive the corresponding interest
rate. This conclusion is not absolute and we separate ourselves from it. We think
that since there is a deadline, and the bank recognizes remuneration, said
deadline should be understood above all in its favor, although it is possible that,
in practice, banks will have some facility to provide early reimbursement in
exchange for the total sacrifice. or partial interest rate.
In addition to term deposits, themselves, there are so-called deposits with
advance notice, in which there is no predetermined period, but the need to give
notice with a certain number of days, weeks or months has been established. in
advance of your retirement date. So the bank does not know how long the money
will be in its possession, but it knows that when the client decides to withdraw it,
it must give them a notice after which a certain period of time runs to do so.
3.4.3. For the social function
Even though the concept we use as a classification criterion may seem vague to
some, it seems appropriate to designate savings deposits. If we analyze their
history and regulation in Latin America, we find that they have been established
for the benefit of small savers and for its proper management by a group that for
many years has had a high percentage of illiterate people. It is, therefore, about
stimulating people with a reduced marginal savings capacity who cannot allocate
those small sums to another form of investment, even if it were more profitable,
using appropriate mechanisms for individuals who do not always have the level
of knowledge and training Essential for managing a current account or checking
account. Which does not mean that in recent years and given some phenomena of
migration, raising educational levels, etc., there has not been a greater use of
savings accounts by socioeconomic classes that, in theory, were considered
outside the system. We will see how, in line with their function of managing
small resources, they frequently enjoy advantages and privileges of a different
nature.
3.4.4.
To fulfill some special function
Here we want to cover several situations in which the deposit obeys particular
reasons of lesser importance than those of the traditional forms that we have
mentioned. This is what happens with the so-called security deposits, irregular
deposits and transfers of property, whose purpose is not to return the equivalent
to the depositary when he establishes it, but rather to cover a main obligation
whose fulfillment is pending on the part of the debtor. This type of deposit is
interesting for banks because it not only allows them to improve their position as
creditors, by having a guarantee, but this is of the most absolute liquidity and, as
if that were not enough, given their characteristic of irregular deposits, the bank
can freely dispose of its amount with the corresponding benefit.
Deposits that are verified in banks can also be mentioned when the laws allow
certain forms of consignment payment to be made through them. Think of the
systems in which it is established that, if a security expires without it being
presented for payment within the period established by law, any of the interested
parties may deposit the amount in a bank, with full payment effects.12
and finally, to cite another example, we have the case of judicial deposits that for
the most varied reasons can be ordered within a process in which the law obliges
the interested parties or the judge to deposit said sums in any bank. or in a
specialized bank, to which the function of receiving them has been assigned. All
these deposits are important in that they can be used by the bank due to their
irregular status.
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1. Mexico.l The Civil Code for the District and the Federal Territories, however,
apparently regulates it as consensual. Article 2516 says that the deposit is a
contract "by which the depositary undertakes to the depositor to receive a
movable or immovable thing that he (the latter?) entrusts to him and to keep it..."
cited by CERVANTES, op. eil. p. 231.
2.V. Supra, Chap. 1, 2.2.4.1.
3. BAUCHE GARCÍADIEGO, Mario. "Bank operations". Ed. Porrúa, 2nd ed.,
Mexico, 1974, p. 54.
4.V. Chap. 11, 2.2.2.2. The reserve or reserve coefficient constitutes a powerful
instrument of monetary control, through which the Central Bank can immediately
influence the expansion or contraction of the monetary mass. According to
macroeconomic theory, deposits are multiplied by 1/reserve. In the proposed
example, then, since the reserve requirement is 20%, the deposits would be
multiplied by 5 as a result of dividing 1 by 0.2.
5. DE CAMARGO VIDIGAL, Geraldo. "Banking Contracts". In: Magazine of
the Latin American Federation of Banks. No. 36,1979. Ed. Kelly, Bogotá, p. 215,
maintains: "We well know that these deposits legally constitute simple species of
the mutual. "In these bank deposits, the principles and rules that govern deposits
of non-fungible goods since Roman models have no application."
6. This is at least by application of the principle of "nominalism". It, however,
lost ground as a consequence, among others, of the high inflation rates that our
countries experienced at some times. Instead, it could be argued that "valorism"
and other theories that justify periodic or permanent adjustments of monetary
obligations prevail. See about it CASTELBLANCO, Mauricio Javier. "The
restitutionary obligations of the Civil Code and Inflation." Ed. Jurídicas de Chile,
Santiago, 1979. URIBE, Luis Fernando. "Pecuniary obligations in the face of
inflation." Ed. Themis. Bogota, 1984. v. Infra, Chap. X, 6.2.4.
7. Mexico. This happens because depositors are among the first-rank creditors in
bankruptcy. RODRIGUEZ R., J. "Banking Rights". 3" ed. Ed. Porrúa, Mexico,
D. F. 1968, p. 40.
8. Colombia. This is established in article 1399 of the Commercial Code. v. 9.
Supra Chap. 11, 2.5.
10. You save the reflections made in note 6 above and which explain the growing
tendency in many countries to recognize interest or to create mechanisms that
allow demand deposits to be remunerated.
11. The statement is by no means absolute. Not only are there countries in which
checkbooks are charged to the client and a commission is charged for the
different forms of transfer or disposal of funds by other means, but a fixed sum is
even charged for accounts with balances lower than those indicated. by the bank
or for movements that exceed a tolerable minimum without cost in the contract.
12. Internal Securities Project, art. 84. Colombia, art. 696 C. Co.
4. IRREGULAR DEPOSITS OF TITLES
Although the figure appears very widespread in Latin America, it is regulated in

some countries. We will see in due course that the regular deposit of securities
takes different forms and that, in practice, it is quite developed on the continent.
This point then refers, exclusively, to irregular deposits when the object is not
money but securities.
4.1. PURPOSE OF THE DEPOSIT
This deposit usually deals with securities, that is, documents necessary to
exercise the literal right contained therein and which, as such, imply a permanent
identification between the incorporated right and the title itself, so that no They
exist one without the other. These are generally titles with credit or participation
content. The constitution of an irregular deposit on titles representative of
merchandise is not easily conceived since the variability of these and the
difficulty of homogenizing, so to speak, the object of the titles, would make it
very difficult to meet the requirements that we will see below. Although it would
exceptionally fit for certificates issued by General Deposit Warehouses regarding
gender goods. The securities must be market securities if, as a consequence of the
application of general principles, we admit that the bank becomes the owner of
them and, therefore, is only obliged to return the same quantity and quality.
Therefore, they must be serial securities whose homogeneous characteristics
make them fungible from a legal point of view, that is, substitutable for each
other. Think of a large company whose shares are listed on the stock market and
are obtained without any difficulty, where it can easily be understood that a
person deposits a title of fifty shares of which the bank becomes owner, given the
clear possibility of being able to obtain in its moment titles of the same species
and quality to fulfill their obligation to return. This would not be incurred if an
irregular deposit were to be verified with a check drawn on bank X and in favor
of a certain person or a bill accepted by a merchant, for a precise value and
maturity. It will not be possible for the bank, in practice, to have them, given the
impossibility of obtaining identical ones.14
4.2.
MODALITIES
Irregular deposits of securities are conceived, like those of money, as simple
deposits or to the order of a person and account deposits. They are simple when
they involve a single operation, the client deposits the securities, the bank
becomes owner of them and subsequently returns the equivalent in integrum so
that the operation ends there. And they are taken into account when there is the
possibility of making payments, that is, increasing the amount and number of
securities held by the bank or making partial withdrawals, all within a contract
that implies a successive and permanent relationship between the parties. From
what it says with the content of the account, the authors vacillate between
supporting the possibility that there may be heterogeneous titles and those who
affirm that it is only possible to maintain homogeneous titles. Even the very
possibility of entering into a contract for the irregular deposit of securities on
account is discussed by numerous authors in heated debates to which Joaquín
Rodríguez refers.15
4.3. OBLIGATIONS OF THE PARTIES
The bank, as a depositary, has the fundamental obligation to return the same
quantity of securities of the same type and quality as those received. It is, as we
said, a gender obligation. However, a question arises that, on the other hand, may
be general for all cases of gender obligations. What happens, in fact, when it
comes to a limited genre, that is, a good that, distinguished by its generic
elements, does not exist in the market in
indefinitely but, for example, are they shares of a certain company, which, at a
given moment, can be sold out on the market? In this case, it is natural that the
bank, given the impossibility of acquiring equivalent securities to comply with its
reimbursement obligation, has to satisfy its obligation indirectly, through the
payment of a sum of money, equivalent to the price of the shares in the moment
in which the return must be made or at the time of the latter plus the damages
caused if, for example, the shares were essential for the depositor because they
granted him vital political power for an assembly of shareholders, of which he
would be deprived if he could not be recovered.
However, there is a more interesting aspect in relation to the obligations of the
parties, the definition of which involves specifying whether the obligation is
borne by the bank or its client. We refer to the remuneration derived from the
contract. Some maintain that in the irregular deposit of securities the client must
pay a commission to the bank since it is a commercial deposit from the
constitution of which a benefit is derived for the depositor.16 Unless specifically
established by law, it is not We find the solution satisfactory.
In fact, if it were a matter of deriving a direct benefit for the client consisting of
the custody, conservation and eventual administration of the securities, the
execution of a regular deposit contract would be sufficient, identifying them in
such a way that the bank would undertake the obligation to return exactly the
amounts. upon expiration of the contract or at the demand of the owner, who,
otherwise, would remain the owner thereof. On the other hand, if the figure of
irregular deposit of securities is invoked, it is to allow the bank to become the
owner of said documents. And for what?, you might ask. So that you can profit
and obtain a benefit from the ownership of said titles. There would be no other
sense in acquiring the risks derived from becoming an owner, if it were not to
trade them on the stock market, offer them to third parties as collateral, vote in a
shareholders' meeting, etc. And if this is so, and if it is not conceived in any other
way that the irregular deposit file is chosen and not the regular one, if it were
simple custody, we have to conclude that the first benefit is for the bank,
similarly than what is obtained with irregular deposits of money. Therefore, the
remuneration would have to be accepted in favor of the client and not the bank.
Of course, the problem is essentially academic and will be resolved without
difficulties when the legislation of each country provides a specific solution to it.
17
4.4.
ITS DEVELOPMENT IN LATIN AMERICAN BANKING
It must be admitted that this contract is not frequent in Latin American
legislation, both because it is regulated in only some, and because of the
conceptual difficulties posed by the possibility that it results from a simple
private initiative. 18 And this, because as we know, there is a direct relationship
between the possibility of entering into contracts and the powers of the banks, in
accordance with which in many countries autonomy is still limited to the
development of the functions assigned to the banks. in each country. When the
activity of banks is regulated, not discretionary, they cannot do anything other
than what is expressly permitted to them, as a general rule. Consequently, it is
possible to imagine all kinds of contracts, even atypical ones, as long as they can
be framed within the functions assigned to them. If this is not the case, if a
general function does not appear to support them, the contracts cannot be carried
out.
All of the above to mention some restrictions that are usually presented as
generic in Latin America for deposit banks. They are not authorized, in the first
place, to acquire shares of companies, except in exceptional cases indicated by
law, such as in some auxiliary credit entities or in those cases in which they
receive them in payment of obligations contracted in good faith. Secondly, they
are often prohibited from speculating on the stock market and trading in stock
securities on their own account, although they may do so on behalf of their
clients. Consequently, if the irregular deposit constitutes the bank as the owner
and the profit that may be derived implies the eventual alienation of the shares, in
countries where they do not have direct power or one of these restrictions is
expressly enshrined, the deposit contract irregular securities securities will be
difficult to admit.
5. SECURITIES DEPOSITS
Entities specialized in the administration of so-called "centralized securities

depository" have been created in numerous countries, 19 to express in this way
that they are at the service of all market operators or a large number of them, and
whose function is It is essential, in turn, to manage securities through a highly
secure computerized system. They are of special interest to banks, which usually
handle a significant volume, either on behalf of their clients or as part of their
own investment portfolio. Its creation can be done by the Central Bank or under
the auspices of private operators.2O
Without prejudice to what was seen at the time, when talking about electronic
banking,2 given the role that technological support has for its operation, it is
worth remembering that the legal basis of the system supposes the breakdown of
traditional principles of securities securities, not only not only as soon as their
circulatory vocation disappears but also as soon as their "dematerialization"
eliminates the paper document in which the essential elements had to appear and
whose possession was inherent to the concept. Indeed, from its delivery, for the
regimes that enshrine the theory of issuance, to its mandatory display to exercise
the rights, through the records of the incorporated rights, negotiation, guarantee
and payment, to name the most important , which had to appear literally in the
document, all this disappears when it becomes an electronic record in the
centralized deposit system.
In practice, this dematerialization can be absolute, when the primary issuance is
made using electronic media, or it can be supervenient when, having created the
titles on paper, they are delivered to the Depository and converted into it.
electronic record that reflects them. In fact, in the first stage, some Deposits
began by fulfilling the exclusive function of custodians, before entering into the
actual dematerialization process.
Another aspect, possible within the general theory of securities but exceptional in
practice, which can become a general rule in the case of Deposits, is the
requirement that is usually made to the person who delivers the securities, to
renounce the exercise of the return exchange actions that could be exercised
against the previous parties.22
The administration of values involves, as a general rule, carrying out the

procedures linked to their dynamic use and the mutations they undergo during
life. They include, therefore, the collection of dividends, the subscription of titles
to which one has the right in new issues of shares, the records of pledges or
seizures and the issuance of non-negotiable certificates that prove ownership, to
name the most important. As a consequence of its proper functioning, beneficial
objectives are achieved such as facilitating and streamlining operations in the
capital market; expedite payments for capital, interest and dividends; avoid risks
derived from physical possession, as well as risks due to falsification and
adulteration of titles; eliminate printing, custody and transportation costs and
facilitate the Central Bank's open market operations.
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13. Honduras, art. 985 C. AC. El Salvador, art. 1202 C. AC. and art. 56 lit. B of
the Banking Law; Mexico, arts. 276/9 LGTOC. Colombia, art. 1179 C. AC.; arts.
2246, 2253. DC
14 Colombia. Although, in principle, the Centralized Securities Depositories do
not become owners of the titles, the law provides that this may occur when it
authorizes the restitution of "titles other than those that were delivered to them..."
(D. 437/92, art. 23).
15 Op. cit., p. '8'10.

16 RODRÍGUEZ R., Joaquín. "Banking Law". 3" Ed. Porrúa, Mexico, 1968. p.
313.
17. BAUCHE, op. cit., p. 164. v. Infra Chap. XVI.
18V. Chap. 11, 2.3.1 and 2.3.2 where we affirm that banking activity,
traditionally regulated, tends to gain space through the figure of multibanking or
organization in groups. In the first case, it may have a general jurisdiction clause
that allows it to carry out all banking businesses, considered by custom, except
those that are expressly prohibited. Argentina, thus consecrates it (L. 18061/69).
19. Colombia. L. 27/90, art. 13: "Companies that are established, with
authorization from the National Securities Commission, to manage a centralized
depository of
securities must have an exclusive purpose and will be subject to the provisions of
this law...".
20. Colombia. Two currently operate: the privately created DECEV AL
(Depósito Centralizado de Valores de Colombia SA) and the DCV (Depósito
Central de Valores del Banco de la República), which is part of the Central Bank.
21.V. Supra, Chap. 111, 3.11.
22. Colombia. d. 437/92, art. 23.
Chapter V
DEPOSITS IN CURRENT ACCOUNTS
1. CURRENT ACCOUNT
The expression current account leads us to clarify some confusion that arises
from using this phrase both to represent an accounting reality and to indicate a
legal relationship known by the same name in commercial contracts and
classified as banking in those of this nature. It is therefore advisable to study each
of these concepts, the relationships that arise between them and, finally, the
specific object of the chapter.
1.1. ACCOUNTING NOTION
Among the general obligations that merchants have is to keep trade books and
accounting records, in accordance with what is established by law. The need to
properly and formally maintain accounting seeks to faithfully and technically
reflect the real state of its businesses and commercial operations and to be able to
specify the pecuniary relationships with the third parties that contract with them.
As soon as there is a relationship with a client and this affects an account with
credits and charges, it can be said, in accounting language, that there is a current
account; That is, the movement of debits and credits establishes a permanent
balance in favor or against the merchant.
Well, since banks are merchants, keep commercial accounting and maintain
relationships with their clients regarding the contracts they enter into, we can
affirm, as a fundamental premise, that the current account, from an accounting
point of view, is the support of all kinds. of banking operations insofar as they
imply a relationship of a certain duration in which different and successive
charges and credits originate. This current account exists both in relation to credit
operations and in the provision of other services that banks offer to their
customers. clientele.
Let's take two services to verify, because in the case of credit operations what has
been said is evident. Let's imagine a bank that, through its international
department or division, lends its assistance to a client for the importation of
merchandise, committing, within a complex operation, to make the payment
abroad or to open the corresponding documentary credit; pay the taxes
established in the country, both for importation and in favor of customs for the
nationalization of the merchandise, etc. And let's think that, in this case, it is the
only business relationship between the bank and its client. If it is assumed that at
the beginning the client has made a provision to cover the cost of the importation
and the expenses inherent to it, by necessity, his initial payment and the expenses
that are subsequently incurred must be recorded in an account, where they will
appear credits and charges and balances borne by the client, if the provision was
insufficient.
The same thing happens, in another case, in the case of a deposit of securities
under administration where the client is obliged to recognize a commission to the
bank for the management of the securities, but the latter, in addition to being held
in custody, has acquired the commitment to collect the corresponding dividends,
subscribe new shares, represent the interested party in share meetings, etc. The
registration of the capital equivalent to the deposited securities, the interest
produced by them, which will increase the depositor's credit, the expenses
incurred by the commissions in favor of the bank or the stamp taxes that must be
paid for the issuance of new shares. , etc., will appear recorded in the form of a
current account, to ultimately produce a balance or allow found in the sequence
of the accounting record.
That is why it has been said that "in a broad sense, a current account is, therefore,
a certain way of recording, between debit and credit, the economic relationships
and terms of duration that two people maintain. "It is an account that records a
continuous series of operations and is not closed, which is considered always
open and which, therefore, until its closure will only yield provisional results." 1
In conclusion, the existence of a current account in the accounting sense depends
on the permanent relationship, that is, on the successive execution of operations,
which, in the banking business, frequently occurs, as can be seen from the
examples presented.
1.2. MERCANTILE CURRENT ACCOUNT
We classify as commercial the typical contract of Commercial Law to distinguish

it from the current account as an accounting notion and, in addition, from the
bank current account as a contract, which we will study in this chapter.
The commercial current account goes a little beyond the accounting reality that
occurs when two people maintain more or less permanent business relationships
or for a relatively long time. It enshrines the reality of the permanent relationship,
but accompanying it with an element of certainty, postponing the enforceability
of reciprocal obligations and specifying a cut-off date, on which it is deduced,
unequivocally, the existence of a balance in charge of one of the parts. That is, by
virtue of the conclusion of the current account contract, the charges and credits
derived from the reciprocal remittances of the parties lose their individuality and
the enforceability that is inherent to them, to be confused within an accounting
mass whose obligatory result is only will know when the account expires or
when it is cut off as provided for in the contract.2
It is believed that the commercial current account is unique, in the sense that it
brings together the mutual obligations that arise between the parties as a
consequence of their remittances; and indivisible in that it is not possible to
demand any of those obligations separately. As a consequence, for example, it is
not possible for the creditor of one of the parties to seize the sum that appears in
the accounting record in its favor during the course of the account, but must wait
for the cut-off date to determine the existence of a credit in favor of the debtor.
French theory supported the structure of the commercial current account in two
main aspects: on the one hand, the deferred compensation of mutual accounts
and, on the other, their novation, so that the sum resulting from an obligation to
the current account, said obligation was extinguished, replaced by the one
derived from this contract and the guarantees that accompanied it disappeared.
Due to the influence of the German school, which has based its theory on the
commercial current account contract, more on the granting of reciprocal credit
than on deferred compensation, novation has lost force and it can be argued that
the contemporary trend in commercial legislation is that of allowing the
guarantees linked to each of the obligations to subsist, the accounting
incorporation of which is made to the account.
In summary, the commercial current account is characterized by the existence of

a permanent business relationship; by verifying reciprocal remittances between
the parties, so that it is not initially known who will be the debtor and who will
be the creditor and, finally, by the absorption of the individual items to integrate
them into a whole from which results, at the end of the account or at its cut, a
balance, this is required. By the way, we speak of liquidation or cutting off the
account when a balance is obtained at the time foreseen by the parties, for
example, monthly; and termination, when it is definitively closed.
2. BANK CURRENT ACCOUNT
Once again we find ourselves with a semantic problem because when

distinguishing the typical banking contract with this name, confusion must arise.
In fact, we do not want to qualify in this way only the innumerable current
accounts, from an accounting point of view, that a bank may have with its
clientele, in which case the term banking would add nothing. The expression
bank current account contract or deposit in it has a particular meaning that would
surely provide less confusion if it were called, for example, a checking account
contract, as happens in some Latin American countries.3
The main discrepancies between the authors regarding the legal nature of this
contract and its similarities or differences with the commercial current account
are due, first of all, to a different use of the terms. For some, in fact, the bank
current account suggests the substrate that supports different credit or service
relationships between the bank and its clients, so that it is closer to the
accounting conception rather than the legal one.
For others, however, and we include ourselves in that position, the expression
bank current account, although misleading for the reasons we have noted,
corresponds to a specific contract which is one in which, the holders are
empowered to make deposits and withdrawals of money, the latter produce
through the use of the security title called a check. It is in the use of this typical
instrument carried out by banks and the analysis of its peculiar functions, by
allowing the current account holder to maintain the advantages of the deposit
guarded by a bank and at the same time have the unreserved availability of his
money, that we understand the bank current account contract.
On the axis of the irregular deposit of money, with the peculiarities that we will
see and the use of the check as a typical title for the disposal of resources, we
have structured the notion of a bank checking account contract. Consequently,
we will necessarily have differences with those who analyze the bank current
account thinking that "it is only an accessory agreement to certain credit
contracts."4 We have already seen the current account in its accounting meaning,
but once the legal concept of account contract is circumscribed bank current to
the checking contract, so to speak, or checking account as others call it, it is
evident that the difference of opinion is not such, in the sense that we are talking
about different things. What's more, we agree with the purely accounting
presentation if you like, but we warn that the expression is intended to identify a
contract regulated by many Latin American laws and, of course, the most
frequently used in the continent's banks. It is nothing less than the contract that
enables banks to capture the greatest volume of resources through their specific
channel, demand deposits, and thus fulfill their intermediary function.
2.1. RELATIONSHIPS WITH THE COMMERCIAL CURRENT ACCOUNT
A first statement is that if the commercial current account is based on accounting

reality, there is an intimate point of connection with the bank current account, in
the meaning that we have given it.
Furthermore, it should be noted that several countries have closely regulated both
institutions, by integrating their articles or by expressly referring to some
provisions of the commercial current account, with a subordination that is almost
gender-based, for the latter, to species, in the case of banking. The
rapprochement has also occurred through jurisprudence when, in the absence of
specific regulations for the contract concluded between banks and their clients
and in the face of a possible conflict arising in the application of their internal
regulations, the judges have resorted to the principles of the commercial current
account to resolve the disputes raised. This integration and even subordination
that can be observed in some countries, although it is presented as a lag of the
French influence, which has now diminished, does not cease to constitute an
incontrovertible5 legal-positive reality.
Let us, therefore, study some differences in order to specify the degree of .
separation between both figures. The first is raised in relation to the phenomenon
of compensation, a distinctive element within French theory to warn that, while
in the commercial current account there is a deferred situation that only produces
compensation at the end of the period, that is, at the moment of the liquidation or
cut-off of the account, in the bank current account the movement that flows from
the operations directly carried out in it, produces a permanent cut-off since it
exists at all times or must exist, at least, a certain balance that the user can
dispose of. customer.
It is noted, however, that in the latter case one cannot properly speak of
compensation, since there are no reciprocal remittances, since only the client is a
creditor of the bank. The accounting notes translate into an increase or decrease
in the balance in your favor, without being able to speak of anything other than
an arithmetic reality of addition or subtraction. Strictly speaking, there is no
compensation because the operation does not result from the fact that at a given
time there are two reciprocal creditors, for liquid and demandable sums, who can
eliminate each other until the smallest amount is met. This being the case, this
possibility would not exist, since by definition a situation in which the bank and
the client were reciprocal debtors or creditors would not fit.
Here we encounter another problem of positive law. The statement would be

incontrovertible in those countries in which the checking account or current bank
account only entitles the holder to dispose of the existing balance in his favor,
without the bank being able to attend to his payment orders for an amount greater
than the balance at any given time. available.6 But this is different in those
countries in which it is possible to issue the check as an overdraft for an amount
greater than the available balance, leaving it at the discretion of the bank to grant
credit for the difference or not. It could be said that, in such a case, a new
contract is involved because the bank opens a credit for that amount in the
holder's current account.
As this possibility arises from what is established by law and corresponds to one
of the natural consequences of the contract, it must necessarily be concluded that
in these countries the movement of the account, that is, the legal relationship
between the parties can allow the credit not to be be exclusively of the depositor
but rather the bank becomes a creditor by virtue of the payment of an overdraft
check.
To which it must be added, returning to the concept of a bank current account as

an accounting notion, that in practice and based on the relationship that arises
from this contract, the other businesses carried out between the clients and the
banking entity are usually linked to it. This would happen if they authorize it - or
the law does so - to credit into their checking account the values resulting from
the collection of the dividends produced by the shares that they have deposited
for their administration or to debit the sums that result from their charge as a
consequence. of the use of a documentary credit. All these possibilities mean that
the client can be a creditor or debtor in that current account, as a result of the
linking to it of other contracts or legal relationships for which it serves as
accounting support.
The issue can be summarized by saying that in the commercial current account
the required balance only appears on the cut-off date, while in the banking
account it exists permanently; that in countries where payment in overdraft is
possible, the requirements for compensation to occur may also be met in the
latter.
'sation and that, ultimately, the link to the bank current account support of other
contractual relationships allows the existence of reciprocal remittances to be
verified. Hence the proximity will be more or less intimate depending on whether
these latter possibilities are admitted or not by the legislation of the respective
country.
Difficult point to deal with, already mentioned. For many of the authors, the bank
checking account contract is nothing more than an accessory instrument to an
irregular deposit of money or a credit opening contract, in relation to any of
which the account is limited to being the technical accounting support. . In this
way, for those who link it to the irregular deposit, the possibility of disposing of
the credit created in favor of the depositor by means of checks seems to be
equally accessory. For them, as a consequence of the above, the contract is real:
it is not conceived or perfected without the existence of a deposit.
We depart from this approach, noting that it is an academic position and that for
many legislative systems it is satisfactory. The thesis is not convenient because
we think that the function that the contract fulfills and its very structure allow us
to recognize an autonomous and main figure, not linked to those contracts as a
result of them, but rather, antecedent and legal support that allows, especially to
the deposit in account, its normal functioning.
We do not want to affirm, then, that there is no link with these forms of contract
and in particular with the irregular deposit of money. On the contrary, we start
from the operational structure of the banks and when talking about their main
source of deposits we arrive at the study of the "deposit" in a bank current
account, qualifying it as such and admitting that it is the typical instrument
through which banking supplies itself. of resources. The point is rather, from the
analytical aspect, that a better conceptual structuring of the deposit in a current
checking account would imply recognizing that, being a contract of successive or
continuous execution, the theory that the account is a simple accessory of the
deposit does not It is satisfactory.
And it is not, because if we take the deposit as a starting point we will have to
conclude that the contract is not perfected until the sum of money has been
delivered to the bank. But what happens then when, when you write a check for
all available funds, the account balance drops to zero? That the bank would have
fulfilled its obligation to repay and a subsequent deposit would mean the
execution of a new real contract, without legally being able to give an
explanation for what happened in the interregnum between the date on which the
balance became zero and the date on which it was verify a new deposit.
Therefore, legislation that is based on this principle must conclude that the
current account ends in this way, immediately or after a certain time or allow, by
exception, it to be understood that said circumstance does not give rise to the
termination of the contract. And on the other hand, it seems at least artificial to us
to assume that when a client enters into a current or checking account contract
with his or her bank, the parties understand that it may be only the first of a series
of deposit contracts, for whose spaces In blank, no legal support appears in the
notion of the deposit contract.
The only legal explanation is the current account contract itself, which is
structured to allow such fluctuations in the property relationships between the
parties, also using a typical instrument of disposition. For this reason, the
conclusion reached in the Colombian Commercial Code is correct when
establishing a system according to which the contract is consensual, and from it
derives the power for the client to make deposits and dispose of them through the
check draft or in another manner agreed upon with the bank. Thus, the permanent
relationship between the parties is understood to be well supported.?
The client has the option to make deposits and in fact it will be the first operation
carried out, in the vast majority of cases simultaneously; but in this case the
deposit will be a consequence of having concluded the contract instead of being a
constituent requirement of it. It is in this way that the account can be settled, that
is, left at zero, without raising the problem of knowing whether, due to this
circumstance, the contract ends or not. It is also easier to understand that the
contract can produce numerous obligations for the client, since it is not linked to
a deposit contract which, because it is unilateral, only produces obligations for
the bank.
The relationship with the credit opening contract can be stated as follows: that an
availability be approved so that the client can use it through a current account
system, where they make withdrawals and partial payments without the contract
ending until the scheduled date or the cause established by the parties themselves
occurs. Or that, since there is already a bank checking account, of which one of
the bank's clients is the owner, the bank then enters into a credit opening contract
by which the bank undertakes to make a certain sum of money available to
them. , which can be used through drafts in the overdraft current account,
understanding that they are automatically covered, by its availability until
concurrence or by a credit order in the account given by the client.
For all the above and recognizing the intimate relationship of the checking
account contract with the opening of credit, when it serves as a technical
accounting structure to manage the availability enjoyed by the client, and, in
particular, admitting the close connection with the irregular deposit of money, the
reasonable legislative and doctrinal tendency should be directed towards
recognizing a condition of autonomy that allows the real functioning of the
contract to be explained in a more logical manner.
This being the case and respecting a Latin American reality contrary to our
concerns, it can be said that the current bank or checking account contract is one
by which, as a consequence of an irregular deposit of money made by a client or
an opening of credit to his or her please, he has the power to dispose of his
balance by writing checks or in other ways provided for by law or agreed upon
with the bank. Accepting our position, it would be necessary to say that by the
bank current account contract the current account holder is empowered to make
deposits of money or securities and dispose of the balances in his favor derived
from the constitution of the deposit or other contracts, by writing checks or in
another manner established by law or previously agreed with the bank. It is a
small difference in the wording of the concept, but with many implications from
the point of view of the derived legal consequences and the logical scheme on the
nature of the contract.
2.3. LEGAL NATURE and CHARACTERISTICS

We have little to add about the legal nature of the contract, after the previous
notes. For some, it is a form of irregular deposit of money and therefore the
content and consequences derived from the contract are those that correspond to
it. For others, the contract authorizes one of the parties to adopt a certain conduct
consisting of being able to make a deposit and, at that moment, enjoy other
additional powers that imply obligations for the bank and the client. Ultimately,
these obligations or correlative rights are linked to the main contract that would
be developed, that is, the irregular deposit. Within the last hypothesis, which is
the one that we have held as ideal, at first there is an obligation on the bank to
make, that is, to receive the deposits and in a second moment of its execution,
resulting in the deposit , reciprocal obligations would arise. For the bank, the
main thing is to reimburse it and for the client to adopt certain behaviors in the
exercise of their rights, guard the checks received, not use them except on certain
budgets, etc. Starting from this scheme we have organized the presentation of the
contract.
In relation to the characteristics we will make a quick comment that must be
complemented with the consultation of the classification of the contracts that we
already had the opportunity to study. 8 These are the following:
2.3.1. Autonomous and main
It exists by itself without subordination to any other. This autonomy should not
be confused with the problem already raised regarding the relationship between
the current account contract and the irregular deposit, since there we were only
trying to establish whether it could be accepted that the current account was only
an accounting support for the deposit contract or if it could be have such
relevance that the deposit was rather a possibility within the structure of the
contract. Whatever the position, it will always be a main contract in light of the
concepts that we saw at the time.9
2.3.2. Real or consensual

It will be real, that is, it will be perfected by the delivery of the corresponding
sum of money, as soon as it has been structured on the basis of an irregular
deposit of money. It will be consensual if the possibility of making this deposit
arises from the pre-existence of the contract. And it will also be when it is linked
to a credit opening.'
We lean towards the thesis of consensuality for the reasons explained in detail in
the previous point because, in this way, the existence of a negotiated deal in the
development of which multiple and successive deposits are made can be
explained. 10
2.3.3. Unilateral or bilateral
Here an interesting problem arises: with the two moments of the contract in the
second thesis or with the development of the contract in the apparently majority
thesis, if it is a real contract, in the latter, it is natural that it is only arise
obligations for the bank consisting of returning the sum of money and paying the
interest corresponding to the amount deposited, in the legislation that allows it.
And even in the other thesis, of a consensual contract, we would have that the
first obligation for the bank would be to accept the deposit made by the client and
that later, verified, the same obligations that we just mentioned would arise. The
bilateralization of the contract will only arise insofar as the law or the contract
imposes particular burdens on the client, such as the custody and conservation of
the checkbooks received, the need to use certain instruments to move their
account and maintain funds as a prerequisite to be able to draw. The latter is
surely open to criticism by the doctrine, since it could be stated that, rather than
an obligation, it is the essential element that explains the contract.
2.3.4. Onerous and commutative

Since both parties derive benefits, which can be understood as equivalent or,
better, the patrimonial content of the reciprocal benefits can be evaluated from
the beginning.
2.3.5. Of successive tract
This characteristic implies that the parties' obligations and the exercise of rights
occur within an indefinite period of time. It constitutes one of the great
arguments to support the thesis of the consensual contract.
2.3.6. Accession
It seems indisputable that, even in countries in which there is a classification by

law, it is the internal regulations of the banks that are imposed in a uniform and
general manner on clients in such a way that it is not possible for them to discuss
the global terms. of the contract. In the best of cases they can achieve some
additions that refer to the peculiarity of the service they hope to obtain and
insofar as their importance as a client leads the bank to separate itself from the
general model. In principle, you can maintain that the bank current account
contract, like other banking contracts, is an adhesion contract in which the client
limits himself to expressing his agreement or rejection of the formula adopted by
the bank. Statement that must be made taking into account the reflections that we
have made previously on the trends that, in terms of general contracting
regulations, are included in consumer protection laws. 11
3.
OPENING AND OPERATION OF THE ACCOUNT
Under this section, some general notions are studied that we have not found
logical to include within the obligations of the parties and that are usually
preceded by what they say with the formal and external elements, as well as
some hypotheses whose study is interesting as a starting point on the particular.
We also include the study of some characteristic notes of the check as a typical
title, which allows us to better understand subsequent references to this
instrument.
3.1.
GENERAL REQUIREMENTS
When talking about contracts we study the essential elements that the legislation
inspired by the Napoleonic Code considers necessary for the effectiveness of
legal acts, which in a broad sense encompass the study of the requirements of
existence, validity and enforceability, as well as the consequences derived from
the lack of one of these requirements or of the defects or vices that could affect
the consent of the contracting parties and, in general, the regime of
ineffectiveness.12 Nothing needs to be added, in principle, on this particular
insofar as the conclusion of the contract bank checking account, like the other
contracts that we will study, implies for its existence and validity the fulfillment
of the requirements provided by law.
A mention that is of some importance may be the specific provision, which some
legislation enshrines, to save the position of the bank that at a given time
contracts, without warning, with an incapable person. They establish that the
bank will validly release itself from its reimbursement obligation by delivering
the deposited sum to the person who opened the current account or on behalf of
the person who opened it, ignoring the capacity conditions of the holder. 13 It
seems to be an equitable solution because if the bank has contracted with
someone it assumed capable of and this person has deposited a sum of money,
the reimbursement made to that person by the bank could be said to return things
to the state prior to the moment of the conclusion. of the contract. This provision,
which exists in some countries, does not free banks from the particular
precautions they must take when opening a current account. On the other hand, it
does not seem difficult to verify the capacity of your clients, whether they are
natural or legal persons.
3.2.
ACCOUNT OPENING
To open the account, the bank adopts some precautions aimed at identifying the
person of its eventual contractor and, above all, his morality and good reputation,
since, as we remember, in the case of banking contracts, the trust and good faith
of the parties supposes that enjoy the highest quality
morals, which are presumed in the case of banks. Although traditionally ~ ~
Although it was the subject of extensive internal regulation by the banks, today it
has become a direct concern of the central banks and supervisors, as we saw
when studying the very personal nature that we preach of the banking contract, in
general and that is mandatory in the current account. 14 The precautions or
requirements that they generally take can be summarized as follows:
3.2.1. Identification of the contractor
Not only to specify the identity of the natural person, but also the existence of
legal persons. In relation to these, it is common, if not imperative for banks, to
request legal documentation that allows establishing the form of constitution, the
organic structure, compliance with the requirements demanded by law, the
powers of the legal representative, the compliance with the obligations under
their responsibility to contract, the existence of operating permits, etc.15
3.2.2.
Verification of moral and economic solvency
Verification of moral solvency is achieved by investigating the commercial
history of the interested party, taking adequate and sufficient commercial and
banking references from establishments with which he has had business or with
which he has obtained credit, specifying the way in which he has complied, etc.
Regarding economic solvency, demanding your financial statements to determine
the composition of your assets, the profitability of your business, the
relationships between your assets and liabilities, your degree of solvency,
liquidity, self-financing capacity, etc., that is, the determination of a set of
financial coefficients essential to know the client and later support the granting of
credit and the provision of the services requested.
,1
This careful process responds to the contemporary mandate that forces the bank
to know its client, to avoid the involvement of undesirable people and, especially,
to contribute effectively in the fight against money laundering and other forms of
crime that seek to take advantage of the systems. financial resources to achieve
their purposes. 16
3.2.3. Full of formal requirements
It includes the signing of the current bank account contract or regulations; the
records of signatures of the account holder and his representatives, necessary to
be subsequently compared with those used in payment orders, correspondence,
and especially, the checks issued by the banking establishment. The bank
requires there, if it is not contained in the current account regulations, a set of
powers determined to be able to verify certain account charges or produce
compensations, if the law has not established or prohibits it, etc.
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1. GIRALDI, Pedro Mario. "Bank Current Account and Check." Ed. Astrea,
Buenos Aires, 1973X 42. MARTINS, Fran. "Contracts and Commercial
Obrigacoes". Ed. Forensic.
Rio de Janeiro Brazil. 2001, pp. 371 And ff.
2. Colombia defines it by saying that "by virtue of the current account contract,
the credits and debits derived from the mutual remittances of the parties will be
considered as indivisible items of credits or debits in the account of each current
account holder, so that only The balance resulting from the closure of the account
will constitute a demandable credit" (art. 1245 C. Co.).
3. Honduras, aft. 959 C. AC.; Mexico, art. 269 LGTOC
4. GIRALDI. "Current Account...", op. cit. pp. 51-52.
5. Panama, art. 987 C. AC.
6. RODRÍGUE2. Joaquin. "Banking Law". Op. cit., 1914, p. 197.
7. Art. 1382 C. Co. GIRALDI, Pedro Mario. "Bank current account and check."
Ed. Astrea. Buenos Aires, 1973. It maintains that "neither the deposit nor the
opening of credit ceases even when there is nothing deposited or credit to be
granted because the current account agreement keeps the contracts alive, so that
any accreditation would not mean the conclusion of a new contract but rather the
continuation of the originally agreed", p. 55.
8.V. Supra, Chap. 1, 5.4.
9. Colombia. This position has been shared by the Supreme Court of Justice
when considering that the current account deposit contract regulated by the
Commercial Code differs noticeably from the deposit contract and the current
account contract; both regulated by the same statute, thus being "an autonomous
contract with its own profiles that give it identity" (Civil Cassation Chamber.
Sent. March/81).
10. Colombia. The Supreme Court of Justice has accepted this interpretation, as
appears in the ruling of the Civil Cassation Chamber of March 31, 1981, in
which it was held that as a consequence of the consensuality of the contract, the
power that the current account holder has to be able to dispose of the bank
balances in a manner other than writing checks, does not require any solemnity,
so a checking account contract entered into in writing can be modified by
agreement of the parties expressed verbally. In the same sense, you can consult
Judgment of the Civil Cassation Chamber, Sep./88 and Ju1./94. M. Q. José
Alejandro Bonivento.
11.V. Supra Chap. 111, 2.4.
12.V. Supra, Chap. 1, 5.2. And 5.3.
13. Honduras, art. 966 C. AC. El Salvador, art. 1196 C. AC.
14V. Supra, Chap. 111,2.2.
15. Argentina. Jurisprudence has held that failure to comply with the precepts
issued by the Central Bank is incompatible with the diligence with which the
bank must act in carrying out its operations, since if it is not obliged to carry out
a "police investigation" into the certainty of the data provided by the applicant,
has the duty to act with the greatest possible diligence to prevent any financial
product, such as, for example, a savings or current account, from becoming a
fraud record for third parties. Therefore, the bank is obliged from pre-contractual
negotiations to properly identify and know its client, otherwise the possibility of
incurring liability looms over it." Colombia. The Supreme Court of Justice
considered that banks are responsible for the damages they cause to third parties
due to the irregular opening of a checking account. The factual situation
consisted in the fact that the bank allowed, with its negligent conduct, that
impersonators of the company that was the beneficiary of a check opened a
current account to deposit it, with which and by disposing of the balance thus
constituted, they caused clear damage to the company. beneficiary (Sent. Aug/76,
M. Q. José María Esguerra).
16. Colombia. The Banking Superintendency has regulated in detail the
requirements that must be requested from the potential client, prior to opening
the account (C. 007/96, Title, 11, Chap. IV; Tit. 111, Ch. Preliminary, added by
C. AND. 72/ 96) Peru. L. 26702/96, art. 375 - v. Chapter 111, 2.2.
17. SUESCUN MELO, Jorge. op. cyl. T. II "Bank Current Account Contract.
Comments on its nature, elements and functioning". He points out that, in
In the absence of a positive law rule, banking practice has been responsible for
determining the scope of the "and/or" clause. In his opinion this is of Anglo-
Saxon origin and its effects coincide with those of the "joint several obligations",
which are characterized because the creditor can demand payment of the debt
from any one or all of the debtors; As well as if there are several creditors and
only one debtor, any of them can demand payment of the obligation from the
latter, thus freeing themselves from all of them. There would be passive
solidarity in the first case and active solidarity in the second. To this end, it
concludes: "...the clause and/or has come to us as equivalent to solidarity and is
thus understood by the people who include it in their negotiations, for which the
autonomy of the will must be valid, allowing that the effects of solidarity have a
place every time the parties use the expression "and/or.", even if they do not use
the term "solidarity". (pp. 497 to 499).
18. Colombia, art. 1381 C. Co.
3.3. PLURALITY OF HOLDERS
It is possible that the current bank account is opened not in the name of one
person but of two or more. This allows us to study three hypotheses, the first two
of plurality of owners, and the last, only, of plurality of people authorized to
dispose of the balances.
3.3.1. Solidarity plurality
This is the hypothesis in which two or more people open the account and appear
as owners so that any of them can have up to the entire available balance. In this
case, the creditors are jointly and severally from an active point of view, that is,
the bank's obligation is satisfied by paying any of them.
This modality does not fail to raise interesting problems. For example, what
happens when a third party, by virtue of being a creditor of one of the holders of
the.
account, initiate legal action and order the seizure of the balances that the debtor
co-owner has in his current bank account? Should the seizure order be rejected
because it concerns an account opened in the name of that debtor and one or
more other persons? Should the entire available balance be frozen? Should half
be frozen, as if it were a divisible obligation? The answer will depend on the
different procedural regimes, as long as they contemplate a specific solution.
In the abstract, we are inclined to think that if there is active solidarity, it must
result in the seizure order being complied with in its entirety since, ultimately,
the possible inequity that could be committed with the other holder or holders
would not be greater than the that the same affected person could produce on his
own initiative when, in exercising his position as joint and several co-creditor -
and even abusing it -, he disposed of the balance that truly belonged to all the
holders. That is to say, in the case of joint and several creditors, the risk that the
others run in the face of the power and even the bad faith of one of them or the
judicial vicissitudes, as would be the case of the embargo, is linked to the legal
form of this entity. modality of obligations. The same would happen in the case
of legal or conventional compensation when an obligation arises in favor of the
bank, but only in charge of one of the joint and several creditor holders.17
3.3.2. Joint or collective plurality
It refers to the possibility of a checking account being opened by two or more

people, but in such a way that the funds cannot be withdrawn except by orders or
checks signed by all of the account holders. In this case it is clear that there is no
active solidarity and that the bank's obligation, owing a sum of money to several
non-solidary creditors, could be satisfied equally in the event of a conflict. Faced
with the two vicissitudes mentioned in the previous point, seizure of a third party
or compensation, and if the principle of divisibility is applied, the seizure and
compensation would have to be limited to the ideal share quota that could be
assigned to each co-owner, even when there are legislations in which it is
established, in the case of compensation, that this will not run in
- in the case of obligations that are not borne by all of the current account
holders. 18 Prohibition that could be extended to the case of accounts where we
have talked about active solidarity.
3.3.3. Optional drawer
Thus we qualify a hypothesis, not strictly speaking of a plurality of owners, but

of a single owner who has authorized one or more other persons to dispose of the
existing balances in the account. The differences with the case of joint and
several creditors are evident since they have the funds as holders of the credit,
while the third party acts in the name and representation of the account holder, as
his agent. Therefore, your assignment may be revoked at any time by the owner
who may appoint one or other persons to replace him. It is, then, a simple
plurality of people authorized to draw against the account, but there is only one
legal owner of it. In the hypotheses of seizure and compensation, it must be
concluded that neither of the two would fit when it comes to court orders directed
against the assets of the third party, signatory of the checks by authorization of
the owner, or debts in favor of the bank and under its charge. Since the bank
could not be excused from complying with the judicial seizure order, when it is
directed against the account holder due to the sole circumstance that, for
example, he is not the person registered to dispose of the funds, because the
simple subscription of Checks do not externalize the property ownership of the
credit right derived from the contract or better, from the deposit made.
3.4.
THE CHECK
A study of the check, even if it is cursory, is mandatory within the deal.
general ment of the bank current account contract. It's not possible, unfortunately
carefully, do a thorough analysis; It's just about having some reference points.
For this reason, we have decided to mention here some characteristic notes of the
check as a security, to study other modalities of the instrument within the rights
and obligations of the parties.
3.4.1.
Typical title
We speak of the check as a typical title in a double sense. Firstly, although the
check is not the exclusive means of disposing of the existing balances in a
checking account since it is possible for its owner to use other channels, it is no
less true that it has historically been the most used method, so that it does not The
bank current account could be conceived, without this security title, as a peculiar
instrument appropriate to the needs of the current account holder, which are
satisfied through its use. That is to say, it is not the desire to obtain custody and
conservation of their money from the bank that leads people to enter into the
contract and deposit their resources, but rather the power to avail themselves of
the services that flow from the existence of this bank. contract and, especially,
the cash service; which says as much with the receipt in the account of the
payments received as, especially, with the possibility that the owner has of
satisfying his obligations to third parties, by writing checks that will be paid by
the respective bank.
or if you want to reconcile positions, the great advantage that derives from the
existence of the contract consists of being able to have the resources at your
disposal, without losing at any time the peace of mind derived from custody. If it
were a simple custody, the owner of the deposit would enjoy that advantage until
the moment in which the needy person was forced to withdraw. On the other
hand, if it is a deposit in a checking account and if it is easy to use the check, the
satisfaction of the needs we have referred to can be achieved without physically
withdrawing the money or assuming, consequently, the risks inherent in holding
it. Therefore, although the check is not an essential element of the bank current
account contract, in the sense that it can be perfected and function without its
presence, it can be stated, without the slightest hesitation, that as a dispositive
title it was for a long time the general rule, Although increasingly, the current
bank account is debited or debited through a different file.19
But we also say that it is a typical instrument because, currently and in a large
number of countries, the check is a security instrument that can only be issued by
a bank. And how can the order be issued by this bank? Well, by virtue of a
contract concluded between the client and the bank and the existence of balances
held by the banker as a consequence of the deposit or the opening of credit. To
this end, several laws in Latin America presume the existence of the current bank
account or current checking account contract due to the delivery that the bank
makes to its client of the corresponding form or forms.2o
It should be noted, for greater clarity, that the check involves a double series of
relationships: on the one hand, those existing between the account holder and the
respective bank, through which the depositing creditor can dispose of his funds
through the use of this title, and another, between the issuer of the instrument and
the beneficiary of the same or the following holders. In this event, the legal
effects are regulated through the application of the general rules of securities and
the particular rules that are related to the check as one of them. This duplicity of
relationships explains why, sometimes, apparently contradictory conclusions are
presented, as we will see when studying the non-exchange liability of the bank
towards the holder or the figure of partial payment compared to the obligation of
the account holder to have pre-existing funds. to turn the
checks. Difficulties that are resolved satisfactorily when it is understood that
legal provisions correspond, not to inconsistent positions, but to different
relationships whose discipline, therefore, is different.
3.4.2.
Historical background
Researchers, in their quest to determine the historical origins of the check, have
gone back to the most ancient civilizations. His scrutinizing work is confused
with the analysis of the first manifestations of currency and banking, which, for
reasons that are not lost on the reader, coincide from the investigative point of
view. However, it is unnecessary to determine that location, more or less remote,
by searching for the antecedents of the check as a security in the evolution of the
bill of exchange, to limit ourselves to reaffirming the concept according to which,
given the typicality of the check as a security issued to position of a bank, it is in
the modern banking structure that it must be located with absolute precision.
To the extent that the banks allowed the disposal of the resources in their
possession through the issuance of orders at their expense, the check can be
recognized in its contemporary conception. It does not seem risky to accept that
the check appears with its characteristics closest to the current ones from the
creation of the Bank of England, in the middle of the 18th century and that it was,
precisely in this country, where it found its broadest development, both doctrinal
and legislative.
3.4.3. Legislative systems and definitions
Legislation regarding checks is largely influenced by two systems: one, inspired

by the English regulation, enshrined by the Bill of Exchange Act and in the
United States collected by the Uniform Commercial Code;21 and the other, that
we could qualify, with some imprecision, as informed in European continental
law. Its most widespread manifestation is the Geneva Uniform Check Law of
1931, which followed the Uniform Bill of Exchange Law of 1930. There are, of
course, countries that have maintained a relatively autonomous position, so to
speak, with respect to one or the other system, but there is no doubt that the vast
majority of legislation is influenced by one of the two.22
There is no doubt that in Latin America the Geneva Uniform Law has been the
most influential, since, with the exception of Panama at present and Colombia
until more or less recently, there is no other legislation that is directly inspired by
the Anglo-Saxon system, although when analyzing each of them in detail it is
possible to find eclectic results, since although we start from the greatest
influence of the Geneva Uniform Law, some provisions that could find their clear
antecedent in the Anglo-Saxon systems are still recognized.
A few years ago, and at the initiative of the Institute for the Integration of Latin
America, INT AL, the Mexican professor Raúl Cervantes Ahumada prepared a
Uniform Project of Securities for Latin America, which seemed destined to have
a greater influence than, in the practice, had, in the countries of the regionY
Not all legislation conceptually defines the check; many of them limit themselves
to pointing out the general requirements that such a degree must meet. The Bill
of Exchange Act, English, defines it as "a demand bill of exchange drawn against
a banker", a definition that, although it has the advantage of suggesting from the
beginning that the rules on bills of exchange are applicable to the check. At first
sight, it has been criticized for considering that it depersonalizes the check, which
must be recognized as having its own individuality. The Geneva Uniform Law is
limited in its article lO to establishing in six paragraphs the requirements that the
check must contain and in article 20 it sanctions with the loss of validity the
instrument that lacks any of the aforementioned requirements, except for those
that the same law show off The INTAL project, for its part, establishes in its
article 101 that the check can only be issued "in printed forms and in charge of a
bank..." and in the following article it establishes that, in addition to the general
requirements for all types of securities values, the check must include in
particular "the unconditional order to pay a certain sum of money" and "the name
of the drawn bank". The French law of 1865 defines it saying that "the check is
the document that, in the form of a payment mandate, serves the drawer to
withdraw for his benefit or for the benefit of a third party all or part of the funds
available from the assets of his account. ".24
The remaining differences between the Anglo-Saxon system and those
influenced by Geneva legislation continue to be important and deserve, without a
doubt, all the efforts that continue to be made towards true uniformity at the
international level. In Latin America, the recent steps taken in this direction are
encouraging and it can be said that, in general, there is a fairly sensitive approach
between all countries.
Finally, when we talk about a check, we are referring to a security with credit
content, that is, it incorporates the obligation to pay a certain sum of money,
issued to a bank, payable on demand and transferable in principle, although
There are exceptions to this possibility.
3.4.4.
Differences with the bill of exchange
In the spirit of giving the check an individuality that differentiates it from other
securities, but especially from the bill of exchange, the authors have agreed in
maintaining that the check is a typical instrument or means of payment, while the
bill is a title primarily of credit. This means that the bill as a security is an
instrument directed through the mechanism of the form of maturity, to allow a
party to obtain credit in exchange for the commitment to pay at a future date. The
retail merchant obtains credit from the wholesaler when, in payment for the
merchandise shipped, he accepts a bill of exchange in his favor or in favor of a
third party. It is therefore an ideal instrument, due to its own negotiation
structure, to obtain credit and mobilize it for the person who receives it through
discount, advance payment, negotiation for another reason, etc.
Instead, the check is intended to be cashed immediately. It is assumed that the
holder issues the check to dispose of funds of which he is a creditor and thus
satisfy his obligation to a third party. For this reason, the check, unlike the bill of
exchange, is always in sight, and a period for its demandability is not conceived
in relation to it. Likewise, while in the bill of exchange the interest clause, the
price of the capital in relation to which the credit is configured, fits in some
legislations, in the check this clause is generally censored.25
Furthermore, the check, as we have already seen, must always be drawn on a
bank, while in the bill of exchange the drawee is indeterminate in that it can be
any person. And while the bill of exchange can be accepted, at which point the
drawer ceases to be the principal obligor and becomes the accepting drawee, the
check does not allow for the possibility of such acceptance. The check is
presented to the bank for payment, never for acceptance, and even in exceptional
cases in which the bank acquires a direct obligation towards the holder, as in the
case of a certified check, legislation and doctrine emphasize that said obligation,
even if it can be considered exchange, is not strictly equivalent to that derived
from acceptance.
Having specified the most important differences between the check and the bill
of exchange, it is worth noting that there are innumerable similarities both in
their structure and in the position of the holder. This is identical both when a bill
of exchange is drawn on a third party and when a check is issued. The drawer or
drawer, in their order, are guaranteeing that the bill will be accepted or paid and
the check will be paid and that in the event that such thing does not occur, they
will respond through exchange to the holder. So in both cases and in the first
stage of the process, the holder has no action against the drawee, as he has no
action against the bank. The difference arises when the drawee accepts because at
that moment he is obligated to exchange money with the holder, which does not
occur in the case of a check.
Even reaffirming the independence between the two types of titles, a good part of
the legislation when regulating the check, after pointing out its particularities,
refers the rest of the regulations to the rules on bills of exchange.
3.4.5.
Legal nature of the authorization to release it
Much has been discussed about the legal nature of the power to issue a check. At
the risk of being simplistic, which we are happy to accept if we are clear in
return, the problem appears simpler in practical terms than is suggested. We start
from an essential logical assumption, consisting of the fact that there must be an
agreement of wills, that is, a contract in accordance with which a person has
deposited or is authorized to deposit sums of money on demand in a banking
establishment, of which may be disposed of by writing checks or in another
manner agreed upon with the depositary. Consequently, the source that explains
from a legal point of view the power to issue it is constituted, in the first place,
by the existence of the contract itself. Now, what happens once said agreement
has been concluded? That a set of obligations are derived from the bank, among
which is the obligation to reimburse the deposited monies by accepting that
checks be issued at its expense. Therefore, the conduct of the account holder
when issuing the check only corresponds to the exercise of the right whose
consideration is the obligation acquired by the bank.
That is to say, expressed in a synthetic and legal form, the possibility of issuing a
check constitutes the current account holder's own power that derives from the
existence of a bank current account contract. This contract can be express or
simply tacit, as occurs when the bank has received a demand deposit from its
client and gives him a checkbook, even when the other formal requirements such
as the signing of the regulations have not been completed. On the other hand, the
lack of a signature record is not conceivable, unless the bank has it indisputable
for another reason or previous contract, since, without the existence of an
objective reference parameter, it would have no way of verifying that the order
given in The checkbook has been issued by the account holder.
3.4.6. Check circulation
The problem of the circulation of the check has raised questions, because if it is a
demand security, which is intended to be paid immediately and in that sense it is
a payment instrument rather than a credit instrument, it has been considered
illogical to raise the possibility of negotiating it, because its circulation would not
be justified.26
The other position, also very respectable and perhaps more solid, maintains that
as soon as the check is subject to the general regime of securities, it must be
authorized, even potentially, to circulate. Furthermore, business life and practice
teach that, although its negotiation does not occur with the same frequency as
that of a bill of exchange and its period of circulation is much shorter, this does
not mean that the holders do not need to negotiate the check at a given time, and
as commercial institutes are aimed at satisfying the needs of merchants and the
people who use them, legislation on checks has generally established the
possibility of negotiating them. Theory and practice merge to support its
possibility of circulation.
Talking about the negotiation of the check implies reviewing the general theory
of securities, in which they are classified, according to the circulation law, into
nominative, order and bearer. Within the modern conception of this tripartite
possibility, bearer titles are understood as those that are transferred by simple
delivery. Order titles are those that are transferred by endorsement and delivery
and, finally, nominative titles are those that are transferred by endorsement and
delivery like the previous ones, but which also imply the need to record said
transfer in the books that, For this purpose, the issuing entity must carry them.
From which the general principle of securities called "legitimation" can be easily
understood, which, from the active point of view, assumes that a person is
authorized in accordance with the law of circulation of the instrument to validly
collect or transfer it. Following the sequence that we have just presented, we will
have that in bearer titles, whoever has it in their possession and presents or
delivers it, as the case may be, will be entitled to collect or transmit it; In the
titles to order, the legitimate holder will be whoever appears as the last endorsee
of an uninterrupted chain of endorsements, so that the debtor can only be released
by paying him and, finally, he will be a legitimate holder in a
nominative title is the one who presents it and corresponds to the last endorsee of
an uninterrupted chain of endorsements, with his endorser being the one who
appears for the last time registered in the books of the issuing company, if it is a
question of verifying a new record in his favor or being the one himself who It
appears there, when it comes to transferring the instrument to a third party.
Within this business structure, it is not possible for the check to take the form of
a nominative title and, as a consequence, most legislation only allows it to be
made to order or to bearer. It is in relation to the first possibility that the problem
of the negotiability of the instrument arises again for the reasons that we will try
to explain below.
The endorsement is the typical form by which the rights derived from a security
are transferred to the order. As the doctrine says, it is an accessory clause ~
inseparable from the title by which the exchange holder or creditor places a third
party in its place, with limited or unlimited effects. Within this exciting figure of
exchange law that explains, in large part, due to its advantages over the
assignment of credits, the very agile role that credit titles play in economic life,
there is a principle related to the opportunity of endorsement, according to the
which must be done before the expiration of the title. Hence, a good part of the
legislation establishes that if the endorsement is made after the expiration, the
peculiar and privileged effects that are inherent to it cease to occur, to produce
only the effects of an ordinary assignment.
Leaving aside the mechanics that could be imposed on the endorsement as a
consequence of this equation, let us remember that the endorsement, by
application of the general principle of "autonomy" of securities, confers on the
acquirer an original property, so-called, by opposition. to the derived acquisition,
so that its ownership is clean, devoid of any vices or defects that could have
affected the title of the previous holder. In other words, contrary to the general
principle according to which "no one can transfer more right than he or she has,"
in securities securities the modality that we have just mentioned is presented and
which translates into that if an apparent owner of the right was in fact
precariously at the time of transferring the instrument, the position of the acquirer
is improved, so to speak, and he is safe from the defective configuration that
could be predicted from whoever appeared as his predecessor.
This principle of autonomy means that when a person as a holder in good faith,
that is, who has acquired the title regularly and without knowledge of the defects
that the position of his predecessor could suffer from, presents it for collection to
the obligated , he cannot propose the personal exceptions that he could have
presented to the endorser, that is, to the person who preceded the holder. Unless
the endorsement was made after the expiration of the instrument.
An example will be useful: a person sells his house to another and the buyer pays
all or part of the price by accepting a bill of exchange or writing a check in his
favor. The beneficiary of one or the other may, at a given time, fail to comply
with his obligation to deliver the house, in which case and by application of a
general principle of law, the buyer would be temporarily relieved of his
obligation to pay the price, Because in bilateral contracts neither party is obliged
to comply if the other has not previously done so or has not agreed to comply.
Now let's imagine that the seller, who has received the check, transfers it by
endorsement to a third party and the latter comes to collect it from the buyer.
Well, the buyer will not be able to refrain from paying with the argument that the
seller has not delivered the house, the purchase of which gave rise to the writing
of the check, since that previous circumstance is unrelated to the position of the
holder. The latter acquires the title autonomously and the exceptions that the
debtor had against the previous party, in this case against the seller of the
property, cannot be proposed. Or to present it in other words, if it were the seller
cashing the check, the buyer could propose the exception consisting of non-
compliance with his obligations. This exception, which would be successful
against the seller, may not be successful against the third party acquiring the title,
as long as it is not in good faith, exempt from fault, in legislation that follows the
principle enshrined in Colombia.
Everything is relevant to explain that the most important procedural difference

between endorsement and assignment translates into the possibility or
impossibility of proposing exceptions derived from previous relationships. Well,
the problem that arises in the case of checks is apparently simple, but it is not
without complicated aspects: if the check by definition is a demand document,
that is, payable from the moment of its birth , it could be stated that it is a title
that is born expired or that is expired from its very birth. And if this were really
the case, it could be argued that the endorsement would not then enjoy the
prerogatives of this institution but, in the best of cases, the effects of an
assignment, with the natural implications for the last holder, who would see his
position deteriorated This interpretation would put an end, in practice, to the
negotiation of the check since no one would be interested in receiving it through
endorsement knowing that their position would be inferior to that of an ordinary
endorsee.
This problem has been solved in two ways: by express provision of the law, by
allowing the check to be negotiated before the date scheduled as possible for its
presentation,2s or by doctrinal interpretation that has led to the same conclusion.
The only difference between one and the other can be found in that when the law
has permitted it, the endorsement may have a date subsequent to the creation of
the check, which if it is prior to the deadline for its presentation, it will be
sufficient to have the endorsement. as regular and carried out in due form.
On the other hand, when it comes to a doctrinal conclusion, there would be the
difficulty that if the endorsement is after the date of creation, a judge could hold,
rightly or wrongly, that it is an endorsement after expiration, with the
consequences already seen. To avoid this possibility as much as possible, the
undated endorsement could be verified and it can be presumed that it was made
simultaneously with the issuance of the check or that it took place there. It is
obvious, in any case, that the solution through doctrinal means is less certain than
that derived from an express legal provision.
3.4.7.
Presentation for payment
If the check is a payment order issued against the bank, its fulfillment must
necessarily involve presentation of the title to the recipient bank. In fact, no other
way is conceived for him to find out about the order issued against him. The
presentation of the check can be done directly by the beneficiary, by displaying it
at the bank's counters or cash registers to demand payment in cash, or through
another bank located in the same place or in a different one. In the latter case, the
depositary bank presents it to the drawee, in general and in the cities where such
a system is established, through the so-called clearing house to which we already
referred when talking about the functions of the Central Bank. 29 For this reason,
the INT AL project and various legislations have provided that the presentation
of the check at a clearing house will produce the same effects as that made
directly to the drawee. 30
To be consistent with the instrumental function of means of payment that checks
ordinarily fulfill, most legislation is inclined to establish very short presentation
periods that can range around a month, to give an example, and that are intended
to reaffirm the principle that checks are issued to be cashed and not to be kept in
the possession of the beneficiary.3!
The importance of the existence of a deadline for the presentation of the check
lies in the determination of the effects that its non-compliance produces for the
holder. We can affirm that, in general, the sanction that derives from such
omission is the loss of the exchanged shares derived from the security, against all
or some of the obligors, which can be catastrophic in systems in which the fate of
the share causal, that is, from the derivative of the legal transaction that gave rise
to the issuance of the check, is linked to that of the exchanged share, because in
this case the extinction due to expiration of the latter will also make the
possibility disappear. to exercise the first. 32 This assumption contradicts the
most generalized doctrinal position according to which one of the manifestations
of independence between changed and causal actions consists in the fact that the
terms of prescription and expiration that are their own are separately predicated
on each of them.
The Geneva Uniform Law on the check, for example, establishes in its article 40
that the viability of the exchanged shares depends on the check having been
presented in good time and such circumstance being verified by an authentic act
(protest) or "by a declaration dated from an official clearing house, stating that
the check has been sent in a timely manner and has not been paid.
The INT AL project establishes a dual solution. In fact, in its article 120 it states
that "the exchange action against the drawer and his guarantors expires for not
having presented and protested the check in time, if during the presentation
period the drawer had sufficient funds in the possession of the drawee, and for
cause not attributable to the drawer, the check stopped being paid". This means
that the simple failure to present and protest on time does not cause the actions to
expire unless during the presentation period there have been sufficient funds and
the check has not stopped being paid for a reason attributable to the issuer. At the
beginning, however, it reiterates the Geneva principle in relation to the other
signatories with respect to whom the expiration occurs due to "the simple lack of
presentation or protest."
Italian legislation, on the contrary, establishes that the holder does not lose his
actions against the drawer "even if the check has not been presented in time, and
the protest or equivalent verification has not been carried out." It adds, however,
that if after the presentation deadline the availability of the sum becomes lacking
"due to the drawee's actions," such rights are lost. This assumption seems to refer
to the event that the bank goes bankrupt.
In any case, it can be argued that failure to present on time may result in the loss
of actions against the drawer and the other endorsers.
3.4.8.
I protest
The protest, in general terms, is the diligence in which the non-payment of a
security and the circumstances or reasons for such refusal are recorded.
Traditionally, especially with the bill of exchange and the other titles regulated
by it, it involves carrying out a notarial procedure with the presence of the
obligor in which the reasons for non-payment are recorded. The observation in
Latin America of the tendency to excuse protest, enshrined as a possibility in
many legislations, led the INT AL Project to establish in its article 85 an inverse
principle consisting of "the protest will only be necessary when the creator of the
letter or some holder, insert the clause with protest, on the obverse and with
visible characters". In any case, even in the INT AL system, it is not evident that
this provision is applicable to the case of checks for which, however, an
expeditious system has been established consisting of the annotation that the
bank or the chamber of compensation if the check has been presented on time
and not paid, in whole or in part, will have the effects of protest.33
3.4.9.
Foreign exchange actions
The exchange action is that which the holder of a security enjoys to demand
compliance with the rights incorporated therein. When it comes to a security with
credit content, such as a check, the exchange action is aimed at obtaining
payment in the event that, by presenting it on time, it is not satisfied by the
drawee bank. In general, doctrine and legislation distinguish between the so-
called direct exchange action, which is that which is directed against the principal
obligor or his guarantors, and the return exchange action, which is that which is
attempted against any of the other obligors, such as endorsers.
In the case of the check, it has been concluded that the exercise of direct
exchange action is not possible, in systems in which it can only be attempted
against the grantor of a promise to pay or the acceptor of a payment order, except
in the case of certified checks. And it does not fit for the simple reason that, as
we have seen, the check is never accepted by the bank, so if in the payment
orders the concept of principal obligor is identified with the acceptor and the
notion is applied to the check By legislative invocation or by doctrinal
interpretation, we would have that only so-called return actions fit into it.
The annotation has an indisputable practical content because ordinarily the direct
exchange action is subject to a much broader term of prescription than that of the
return exchange action. An example is what is established by the INT AL project,
in its articles 240 and 241, from which it can be deduced that the direct exchange
action for securities expires in three years from the expiration date, while the
return exchange action expires in one year from the date of the protest or
expiration if the title is without protest and, where applicable, from the end of the
presentation deadlines. To which it is added that the action of the obligor who
pays against the other obligors expires in six months from that moment or from
the notification of the demand. In the case of checks, article 121 provides that
exchange actions expire in six months "counted from the presentation, those of
the last holder, and from the next to the one in which the check is paid, those of
the endorsers and guarantors."
Consequently, since a certain legislation establishes or deduces that there is no
direct exchange action in the case of the check, in which case the return action
has a shorter prescription period, even if the legislation provides for a particular
term of prescription for their exchange actions, it is concluded that this term is
usually lower than that provided for other securities and, of course, that
established for direct exchange action, in cases such as that of the bill of
exchange.34
As we already observed, the logical prerequisites for the exercise of exchange
actions are the presentation and protest of the respective title. Likewise, we said
that only the exhaustive exceptions established by law can be proposed against
exchange actions, in order to provide the security with all the guarantees of
certainty and security that acquirers must have so that its circulation is favored.
To which it must be added that, in most legislations, securities are usually
recognized as those that entail execution, that is, in which certain and
indisputable obligations are incorporated by a debtor, so that the exercise of The
action before the state powers is not aimed at whether or not they recognize the
existence of a right but, based on the fact that it exists and appears sufficiently
proven in the title that is presented, it is rather appropriate to demand
precautionary measures directed at remove some of the debtor's assets from
commerce so that, in the event that the debtor does not pay, it is possible to order
their auction and with the proceeds or through their adjudication satisfy the
unfulfilled obligation.
One last comment to return to the exceptional hypothesis in which the exercise of
direct action against the bank would be possible. It is constituted by the case of
the certification of a check in which the bank is directly obligated towards the
holder and, consequently, in the remote event that the check was not paid upon
presentation, the bank would have to bear against it the direct action exercised by
the holder.
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17. SUESCUN MELO, Jorge. op. cyl. T. II "Bank Current Account Contract.
Comments on its nature, elements and functioning". He points out that, in
In the absence of a positive law rule, banking practice has been responsible for
determining the scope of the "and/or" clause. In his opinion this is of Anglo-
Saxon origin and its effects coincide with those of the "joint several obligations",
which are characterized because the creditor can demand payment of the debt
from any one or all of the debtors; As well as if there are several creditors and
only one debtor, any of them can demand payment of the obligation from the
latter, thus freeing themselves from all of them. There would be passive
solidarity in the first case and active solidarity in the second. To this end, it
concludes: "...the clause and/or has come to us as equivalent to solidarity and is
thus understood by the people who include it in their negotiations, for which the
autonomy of the will must be valid, allowing that the effects of solidarity have a
place every time the parties use the expression "and/or.", even if they do not use
the term "solidarity". (pp. 497 to 499).
19. In this regard, it must be admitted that notable changes have occurred in that
the growing intervention of banks to make payments through electronic transfer
of funds and the universalization of the use of "plastic currency" have led to a
increasing use of other mechanisms -other than checks- to dispose of the funds
deposited in the account, as we saw when talking about electronic banking. v.
supra Chap. 111, 3.4.
20. Colombia, art. 714 C. AC.; Mexico, art. 175 LGTOC. Honduras, art. 596 C.
Co.
21. As we saw, the UCC is barely a model law that only applies in the States that
have adopted it and not in all of the United States, as is sometimes thought.
22. GIRALDI. "Current Account...", op. cit. p. 178.
23. Cervantes had an important participation in the preparation of a similar
project for Central America and for several years he has been a prominent part of
the groups that study the reforms that could be introduced to commercial law in
Mexico. This project, which from now on we will call INTAL, took into account
the most outstanding universal antecedents and the consultation of the different
legislations and reform projects, then existing in Latin America. In South
America, Colombia was the first country to adopt the Securities Project,
incorporating it into the Commercial Code with some modifications.
24. RODRÍGUEZ R., J. "Banking Law". Op. cit., p. 100.
25. Uruguay introduced a new modality that breaks the principle, by enshrining
the so-called "deferred payment check" which, by definition, cannot be presented
for payment, nor paid, of course, before the future date provided for in it. . Apart
from the practical reasons that inspired the legislator, totally respectable, for the
rest, it seems to us that this distorts the instrument compared to its traditional
conception. L. 14412 of 1975. Argentina. Article 54 of Law 24,452 (Check
Law).
26. Colombia. The Supreme Court of Justice has specified that although the
check is a substitute for currency, it cannot be considered as such, but rather as a
simple means of payment (Sent. of Cassation. Criminal Court. Nov/95. M. Q.
Carlos A. Mejía Escobar. TENA, cited by Juan José González and this by the
Court. It states that: "... it may actually happen that while the recipient of the
document presents it to the bank to make it effective, he endorses or delivers it to
another person, this person to another and so on, until it is presented by the last
person to the drawee. The title has circulated in this case, but it was not issued for
that purpose nor is that what emerges from its nature; The circulation of the title
has been an accidental, adventitious circumstance, incapable of affecting its
nature..." (Senl. Ju1./94, M. Q. Carlos A. Mejía Escobar). We allow ourselves to
add, then, as a summary, that the check is a means of payment, intended,
therefore, to be cashed immediately, but that, although this is not the most
frequent, it can circulate within the period provided for its presentation. for
payment, without affecting its effectiveness as such in any way.
27. Colombia, Art. 704 C. AC.
28. Argentina, L. 24,452/95, arts. 22 and 23. In Colombia this would not be
possible because of article 660 C. Co. presumes that when the date is omitted in
the endorsement "the instrument was endorsed on the day on which the endorser
delivered it to the endorsee...". But, of course, this can coincide with the emission
of the instrument.
29.V. supra, chap. 1I 2.2.2.2.
30. INTAL, art. 110; Mexico, art. 182 LGTOC; Colombia, art. 719, C. Co.
31. INT AL, art. 109; Mexico, art. 181 C. Co.; Costa Rica, art. 830 C. Co.;
Argentina, art. 25, Law 24,452 (Checks Law); Venezuela, art 492 C. Co.;
Colombia, art. 718 C. Co.
32. Colombia, Establishes that if the creditor allows the instrument to expire or
prescribe, the original or fundamental obligation will also be extinguished;
However, it will have action against anyone who has become unjustly enriched
as a result of the expiration or prescription. This action will expire in one year"
(C. Co. Art. 882).
33. Argentina, L. 24,452/95, art. 38; Colombia, art. 727 C. AC.; Intal, art. 119.
34. Argentina, 1 year, L. 24,452/95, art. 61 (Check Law); Honduras, 6 months,
art. 613 C. Co.; Colombia, 6 months, art. 730 C. Co.; El Salvador, 1 year, art. 820
C. Co.
We have commented at the beginning of this chapter our decision to organize the
subject within a didactic structure that explains the relationships between the
parts and the way in which there are powers and obligations in relation to each of
them. We have also noted that although numerous additional comments could be
made regarding the check, we prefer to involve them within the structure of
reciprocal rights and obligations of the parties. This would explain, for example,
that instead of discussing in the previous point the possibilities of creating
different types of checks, we look at this aspect within what we consider to be the
powers of the holder of the current bank account.
We must also issue a warning to explain our position, otherwise we will be
subject to fair criticism from scholars. For a better understanding of the subject,
we have opted for a scheme that we could call pedagogical, recognizing that for
those who consider the current account deposit contract as a real contract, some
of the obligations borne by the account holder do not actually exist and if They
exist and are derived from an accessory agreement, the so-called checking or
checking account agreement and not directly from the fundamental contract. And
it could be accepted that even if the contract is based on the mechanism of the
check, if not essentially distinctive and closely linked to the account, it would be
excessive to speak of certain obligations of the client as derived from the same
contract, when they would be charges or expected conduct 9ue, Unlike
obligations, they could not be properly demanded by the bank.
However, even with the possible technical deficiency of the scheme that we will
follow throughout the presentation, we think that from the didactic point of view
it is justified and allows us to distinguish two very clear moments in the
execution of the contract: one in which the bank acquires the obligation to
receive deposits and that extends throughout the life of the contract and another
that arises at the moment in which, in fact, the deposit is constituted and that
authorizes the holder to dispose of it through the issuance of checks in charge of
the institution.
Having made these notes, let's study what in our opinion constitute the main
obligations of the banking entity.
4.1. RECEIVE DEPOSITS
Let us state from the beginning the observation we have just made. If the contract
is considered consensual, the bank's main obligation is to receive the deposits
that its client wants to make. But even if it is considered that the contract is real,
in which case the initial deposit would not be the fulfillment of an obligation but
rather the essential element for the birth of the contract, it must be admitted that,
from that moment on, the possibility that the client has verifying successive
deposits cannot imply the execution of successive deposit contracts,
because it would be artificial, if not to constitute a simple faculty of the client, or
what is the same, an obligation of the bank of receipts within an integrated and
autonomous contract, whose main purpose is to be able to regularly deposit sums
of money or other securities and dispose of them by writing checks or other
forms.
4.1.1. In money
The bank is obliged to receive sums of cash on deposit in the respective account,
that is, monetary species whose circulation is admitted in the country. A first
observation that we must make, because the topic will only be touched on
marginally throughout the book, is that depending on the exchange regulations
that govern in a given country, it will or will not be possible to make deposits in
currencies other than the national currency, either for converted to this by virtue
of an exchange accounting operation, already to maintain the deposit in those
currencies.35 We will work on the basis of the receipt of national currency,
leaving aside the exchange problem typical of the legislation of each country and
quite changeable in America Latina.
The obligation to receive deposits in cash is obvious since it is the peculiar

channel through which banks raise monetary resources to carry out a good part of
their active operations, as already stated. And this limited obligation is what is
enshrined in a good number of laws or is deduced from the regulations
established by banks in different countries.36 Once the deposit is in the hands of
the bank, availability in favor of the client immediately arises, or that is, the
power to issue checks against the institution or dispose of its balances in other
ways. In other words, once the transfer deposit is verified, the bank acquires the
property, but, automatically and simultaneously, the credit right arises in favor of
the client to dispose of the deposited sum.
4.1.2.
on checks
In addition to depositing cash, the possibility is recognized for clients to deposit
other securities, especially securities and particularly checks, since their volume
is increasing in relation to the monetary species in circulation. We already
mentioned that frequently those who receive checks, instead of going to the cash
registers and banks to demand payment, prefer to deposit them in the checking
account they have open in one of them. We will even see that, in certain cases,
they are obliged to do so because they are checks whose modalities prevent their
collection in cash at the bank's cash desk.
In countries in which it is only contemplated that the bank is obliged to receive
deposits in money and checks, the reception of other securities is conditional on
its express authorization. Only the rejection of the first would constitute a default
on the part of the bank, while the receipt of other titles or documents would be
optional for the credit institution.37
The availability, by the holder, of the sums corresponding to deposits in checks
depends, above all, on the person of the drawee since checks can be deposited in
charge of the same bank or others located in the same place or in a different place
in the country or even outside. It is not difficult to imagine that those drawn on
the same establishment, as soon as the bank can immediately proceed to verify if
there are funds available, empower the client, almost automatically, to issue
checks or make withdrawals against the respective funds.
A different thing happens with checks drawn on another bank. In this regard,
legislation usually establishes the principle that checks are received on
consignment "unless they are properly collected," which means that, even when
they are credited into the account in accounting terms, the corresponding sum can
only be made available if they are discharged by the bank. released. If it is a bank
from the same country and to the extent that the mechanism exists, the check will
be sent to the clearing house of the drawee, or it will be cleared electronically,
depending on the case, and the possibility of disposing of the funds. It will
depend on a fluctuating term, depending on the time required to confirm payment
of the instrument.
Remember that, fundamentally, interbank clearing can be done in two ways: the
traditional one, which is increasingly out of use, but is still used in cities where
the technological resources do not exist to use another way, by virtue of which
banks physically send all the checks received in consignment from their clients to
the other drawn banks in the area and receive from them, in turn, those that they
have accepted in consignment from their own clientele and at the expense of the
others. When such compensation is made with the intervention of the Central
Bank, it affects the balances of all banks with the result of the operation on the
date it is carried out. Now, the received checks continue on their way until they
reach each of the banks and then, normally during the night, verifications are
made on the conditions of existence and regularity of the instruments, to
determine if all of them can be paid. Those that must be rejected, for the just
reasons for return that we will see later, are sent the next morning, undoing what
has been done, to the same Clearing House, in what is technically known as the
"refund exchange", based on whose figures the central bank reverses until its
concurrence the accounts of the banks that it had affected the previous night. But
most importantly, the physical receipt of the checks allows each bank to return
them to its clients, invoking, for this purpose, the respective cause and enabling
them to make the commercial decisions of the case against the issuers, whose
orders were not honored and even initiating the judicial actions planned for the
collection, by this means, of unpaid titles.
Technological development has made it possible, however, to use electronic

clearing mechanisms by virtue of which banks do not physically send checks to
the Central Bank, along with totalized lists of the amounts owed by their
counterparts, as in the traditional system. but they send these figures
electronically, even several times a day, if the regulations allow it. The Central
Bank then carries out, with this support, the allocations of the accounts, without a
fundamental change occurring before it. Where it occurs is in the relations
between the banks and in their relations with their clients, given that in a
comprehensive clearing system, by electronic means, it is not necessary, in
theory, to send any check to the drawn banks and neither not even to the
clearinghouse, which as a physical space could disappear. From this perspective,
very significant legal and operational consequences occur.
In effect, it begins by breaking the principle according to which the exercise of
the rights derived from the check implies its presentation to the drawee and is
presumed when it is done in a clearing house, since no presentation will be made.
But obvious risks are also generated because the drawees will have to define the
payment or its rejection with the sole electronic information received but without
having the title itself to verify those aspects linked to its physical possession and
which include knowing if the check has been duly drawn. by its owner and with
the fulfillment of the requirements that are legally and contractually required but,
above all, if the check has not been subject to forgery or alteration that would
impose its rejection, under penalty of binding the liability of the drawn bank. Not
to add that it will be impossible for the latter to periodically return it to its clients,
if the law or customs impose it, nor will it remain in its files but in those of the
depositary for collection, with which the client has no relationship. legal and
would not have direct action to request its return. As is evident, in this case, a
truncation occurs in the natural physical movement of the check that its
presentation for payment entails and which, despite the anticipated risks and
questions, has the undoubted advantage of eliminating the gigantic cost that the
manipulation of securities represents for a banking system and with whose
savings, allows banks to self-insure themselves or contract full insurance, against
risk, or for excess loss, if they retain it in part, as would seem advisable.38
It seems interesting to highlight the condition in which the depositary bank acts
in these cases. Remember that the check must be presented on time for payment
and that, consequently, the bank acts as a commissioner for collection, that is, the
endorsement stamped by the depositor, a client of the intermediary bank, must be
considered a restrictive endorsement. , which authorizes the bank to present it to
the drawee for payment and collect it. With exceptions, in which the interested
parties should stipulate otherwise, the bank acts not as the owner of the
instruments but as a simple holder for collection.
In other words, the bank's business does not consist of acquiring checks and
running the risks of the debtor's eventual insolvency, but rather of providing the
service to its clientele consisting of using its structure and that of the banking
system, in particular, that of the chamber or the clearing system, to be presented
for collection to the drawees. Consequently, the account holder cannot dispose of
the balances until confirmation of payment occurs or after a certain period
previously established by the bank, within which he considers that he has been
able to obtain confirmation or rejection of the payment order. pay.
Even in exceptional cases in which by negotiating the instrument, that is, by
receiving it as property, the bank authorizes its client to immediately dispose of
the sum, the doctrine is hesitant. There are those who maintain that the bank
never acquires the checks and that in this case the only thing it does is grant a
credit to the client on the title, which would continue to be the property of the
latter and in relation to which the risks would be borne by them. It would then be
that, as a general rule, the client cannot dispose of the check until its collection is
confirmed and that, only by exception, it can be made against the advance
payment verified by the bank with the guarantee of the same title, but in both
assumptions with the client retaining ownership of the instrument and his bank
acting as a simple agent for collection.39
In any case, it is evident that if the bank does not acquire ownership of the title or
the principle of "unless good collection" is applied, in the event of non-payment
of the check the bank is authorized to debit the corresponding sum and even to
take legal action. that fit against the different parties involved in the title.
4.1.3.
In other titles
If banks receive deposits in cash and, for the most part, deposits in checks, there
is nothing to prevent them from tolerating the client from making deposits in
other documents, even if they are not securities. This may be the case of a receipt
that certifies the creation of an import deposit, or a title representing a judicial
deposit that, instead of making cash directly, delivers to the bank to be presented
through its own channels, such as the clearing house, the use of correspondents,
etc. This possibility depends to a high degree on the current practices in each
country and each bank in particular and on the specific agreements entered into
with some clients who, due to their importance, are in a position to obtain
exceptional treatment with respect to the general modalities of the contract. . We
believe that even more so in this case, that is, when titles whose receipt is not
mandatory are accepted, the banks apply the same principles that the client will
not be able to have the equivalent sum, except as soon as the titles are paid and
that, Of course, the risks inherent to its shipment are borne by the customer.
Note that perhaps one of the uses that has generated the greatest volume of other
securities received on consignment has to do with the so-called "vouchers" or
promissory notes subscribed by credit card users, in favor of affiliated
establishments, which, To make them effective, they deposit them in their bank -
which in banking jargon is usually known as the "acquirer" - so that it can
present it to the issuing bank of the card used, through the compensation
mechanism that the card administration systems , have it noted.4O
4.1.4.
Deposit made by third parties
In banking practice, it is usual that it is not the depositor who always verifies the
deposits. Sometimes it uses a third party, its agent or employee, a case that does
not pose any major difficulty since it is legally clear that by acting on behalf of
the owner, the deposit is understood to have been received by the bank's client.
The problem that is of interest consists of the consignment made by one person
on behalf of another, when there is no authorization from the owner and later
legal consequences are intended to arise from said consignment, such as the
satisfaction of an obligation owed to the depositor and in favor of the depositor.
of the account holder.
Even though the most logical solution would seem to consist of the bank
rejecting the deposits made by a third party since there is no legal relationship
that explains the conduct of the latter, the circumstance of indicating on the
deposit slip the name and number with which it is distinguished Specifically, it
makes it almost impossible, in practice, to verify, given the existing cash
systems, whether or not the third party that deposits is authorized to do so by the
account holder, which could be aggravated by the circumstance that at mention
the name and number of the respective account, the bank can logically infer that
such name and number have been provided by the owner since, given the
principle of banking reserve, the bank does not provide this type of data to any
third party to go to their boxes. Then the problem, which is in principle unrelated
to the bank, consists of knowing what use or for what purposes the deposit is
going to be used by the third party.
Imagine that this third party has a debt with the account holder and that because
there is a discussion about the amount and because the latter has refused to
receive it, for one reason or another, the debtor chooses to make the deposit in
the current account of his creditor and claim later that he has paid in that way.
We believe that the judges could not accept this consignment as payment for
many reasons, but, especially, because, as we have seen, the payment consists of
the satisfaction of the obligation in the originally agreed manner and must be
made to the creditor or his successors in title. universal or singular. Only by
exception and due to the reluctance of the debtor, the law has allowed payment
by consignment to be verified through a judicial procedure, but after the
defendant, that is, the creditor, has been blocked in a process. We also saw that
the exceptional possibility appears enshrined in provisions such as those of the
INT AL by allowing that if a bill of exchange is not presented for payment on
time, the debtor can be released by depositing such sum in a bank authorized to
receive judicial deposits. Except, then, for the exceptions established by law, it
does not seem evident that it is enough for a third party to make a deposit in the
account of its creditor to free itself from obligations.
Of course, the problem is complex and will be much more so in practice since it
could be assumed that if the account holder has the largest balance resulting from
said deposit, he tacitly accepts the payment made by the debtor. And even if he
realizes it in time, he will have enormous difficulty because it will not be easy for
him to return the money or he will be placed in the same position as someone
who has tried to pay through this irregular means, since he would have to initiate
an action so that a judge
. order the intruding consignor to receive the amount in return. Perhaps, in
practice, it would be best to ignore the payment - which will not be, of course, for
the amount of your supposed debt, since it would be better if you accepted it -
and act through the means of enforcement provided by the law. as if it had never
occurred, legally speaking, to wait for the judge, in the process in which
- acts as plaintiff, assigns a value at the time to the unauthorized consignment
carried out by the debtor, and impossible to ignore as a fact of the claim. It is a
problem that we barely leave raised, since its resolution corresponds to the
criteria of the judges in each specific case, unless the law has established express
solutions in a certain country.
4.1.5.
Night deposits
This name or "night deposits" is the service that allows clients to have access to
the bank's vaults during hours that are normally out of service or without using
the usual mechanisms for accessing the deposit boxes. That is, using external
access and equipped with special security measures, generally a duct that
connects a bank security vault with its external facilities, or even with those of its
neighboring clients, allows them, through the use of keys or specific control
mechanisms in their possession, deposit bags or containers, duly identified and
equipped with their own enclosure and security measures, so that they enter the
bank's vaults and later, during the institution's business hours, proceed to identify
them, open them and remove the money or values contained therein and proceed,
then, to make the corresponding deposit into the account.
The rights and obligations of the parties, but especially the clauses that delimit
their responsibility, are usually expressed in the special contracts entered into by
the banks with the clientele that has access to this exceptional service. But, in any
case and in the absence of these particular prescriptions, it is obvious that it must
be analyzed whether it is a onerous or free service and remember that, in
accordance with general principles of Civil Law, it is not strictly a deposit of
money but of a closed bag or chest deposit that is supposed to contain money, as
enshrined in the Napoleonic Code and the Civil Codes inspired by it.41 That is,
in principle, the bank is only responsible for the fact that the container remains
unbroken.
Additionally, and considering that a responsibility derived from the receipt of

gender goods only arises when the money is actually consigned and it is not
usually externalized except from the issuance of the corresponding receipt,
contracts usually enshrine, as a logical consequence , that the risk is borne by the
client user of the service. What risk? That of loss of the thing that occurs from
the moment the container is deposited and until it is recovered by its owner, prior
to its identification.42
For its part, the Banking Superintendency of Colombia has said that "now, being
subject to the specific regulations adopted by the banks in the execution of their
contracts for the use of the night deposit system, the responsibilities of each of
the parties end of the operation, are fully determined, insofar as the attention of
the service in that special modality provides that the exercise of such privilege is
carried out under the sole responsibility and risk of the current account holder. "..
.as long as the bank's commitment and the legal effects of the consignment only
become valid from the moment of issuance of the corresponding receipt, under
the terms and conditions established by law, in accordance with which, the full
"Proof of the deposit is only constituted by the deposit receipt issued by the
Bank." Legal Office Bulletin, number 074, March 1982, pages 20-21.
These principles were accepted in Colombia by the Superior Court of Medellín,
in a ruling of April 5, 1986, ordinary process of Bancoquia against Aseguradora
Colseguros and Suramericana de Seguros. Judge Speaker José Fernando
Ramírez.
If when the client goes to identify the container, it appears that the seals or
security measures have been broken or fractured, it should be concluded, in
accordance with Civil Law standards, that the client must be informed about the
number and quality of the deposited species. If there is no fault and in case of
disagreement, the content must be proven.43
4.2. PROVIDE THE NECESSARY DOCUMENTS OR SKELETONS
Under this obligation we cover two types of documents, consignment forms or

receipts and checkbooks.
4.2.1.
Consignment forms
The deposit of money and other securities in the current account requires the
preparation of a detailed list showing, at least, the amount of the sum in cash and
the discrimination of the checks indicating the issuer and, sometimes, the their
identification numbers. All of this accompanied by the necessary information so
that the bank can know the name of the account holder, its number, the date of
deposit, etc. The management of the corresponding lists or relationships would
be extremely cumbersome if each individual used the particular form that best
suited them, which is why the need to use uniform and continuous skeletons, if
possible, is imposed on the bank. For this reason, the use of pre-printed forms by
the bank contributes to proper handling and, most importantly, to providing an
element of evidence regarding the circumstances of the deposit.
Whoever verifies a deposit in their current bank account, a deposit that is
otherwise transferable, as we have seen, needs to be able to later prove the
circumstance of the deposit for the management of their own accounts and to
support a discussion on possible differences that may arise with the banking
establishment regarding the amount or nature of the securities recorded. The
bank's obligation consists of issuing a receipt that certifies the verification of the
deposit, for which the prior preparation of deposit forms allows the necessary
operational management to be reconciled, through uniform formats, with the
possibility of delivering a signed copy of them. by a bank official and usually
covered by a printed accounting record, so that it serves as efficient proof to the
holder of the current account.
Furthermore, it should be noted that, according to some legislation, the receipt
issued by the bank constitutes full proof of the deposit, which, to the practical
purposes already mentioned, is added the express legal provision that converts
the issuance of the receipt and the provision of suitable forms in an obligation
borne by the banking institution.44 This obligation can be translated into the
settlement verified by the same bank in the booklet that the current account
holder keeps for this purpose, although this system is practically reserved for
savings accounts, for reasons, It is even of a social nature and is of remote
application in the practice of the current bank account.45
4.2.2.
Checks or checkbooks
For a long time and certainly in some legislative systems or within certain
banking practices, it was up to the account holder to issue checks on common
papers whose only validity requirements consisted of meeting the minimum
requirements established by law or by contract. This practice, however, is almost
relegated to oblivion in our systems because account holders are required to use
forms previously printed by the bank or authorized by it.
In most cases, banks directly prepare check cards or checkbooks where the
fundamental requirements of the check are printed, such as the name of this
security, when legislation requires it, the name of the drawn bank and the spaces
intended to fill in the place and date of creation of the instrument, the amount for
which it must be paid, the name of the beneficiary and the signature of the
account holder, which is usually accompanied by a pre-printed notation with the
account number and, sometimes, with the name of the owner. This practice leads
to the formal requirements of the check being completed easily, if it is noted that
many of them are suggested in the form or are hinted at through the blank spaces
left in the title.
Checks, furthermore, and for security reasons, are frequently manufactured on

papers with some guarantee that are protected by backgrounds of certain colors,
watermarks, fugitive inks, etc., to a greater or lesser degree depending on the
insecure conditions of the respective country and to avoid, as far as possible,
falsifications due to alteration of the content of the title.46 As an exception,
banks authorize major clients to create their own checkbooks in which they wish,
for example, to incorporate the symbols of the respective societies, but in this
case a judicious attitude indicates the convenience of the bank enshrining
additional clauses to the bank current account contract, which provide that, by
virtue of this authorization, the bank is relieved of responsibility for cases in
which which the less rigid forms used by companies can facilitate the alteration
of the instrument. In any case, the bank will ensure that, to the extent possible,
these titles meet the minimum security requirements established by the law and
the regulations of the surveillance entities or the internal provisions of the
institution.47
The bank's obligation to provide its clients with checks or checkbooks has reason
to exist, from a legal point of view, as long as the law establishes as an essential
requirement that the check must be issued in this form. Such is the case of the
INT AL project and of some legislation in Latin America that even sanctions the
issuance of a security in the form of a check in a different form, with the loss of
the effects of securities.48
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35. Colombia. Current accounts in foreign currency may be opened
exceptionally. In this regard, see article 55 of the Exchange Statute, which allows
opening current accounts abroad with currencies acquired in the exchange
market; and numerals 5.1 to 5.5. of chapter 1 Title III of Circular 007 of 1996
Banking Superintendency.
Mexico, art 269 LGTOC; Honduras, art. 959 C. Co.; Colombia, art 1382 C. CO.
36. The Banking Superintendency has reiterated some definitions in a recent
concept. nes made by the Supreme Court of Justice, in a ruling of October 5,
1982, among which, the affirmation that banks are authorized to reject deposits
when current account holders intend to make them without complying with the
requirements that the bank has established in its regulations because the
"rejection is justified because the consignor has failed to comply with the rules
that must be observed in the preparation of the respective forms." Later, however,
he warned that "if the account holder, through his or her carelessness, incorrectly
fills out the deposit forms and the bank negligently accepts them as such, and
does not reject the defective deposit or does not draw attention to that
objectionable fact, the one and the other commits notorious guilt" (Concept
19990775320-2 January 19, 2000).
37. In Colombia, for example, the bank is obliged to receive deposits in money
and checks, as established in article 1382 of the C. Co. Igual El Salvador, art.
1189 C. Co. and Costa Rica, art. 612 C. Co., where banks receive money or other
creditable securities immediately.
38.V. Supra Chap. 111,3.12.1.
39. The clause "unless good collection" or another equivalent is enshrined in law,
among others, in Colombia, art. 1383 C. Co.; Mexico, art. 269 LGTOC which
establishes "unless otherwise agreed", Honduras, art. 959 C. CO.
40.V. Supra Chap. 111, 3.4.3.1. and in/ra Chap. XI, 9.
41. Colombia establishes this by saying that "in the deposit of money, if it is not
in a closed chest, the key to which the depositor has, or with other precautions
that make it possible to take it without fracture, it will be presumed that it is
permitted to use it, and the depositary will be obliged to restore the same amount
in the same currency", article 2246 C. c.
42. MUÑOZ, Luis. "Financial Legal Contracts and Business", Volume 11,
Special Part, Edil. University, Buenos Aires 1981, p. 330, maintains that 'to
facilitate the
deposits, financial institutions enter into legal agreements or agreements with
their clients through which they receive suitable containers, which have their
corresponding number, provided with padlocks with two keys so that the account
holder can deposit deposits from outside the building in hermetically closed
cubicles or boxes - which the client can open -, the financial institution incurs the
duty of vigilance, and may terminate the business without giving cause. The
current account holder can withdraw the container when the entity is open to the
public, and make the deposit in the ordinary way."
43. Colombia, article 2249, C. c.
44. Mexico, art. 274 LGTOC; Honduras, 964 C. AC.; Four. Five. Colombia, art.
1386, C. AC. Colombia. Supreme Court of Justice. Sentence current/82. M. Q.
Germán Giralda.
46. Colombia. The Supreme Court of Justice, in a cited ruling, has said in this
regard: "In order for the bank to fully comply with this obligation (refers to its
obligation to pay checks up to the amount of the respective balance) and for the
current account holder to exercise the correlative law, in practice that begins by
delivering to it, gathered in a checkbook, a plural number of forms or skeletons
that contain printed all the indications and requirements of the check, prepared by
the bank in compliance with the pertinent legal requirements of course, with
blank spaces, in relation to the place and date of issue, the amount, the name of
the beneficiary and the signature of the drawer" (Sent., juI./94).
47. We have maintained that in countries in which checks are cashed for a value
significantly higher than their cost - and this is the case of Colombia - what
ultimately happens is that they end up being charged for the administration of the
account. Indeed, the administrative cost of internally processing the payment
process of a check is usually significant and is identical regardless of the value
for which it has been drawn. This means that it costs the same to process the
payment of a check drawn for 10,000 as for 1,000,000. Well, since the lowest
average accounts tend to be, at the same time, those in which checks are drawn
for a lower value, the beneficial margin that their sale produces for the bank
becomes an economic compensation that is not always easy. to collect or that
would be done for a fixed sum, while by this means it generates a variable
income depending on the volume of checks drawn, that is, the use of the service.
Intal, art. 101;
4.3. KEEP A CURRENT ACCOUNT AND PROVIDE DATA ON YOUR

STATUS
Under this obligation we cover two closely linked assumptions. On the one hand,
and as we noted, the support of the bank current account lies in the accounting
entry that allows the client's credits and withdrawals to be recorded and the
existence of a balance in their favor or against, in the hypotheses in which this
becomes possible. This obligation is, above all, an essential need for the bank,
since adequate attention to the constant movement of credits and withdrawals
could not be conceived without accounting support that would allow it to
immediately determine the existence of available balances in favor of its client.
The bank could not pay calmly and with certainty, without having this
fundamental work instrument. But, in addition, based on these records it is
possible to provide the clientele with an extract or statement of account that in a
certain period, relatively short according to the trend, reflects the total movement
of credits and charges and the balance existing on the cut-off date. .49
This obligation may entail returning checks that have been issued during the
same period and that must remain in the bank's possession because they have
been presented to its coffers or through the clearing house. 50 The checks,
however, may be in the possession of the banks in which they have been
deposited by the beneficiaries, if their clearing has been done electronically and
at least with respect to those whose circulation has been truncated. 51
The sending of the statement is, finally, of significant importance because from
the date on which the client is notified of the status of his account, he can
formulate any objections or concerns that it may cause, because a deposit has
been omitted or has been registered for a different amount or because debits
appear in the account that are not justified in the opinion of the owner. The
responsibility for the bad payment of a check will be seen in the next point.
4.4.
PAY THE CHECKS
It constitutes the primary obligation of the bank since, as we have seen, it
corresponds to the primary power of the account holder to dispose of his
balances, that is, to reimburse himself for the sums that he has deposited in the
credit institution and of which he is credited. or. Paying is, in other words, the
concrete expression of the depositary's fundamental obligation to return the sums
it has received in deposit. That is why we can affirm that the law and even the
banking regulations are very jealous in this matter and sanction the bank both for
not paying, when it should do so, and for paying poorly, in cases in which this
payment is verified irregularly and, Sometimes they force you not to pay.
It must be remembered that the obligation to pay runs exclusively against the
drawer, that is, the bank has no exchange relationship with the holder and,
consequently, the holder has no action against the drawee establishment.
Statement that is directly related to the problem of the legal nature of the
authorization to cash the check and that ultimately touches on the relationship
between the issue of the instrument and the way of disposing of the provision.
In systems in which it is understood that the fact of issuing a check implies
transferring the existing provision in the hands of the banker, up to the
concurrence of the sum expressed in the title, the logical consequence is contrary
to what we have just explained in the sense that The assignee can directly address
the drawee bank. In our legislation, however, the general thesis is that the holder
of the instrument has a direct relationship with the issuer of the same, which is
regulated by the general provisions on securities, but which is unrelated as it is to
the legal link with the drawee bank. , cannot be directed against him. That is, the
beneficiary or legitimate holder of the instrument is considered a third party
authorized to receive payment in the name or by order of the drawer and the bank
is released to its client until the sum paid is met, but without the holder has the
power to directly demand said payment. From which it follows that in the event
of the eventual rejection of payment by the bank, the beneficiary has no other
alternative but to direct the corresponding actions against the issuer of the check,
its guarantors and the other endorsers.52
This fundamental obligation implies a set of accessory charges, pre
- via or simultaneous with the payment itself, which refer both to the forms of
validity of the title and its formal regularity. And it is a duo because functionally
the existence of a double relationship can be recognized, which we have called
"external" which refers to the circumstance that the client writes checks to third
parties, ordering the bank, therefore, to pay them to them or to who turns out to
be a legitimate holder, as a consequence of their negotiation and what we have
called "internal" that touches on the existing link between the client and the bank
by virtue of the conclusion of the current account contract. While the former is
disciplined by the application of securities regulations, the latter is regulated by
the legal and contractual provisions of the legal business that binds the parties.
4.4.1. Requirements verification
4.4.1.1. Validity requirements
The first examination that the bank must make of the check that is
presented for payment - by virtue of the "external" relationship - is the
verification of the requirements
essential elements provided by law so that it can be held as a security. Among the
fundamental ones we will mention the following:
to)
Bank released
The check must contain the name of the drawn bank, that is, the recipient of the
payment order; requirement that in practice is usually met automatically by
printing on the same checkbooks made by the credit institution, but whose
existence is essential to verify that it is a check drawn on that bank and not
another.
b)
Incorporated right and opportunity to exercise it
Since the check is a security with credit content, that is, it incorporates the
obligation to pay a specific sum of money, it must express the unconditional
order to do so.
The possible existence of a term is incompatible with the very essence of the
instrument, for most legislations. The inclusion of a clause that establishes the
opposite produces one of two consequences, depending on the systems: either the
invalidity of the instrument, that is, the possibility of considering it ineffective
against the bank, or the possibility of considering the annotation as not placed,
subtracting all effectiveness of the clause, but without affecting the existence of
the security. 53 With this last solution, without compromising the existence of
the title, the Ineffectiveness of the clauses intended to establish a period in
relation to the date of issue is reiterated in practical terms, in accordance with the
general principle according to which the check is always payable visible and,
therefore, payable upon presentation.
c) Date and place of creation
Both requirements are fundamental to determine the presentation deadlines
established by law, especially when a different deadline has been established
depending on whether the check has been issued to a bank in the same location or
to a bank in a different location and even from abroad.
Regarding the date, a problem closely linked to the one we just mentioned, two
abnormal possibilities arise: antedating, or inserting a date prior to its creation,
which, if it does not affect the essence or validity of the check, introduces an
element of risk for the beneficiary because upon receiving the check it may
happen that, formally and externally, it may appear that all or part of the
presentation deadlines have passed; and the postscript which implies the mention
of a later date. We have already seen the consequences if you try to translate the
existence of a deadline against the principle that the check is always payable on
demand, except in the case of deferred payment checks which, precisely,
establish the opposite. Added to that, in some systems, the beneficiary of a post-
dated check is criminally sanctioned for assuming that only a creditor of usurious
loans can impose on the debtor the issuance of the title in that form, to have, in
turn, the pressure of criminal action that may arise in your favor if the check is
not paid due to lack of funds or other similar reason. It is considered, therefore,
that it is a type of "extortionate" use of the check. 54
d)
Legitimation of the holder
In order to be released by paying the check to the person who presents it, the
bank must apply the principles of the circulation law to which it has been subject,
which cannot be different from that resulting from the check having been created
to the order or to the carrier. In the latter case, as we saw, any holder who
presents it is entitled to collect it. In the first, the holder must be the last link in an
uninterrupted chain of endorsements, which imposes on the bank the obligation
to be unequivocally identified.
e) Signature of the subscriber
This is a fundamental requirement because a security cannot be conceived

without it having been signed and because of the comparison between the
signature imposed on the check and the one registered in the bank, the latter can
proceed with the awareness that it is complying with the order of payment given
by the account holder. Is
That is to say, that the bank's primary obligation to pay will be fulfilled
satisfactorily as soon as it responds to the orders of the client authorized to do so
and to do so it must verify that the signature imposed on the title corresponds to
that of the client.
4.4.1.2.
Regularity requirements
Which arise from the relationship that we have called "internal" and among
which we can mention the following:
to)
drawer's checkbook
The bank must verify that the check issued to it, in addition to meeting the
requirements established by law, is issued in a checkbook or a check book
delivered or authorized to the account holder, which results from the numbering
of the check itself. check presented and its comparison with the records
established and held by the bank. It could be a bank checkbook but assigned to
another drawer, in which case the requirement would be considered unfulfilled.
b)
Formal regularity
The check must appear clear and completely presented without any alterations,
erasures or scratches being recorded in its text that suggest adulterations of the
title and therefore, a modification of the will expressed by the account holder.
And furthermore, that the skeleton, due to its conditions of size, typographical
printing, colors, paper quality, etc., corresponds to those delivered or authorized
by the bank, to avoid the payment of an entirely forged check.
c) Agreement between the mentioned quantities
It is common for the amount to which the order refers to be expressed both in
figures or numbers and in letters. In this case the bank must verify the identity
between both expressions. If there is not one, the solutions will be diverse
depending on the systems: a) that the bank is authorized to reject the check so
that the holder clarifies the amount that he really wanted to express and thus
overcomes the inconsistency found; b) that general rules be applied to save it and
that they consist of taking the amount expressed in words in preference to that
stated in numbers, as the legislator or the respective current account contract
considers that there is a more reflective and conscious attitude when the
person expresses the quantity in words than when he puts it in numbers, as also
indicated by experience. 55 If several quantities appear in figures and words and
are diverse, the tendency is to choose to consider the smaller one as valid.
To conclude, it can be said that in the payment of a check the bank must take all
the precautions that, by mandate of the law or by the particular prudence with
which credit establishments must act as professionals, seem necessary or
convenient to verify that the payment order has been issued by the person who
has the right to issue it and that it has been issued in such a way that it satisfies
both the requirements established by law and the standards derived from the
contract; that the will stated in the title apparently corresponds to that of the
account holder since there are no alterations or modifications that could suggest
an illegitimate modification of the same and the order has been issued in a form
authorized for this purpose.
4.4.2. Just reasons for not paying
Although it is derived from what was seen in the previous point, we treat this
aspect separately to emphasize that, as the bank's primary obligation is to pay the
checks, not doing so must necessarily be based on a just cause, including the
hypotheses in that he is obliged not to do it. The problem is not difficult if the
law establishes exhaustively or, at least, by way of example, some justifying
causes for non-payment. It becomes a little more complex when the bank is left
to its own discretion to evaluate the circumstances on which it bases its refusal.
And this, since unjustified non-payment of the check, generates significant
responsibilities and sanctions for the bank.
In any of the cases, that is, if the just causes are enshrined in the law or
regulations or result from custom, they may be, among others, the following:
4.4.2.1. Failure to comply with check existence requirements
If the check cannot be considered as such because it lacks some of the

requirements or if its external appearance is inadequate because, for example,
there are alterations, smudges, scratches, etc., or the holder who intends to collect
it is not legitimate in accordance with the exchange regulations, the bank has just
cause to deny payment.
4.4.2.2.
Failure to comply with regularity requirements
The lack of any of those we have mentioned would also result in the bank
refusing for just cause to pay the instrument. But we want to emphasize the lack
or insufficiency of funds due to the particular relevance that this cause has, both
practically and legally.
We will see later that the logical prerequisite for the client to be able to issue
checks consists of having a supply of funds, either as a result of the creation of a
deposit in an account, or as a consequence of a credit granted by the institution,
as in the case of a opening credit usable in a current account or a specific
authorization to draw an overdraft, if not prohibited by law. Consequently, if
there are no funds, the bank has full justification for not paying, among other
things, because its obligation only arises from the existence of a credit under its
charge, resulting from one of the aforementioned causes.
In the case of insufficient funds, the situation will depend on the regulations of
each country. If the figure of partial payment exists, the bank may not refuse to
pay but must pay until the available balance is reached. In legislations in which
this figure is not admitted, the bank finds in the insufficient funds a reasonable
and legitimate cause to refrain from paying.
4.4.2.3.
Untimely presentation of the check
This cause is very important because if the lack of timely presentation of the
instrument produces the expiration of the holder's actions against the drawer and
the previous parties and consequently extinguishes the exchange action, the bank
would have full justification in not paying, supported by the very benefit of the
account holder, since he could prevail in the trial of the exception of expiration
and be relieved of paying the check, at least through exchange.
It could even be argued that in this case, rather than a justification for non-
payment, we are faced with an obligation not to pay, as we will see later.
The solution is different when we find a system like the one established by the
INT AL that actually distorts the figure of expiration and allows under certain
conditions that the check can be paid, even if it is presented untimely. Article 115
of this project states: "even if the check has not been presented on time, the
drawee must pay if he has sufficient funds from the drawer, the check has not
been revoked and it is presented within six months from its date. ".56 The
disturbance arises because if expiration operates for parties other than the drawer
and his guarantors due to the simple lack of presentation on time, it cannot be
invoked by the drawer and is translated into a kind of grace period for the holder
who, despite having acted negligently, can always present the check a little later
and, if funds exist at that time, the check will be paid to him.
The reason for this curious modification of the expiration system seems to be due
to the consideration that if the drawer has not withdrawn the funds it is because,
ultimately, he has the desire to comply with his original obligation. Observation
that is not entirely valid from a practical point of view, since it is well known that
people keep in their account resources greater than, ordinarily, the value of a
particular check and, consequently, the existence of funds at a time. given may
not exactly mean that the provision has been maintained to cover that title, which
in principle has expired, but rather to support the issuance of other checks
payable by the bank.
The solution, however, has a positive aspect in that it corresponds to the normal
behavior of the debtor in good faith who, not willing to take advantage of the
lack of presentation, wants to pay the corresponding sum. It is also supported in
the INTAL Project by the circumstance that late payment only takes place if the
order has not been revoked, with which it can be stated that the owner who wants
to benefit from the non-submission has a simple file in his hands. to inhibit
payment.
4.4.3. Partial payment
Partial payment consists of the possibility of downloading the instrument for a

part of its value. It is due, however, to factual circumstances, since it is not a
question of the bank's discretionary power to pay less, if there are sufficient
funds, but rather that these are not sufficient and, therefore, the check cannot be
paid with the existing balance. for its total value. Partial payment constitutes an
exception to the general principle of obligations according to which the creditor
has the right to have the obligation satisfied in the manner and terms originally
agreed upon. It is not possible, therefore, according to him, for the debtor to
modify the form of payment and when a sum of money is involved, he is obliged
to satisfy the entire debt, and the creditor may reject the partial payment or credit
that he intends to make. .
~,
The legitimacy of the institution in matters of securities has been defended,
however, for two fundamental reasons linked to the negotiating structure of these
instruments. It is considered, first of all, that in commercial matters agility and
speed are essential and, in that order of ideas, it may be more convenient for the
creditor to obtain part of the amount owed rather than getting involved in a
judicial controversy than if, presumably, , will favor it, but still has the
cumbersome natural delays of a process susceptible to resources, terms,
procedures, etc. Consequently, to the extent that the acceptance of partial
payment does not deteriorate the legal position of the creditor and the creditor
can exercise exchange action for the unpaid balance, it cannot be considered that
there is, strictly speaking, a loss, but, rather, a benefit as Practice indicates this, as
its liquidity requirement is resolved, even partially.
\
Let us also remember that by virtue of the mechanics of securities, the holder of
the check is entitled to address not only the issuer but also against the previous
parties, that is, against the endorsers who have preceded him in holding the
instrument. . For this reason, the holder enjoys a wider range of possibilities the
greater the number of obligated parties.
The second aspect that is taken into account is that the position of the previous
endorsers, who guarantee the solvency of the debtor and are obliged to pay in
case the debtor does not do so, is significantly improved with the figure of partial
payment. In effect, if the creditor accepts or is constrained, according to the
systems, to receive a partial payment, the endorsers of the obligation will be
released from it until the payment is made without deteriorating, as we said, the
creditor's position. .
In conclusion, since the creditor's right to the rest is not harmed and instead an
obvious benefit is derived for the endorsers and the drawer himself, the
commercial doctrine has been inclined to defend this figure in matters of
securities.
4.4.3.1. Legislative regulation
To refer to nearby investigative sources of undoubted interest, let us remember

that the figure of partial payment appears enshrined in the Geneva Uniform Laws
on bills of exchange and checks. Indeed, article 39 of the bill law establishes that
"the bearer may not refuse a partial payment", a principle echoed by article 34 of
the check law. It was adopted by several Latin American legislations regarding
the impossibility of the holder, in principle, to reject such payment. 57
The INTAL project, in its article 81, adopted the principle for bills of exchange
and other instruments to which its principles apply, but it separated from the
Geneva regulations regarding checks, by establishing the power for the holder to
reject partial payment, as can be seen from reading articles 111 and 113 of the
aforementioned project. It established, however, the obligation of the bank and
the issuer to offer partial payment to the holder so that in this way he can exercise
his option. Therefore, the bank is liable to the drawer both for non-payment of a
check and for failure to offer partial payment. Perhaps thinking that the check is a
payment instrument rather than a credit document, the author of the project
considered that, although the figure of partial payment should also be established
for checks, its effective implementation should be left to the free decision of the
fork.
There is another aspect on which it is interesting to establish a clear point of
reference. Admitted that it is partial payment and taking into account the general
principles of securities and in particular that of incorporation, which translates an
absolute identity between right and title, the logical consequence leads to the
holder writing down on the instrument the amount paid and the unpaid balance
and keep the instrument in your possession, providing a receipt to the debtor for
the amount paid, if necessary. Logical conclusion that allows the holder to
exercise his exchange actions for the unpaid balance.
The INT AL Project separated itself from this solution and said in its article 313
that "if the holder accepts partial payment, he or she will deliver a certificate
containing the fundamental elements of the check and the amount of the payment
made." This certificate will replace the title for the purposes of exercising the
corresponding actions against the obligated parties. 58 Why, one might ask, this
modification proposed by INT AL? We understand it as a correct forecast in the
face of a felt and not always controllable risk, linked to the possibility of
falsification or adulteration of the instrument.
Think of a check that, having been drawn for 1000, is adulterated and presented
to the bank's coffers for 10,000. Suppose, furthermore, that the holder's available
balance is 7,500 and that, given the impossibility of paying the title for its full
value, the bank offers the holder partial payment for that sum. He accepts it,
delivers a receipt to the bank, within the general system and recovers the title,
supposedly to exercise exchange actions for the balance. However, once the
account holder was notified of the payment, through the periodic statement, he
complained to the bank for improper payment and stated that the check had been
drawn for 1000 and, consequently, the apparent "partial payment" made by the
bank for 7,500 is equivalent to a poor payment for the difference. Well, in this
hypothesis the client would have to prove the bad payment made by the bank
with such bad fortune that the reliable proof of the adulteration has remained in
the hands of the holder, that is, the criminal. Which in other words means that by
virtue of the application of the general principle, the author of the crime takes the
only efficient evidence to demonstrate the commission of the crime and allow the
client's reimbursement action against the bank to succeed.
Given this hypothesis, more for the security of the clientele than for that of the
bank itself, the solution of the INT AL Project is impeccable, because the receipt
issued by the bank reproducing a check and with the mention of the unpaid
balance would serve the same title function. executive, with the advantage of
leaving the partially paid check in the bank's possession and at the disposal of its
client, as unequivocal proof of the payment made.
4.4.3.2. Partial payment and provision
One last note to overcome, in advance, a misunderstanding that usually arises on

this matter. In fact, some ask whether the existence of partial payment, especially
if it is mandatory for the accepted payee, will not imply a lack of knowledge or a
modification of the general principle according to which the account holder must
have sufficient provision to be able to issue the checks. It is clear that not, since a
teleological study of the figure confirms that it seeks not to harm the recipient of
the check and indirectly benefit the third parties involved. That is, the bank's
obligation to offer partial payment, although assumed towards its client, is linked
to the interests of third parties with whom it has no direct legal relationship, but
which the law recognizes to protect them. On the other hand, the client's
obligation to have sufficient provision results from the contractual relationship
with the bank and is the logical budget necessary for the holder to issue checks.
In effect, one cannot dispose of anything other than that which has previously
been left in the hands of the banker or constitutes the amount of a credit opening
granted by him.
In short, it is one thing that the bank in its relations with the drawer, its client, has
the obligation to offer partial payment to the holders of the checks and for the
benefit of them and the parties preceding them; and another, completely
different, that by fulfilling that obligation for the benefit of third parties the
account holder is relieved of having the necessary provision to support his
payment order. All the more so since in some countries the writing of checks
without sufficient provision is classified as a criminal act and, therefore, subject
to criminal sanctions. 59 It could not be argued, in our opinion, that the
incorporation into a legislative system of the figure of partial payment can
legitimize the conduct of the holder in terms that it is no longer punishable by
criminal law. But this is, of course, a problem that far exceeds the content of our
work and must be studied in light of the particular provisions of each country.
4.4.4. Liability for poor payment
We have said that paying constitutes the bank's fundamental obligation to return
the deposited sum. We have seen how the payment should be carried out, what
requirements must be verified by the bank, in which cases it could be understood
that there is a just cause for not making it and, finally, what the figure of partial
payment consists of. We must now study what happens when the bank, believing
it is fulfilling its main obligation, makes the payment improperly. Warning that
the liability that may arise for the bank must be based on the existence of damage
to the owner, for whose compensation the entity can be validly sued. In other
words, the eventual irregularity in payment may be irrelevant, from the point of
view of the liability of the drawee. If, despite, for example, defects in substance
or form of the instrument or non-compliance with any of the requirements whose
existence the bank must verify, the payment is made to the person authorized to
do so, he or she will have nothing to claim from the issuer of the instrument.
check nor the last one will have support to be able to sue the bank, since no
damage has been caused. Which, in summary, means that not every irregular
payment constitutes a bad payment and that we reserve that qualification for
those cases in which damage is caused and, therefore, an eventual liability arises
for the bank.
The hypotheses that cause poor payment can be classified into two large groups.
Firstly, the payment made without due verification of the general requirements
regarding the validity and regularity of the instrument, which will give rise to
liability as soon as the production of damage as a consequence of the bank's
conduct is proven. Although it can happen, there are many examples taken from
practice in which what happened turns out to be inane. And secondly, the bad
payment linked to the falsification of the signature or the form or to adulterations
in the text, which because it implies the commission of malicious acts allows it to
be presumed that they have been made to obtain an undue benefit to the
detriment of the patrimonial interests of the account holder and usually match it.
In relation to the first group of cases, it is enough for us to observe that, in many
cases, irregular payment, which could be described as bad payment by some,
does not produce liability on the part of the institution for not causing damage to
its property. customer. Let's take the case of a person who issues a check payable
to the drawn bank but omits to include the expression check, which we are going
to assume is an essential element of the title in the respective country. The bank
does not notice the omission and proceeds to pay it to the beneficiary. Well, in
this case, although the title was considered a check, which was not a check, the
payment order was attended to, the beneficiary received the sum and has no
claim to make to the owner. There is no essential budget that would allow the
payment to be classified as bad and a liability for the banking establishment to be
deduced. And the same thing could be said in relation to meeting the essential
requirements to have the security as a check at the time of its presentation.
But if other aspects of irregularity, so to speak, were presented, as if the

policyholder was not strictly speaking the last link in an uninterrupted chain of
endorsements - Juan, beneficiary, negotiated it with Pedro but did not endorse it
and the bank would not realized this at the time of making the payment - so that
from a technical legal point of view his legitimacy to collect could be glossed,
this circumstance would also be irrelevant to the extent that any person claimed
for the fact of the payment or the manner how it was done; nor did the client, on
the other hand, reject the debit on account because it corresponded to the amount
for which he had issued the order.
Therefore, it is in the existence of the damage and in the possibility of attributing
it to the bank that the problem of bad payment of the check must be studied.
In the second hypothesis of irregularities, the one that deals with alterations,
smudges, scratches and, specifically, with the falsification of the instrument or
some of its essential parts, it can be argued that in the majority of cases and
insofar as it involves fraudulent conduct, damage will occur and, therefore,
eventual liability for the bank. Perhaps that is why legislation and authors, when
talking about liability for bad payment of a check, often limit themselves to
dealing with only this aspect of the problem.
Of course, as in the previous case, if despite the existence of an erasure the bank
pays by satisfying its client's order, so that neither the payee can claim against the
drawer nor the latter against the bank, the irregularity in which the latter has
incurred is irrelevant from the point of view of contractual liability.
That is why we limit ourselves to studying the cases in which the adulteration
modifies some of the essential elements such as the name of the beneficiary,
replaced by that of another person, or the amount for which the check was issued
is increased or the date of issue is modified. issuance to prevent expiration from
operating, etc. In all these examples, the payment verified by the bank can
translate into harm to its client, immediately, when they pay an amount greater
than that for which the payment order had been issued, for example, or
mediately, when they pay to a person other than the beneficiary and he sues him
and wins in court in a way that enables him to repeat against the bank. The laws
on checks are not very fortunate in relation to this last hypothesis, since the
deadlines for the claim by the holder correspond to assumptions that do not
ordinarily fit into the one we have just mentioned.
The claim for bad payment means that the account holder finds out about said
payment. And how does he do it? Through, as a general rule, the receipt of the
account statement or the periodic statement that the bank must send you and that
we have discussed in this same chapter. It is from that moment that the client can
realize, at least in most cases, that a bad payment has been made for the aspects
that we have been observing. This happens if check number 2732 on your
account was issued according to your records for 100 and appears paid for 1,000
or if there is a charge on your account that corresponds to a number of checks
that has never been part of your book, to name two hypotheses. frequent. Which
in other words means that you cannot claim for a payment before knowing the
account debit through the statement we have referred to or receiving the original
checks that the bank has paid, if this does not occur simultaneously.
We said, however, that legislation is not usually very fortunate in this regard
because the hypothesis is not covered there, for example, that the falsification
consisted of changing the name of the beneficiary so that a third party,
substituting it in an abusive manner, could present itself to collect the instrument.
The verification of this type of falsification will only be possible in cases in
which the original of a paid check is received, but not when only an account
statement is sent, by reading which the owner can verify that the check number
was such. paid for the certain sum, which corresponds precisely to its records and
only later, when the person in whose favor it had been issued and sent by mail,
for example, demands payment of the fundamental obligation that gave rise to its
transfer, does it the commission of a crime that until then had been in the
shadows became evident. Therefore, we go ahead to observe how, in this
hypothesis, the rules that we will mention below on deadlines and expiration
would not be applicable, strictly speaking, since it seems inequitable to speak of
an expiration in relation to a fact that would generate an action, but it is unknown
to the person affected by it, unless their ignorance is culpable in light of
commercial practices.
The systems adopted by the legislation are based on the premise consisting of
notification to the account holder of the status of the account and the
establishment of a period from that moment for the client to express his
agreement or the objections that the client has. deserve, assuming that if the latter
is not formulated within that period, the action that would be taken against the
bank to claim for poor payment is extinguished. That is, the client is required to
behave positively if he wants to substantiate his claim, consisting of expressly
expressing his rejection of any of the charges listed in the statement, within a
certain period.
The term is usually relatively short, such as a fortnight or a few months and has
more or less force before judges if it is established by law or results from a clause
printed in the adhesive contract concluded. In any case, the existence of a period
to complain is logical because, otherwise, there would be a permanent state of
indefinition in relation to accounts that the client has had the opportunity to
study, analyze and gloss, if any disagreement has been found. 6° That is, with the
application of the principle of a presumptive period, the bank will be released
from its responsibility for the sole circumstance that the claim is not made in
time. Once the claim is filed, the resulting judicial action is subject to the general
prescription periods or the specific ones established by law in each country.61
Regarding the bank's responsibility for having paid a forged check or whose
amount has been altered, there are two fundamental theories that constitute
representative examples of what may be a legislative and doctrinal evolution in
this sense.
Firstly, the so-called theory of "created risk" or "professional responsibility"
according to which banking activity entails natural risks that must be assumed by
those who professionally, that is, repeatedly, publicly and massively, benefit
from the results of it. If the bank's business is to manage other people's money, if
as a result of the deposits constituted a credit arises in favor of the account holder
and if, finally, the primary obligation of the credit institution is to reimburse that
holder for the money in the form in which he indicates it and in favor of whoever
he establishes, it is evident that the risk derived from possible impersonation,
adulteration of the figures, etc., does not
may harm that owner, but must be assumed by the bank. In accordance with this
theory, if it is proven by the client that his signature, for example, was forged or
that the amount for which he issued the payment order was adulterated, the bank
would have to respond for the damages caused. If it is proven that the check was
issued for 100 and that the amount was adulterated and paid for 1,000, the bank,
by virtue of the application of the theory of created risk or professional liability,
must reimburse the difference of 900.62
The theory of fault - the traditional support for responsibility - on the other hand,
before being based on the objective verification of the falsity or adulteration and
deducing an automatic consequence from there, incorporates a subjective
qualification aimed at specifying under what conditions the bank was able to
appreciate the said forgery or adulteration and to what extent the account holder
contributed through his or her fault to the existence of forgery. In other words,
the conduct of the parties regarding the factual circumstances in which the
payment occurs or its antecedents is decisive in order to evaluate eventual
liability. In this theory then, by application of general principles of responsibility,
the establishment of fault on the part of one of the parties can lead to the integral
responsibility of the same or the eventual presence of shared faults can translate
into a distribution of responsibility that, In turn, it leads to a proportional
distribution of the pecuniary damages suffered.
In any case, the general principle, even within this theory, remains that the bank
is responsible for the payment of a false check or whose amount has been altered,
because its obligation is to pay in accordance with the customer's instructions and
failure to do so constitutes a clear breach. Consequently, if the fact is proven in a
process, it is up to the bank to prove that there was fault on the part of its current
account holder or its representative, its factors or dependents, that is, those
people who acting on its behalf have been able to oblige. Seen another way: in
response to the client's claim, it is enough for the bank to present the check based
on whose payment it proceeded to debit the client's account, before which the
client must prove the existence of forgery or adulteration. If established and to be
exempt from liability, the bank must be in a position to prove the fault of the
owner or of the persons who may act on his behalf.63
Some legislation establishes the cases in which the bank must respond for the
consequences of the payment of a check and the cases in which the drawer is
responsible for the falsification of the instrument, that is, they expressly refer to
the different hypotheses to specify the assumptions that generate fault on the part
of the owner. Most legislations, however, leave this problem to the free
discretion of the judge.64 The INTAL in its article 123 establishes: "The
alteration of the amount for which the check was issued, or the falsification of the
signature of the drawer , cannot be invoked by the latter to object to the payment
made by the drawee, if the drawer gave place;. to them through their fault, or
through that of their factors, representatives or dependents". Provision from
which it can be concluded, acontra sensu, that, if this fault does not exist on the
part of the account holder, the responsibility corresponds to the drawee bank.
What could be the culpable conduct of the current account holder invoked by the
bank? Some are inferred by law or regulations from what we could consider a
breach of the custody obligation over the checkbook that we will mention later.
In this case, it can be foreseen that if a check delivered to the drawer is forged
and the forgery was not clearly visible, the bank should not be liable for the bad
payment, because once the booklet is in the possession of the client, he assumes
the risks of its custody
and utilization. The falsification or impersonation of the signature made on one
of the checks means that it has left the hands of the holder due to carelessness on
his part or has been issued to an unknown or disreputable person or, at least on
those assumptions, it operates the legal or contractual provision that may lead to
establishing the responsibility of the current account holder.65
But outside of this case, which is truly rigorous with the headline, even if logical,
one can imagine some other examples that are not always easy to prove in a
process, but which can be conceived as reasonable. If, for example, the bank can
prove that the account holder used to leave signed blank checks on his work table
to fill out later or gave them to an employee in his office so that he could fill
them out to the extent necessary. that were required, there would be no doubt
about the assumption of a risk, since any person who had them within their reach
would be in a position to fill them, in the first case, or their employee or a third
party, without their knowledge or against their will. , do the same at any time. If
it is proven that the account holder, when filling out the check, left spaces that,
contrary to the usual recommendations of the bank to its clients and what
elementary prudence says, allow intercalations that, carried out with skill by third
parties, would appear logical in the context of the instrument. ; If, finally, against
the bank's express recommendation not to issue checks to the bearer or to
unknown persons, it could be proven that the client, under inadvisable
circumstances, did so; In all these and similar cases, the bank would be in a
position to support, with some probability of success, the position of non-
responsibility, based on the fault of the account holder as a result of which the
falsification or adulteration was facilitated.
To conclude, it is worth noting that there are hypotheses in which the client's
position is weak from the beginning since these are facts or circumstances that
may indirectly contribute to the commission of the crime, of which the client is
aware and which he does not timely put into account. knowledge of the drawee
bank. This occurs when the client has lost his or her checkbook or it has been
stolen or stolen, which, either because the law establishes it, or because reason
indicates it, must be immediately communicated to the bank so that it can take
extreme precautions. aimed at avoiding bad payment. If this notice is not given,
the client's fault may become exclusive, that is, having to assume the entire loss
caused by the eventual falsification or create less severe conditions to judge the
bank, since it will only be responsible in the event that the alteration or forgery
are notorious, that is, they are so grossly obvious that, even if the bank has not
been notified, it must reject the checks by application of general principles. On
the contrary, if it is a falsification or adulteration that can only be detected
through technical expertise, because it is not evident to the naked eye, as is often
the case, since counterfeiters are usually experts, the client must fully bear the
consequences. of counterfeiting.66
4.4.5. Liability for non-payment
If the bank's fundamental obligation is to pay the checks, non-payment implies

non-compliance with it and the corresponding liability. That is to say, the Bank's
position is particularly difficult because it has to pay; If he refrains from doing it
without justification he will be responsible and if he pays poorly, so will he. The
general principle is that the bank must pay the checks that the holder releases to
its responsibility, unless there is a justifiable cause that exonerates it from doing
so or that it is obliged not to pay the checks, by exception, as we will see later.
The normal consequence of failing to comply with the obligation to pay is the
need to compensate the account holder for damages caused by his refusal.
Remember again that the bank, except in the case of certified checks or those
similar to them, is never liable to the holder for non-payment. However, the
holder can sue the drawer to obtain not only payment of the security but also the
interest, costs, etc., that arise from the default and the judicial process. Well, the
drawer, who will have to respond to the holder for non-payment, is entitled to
demand compensation from the drawee bank for the damages caused by its
refusal. Although these damages must be proven and determined in the judicial
process, the legislative trend is to quantify them in advance so that, in any case,
the bank must respond for a certain percentage in relation to the amount of the
check, if it was left. to pay or the proportional part, if the offer of partial payment
was not made, in the systems that allow this figure.
This orientation is clearly enshrined in the INT AL project in its article 112,
which establishes: "When without just cause the drawee refuses to pay a check,
or does not make the offer of partial payment provided for in the previous article,
he will compensate the drawer. the damages and losses caused to you. The
compensation will not be less than 20% of the amount of the check, or the
available balance." 67 The drasticity of the sanction reiterates the special
seriousness with which banks must attend to the fulfillment of their obligations,
but it can be excessive in many cases, especially in those of doubt in which the
bank will have to decide on the justification or not of the cause that can be
invoked to stop paying. And the inequity of the solution is evident if it is noted
that if the bank does not pay for a reason that it considers justified, it does so
precisely to protect the interests of its client and avoid a possible bad payment.
However, if later the judge, in cases in which the law has not specifically
indicated them, considers that the reason invoked does not justify the refusal, the
bank is subject to a very burdensome sanction that could even lead to bad faith
account holder to feel attracted by the possibility that the bank finds itself facing
an ambiguous situation that leads it to not pay.
4.4.6.
Payment and termination of the contract
Under this section we refer to the situation created when the law or regulation has
provided for the possibility of unilaterally terminating the contract without
notice, as we will see in due course. The question is what happens when the
bank, which has made use of this power, is presented with checks that have been
issued, at least apparently, prior to the date of termination.
It cannot fail to be recognized that the power of unilateral termination without
any limitation or restriction could lead to reprehensible situations when the
account holder who has issued a series of checks suddenly finds that the contract
has ended without them having been presented for collection. If the drawee bank
limited itself to returning them stating that the account has been closed, it could
legitimize the borrowers to turn against the drawer, not only demanding the
corresponding interest and other sanctions provided for by law but causing
serious damage. For this reason, legislation has opted for different solutions
when this unilateral termination is possible and especially when there are no
exhaustive causes by law to terminate the contract.
One of the solutions consists of establishing a kind of grace period during which
there can be no talk of termination of the contract and the bank is obliged to pay
the checks presented to it. More properly, it would be a termination of the
account with prior notice, with the period resulting from the latter being allocated
to the presentation of checks that have been issued previously or that, in any case,
are presented before its expiration.68
Another solution would be to terminate the contract immediately, for example,

on the date or the day after the bank sends a letter to the address registered by the
client informing him of its decision, but obligating the bank, in any case, to pay
the checks presented to you up to the availability of the available balance. This
solution, which may seem somewhat curious, in that it makes an obligation take
effect beyond the termination of the contract, has the advantage from the point of
view of equity that, without limiting in time the presentation of the checks that
are in the hands of third parties, reiterates that the bank will pay them as soon as
there is a sufficient balance, which applies the principle of termination, but
avoids the commission of any injustice.69 Among other things because, even if
advance notice is given , third parties cannot always be notified that they must
immediately proceed to cash the checks. In the latter case, the solution could be
that the notice be for a period equivalent to the presentation period provided for
by law for checks so that, as a consequence, subsequent presentation would
always be untimely.
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49. Colombia, art. 728 C. of Cc.; Argentina, art. 793 C. DC.; Panama, art. 989 C.
DC.; Mexico, art. 41 LRSPBC; Honduras, art. 965 C. DC.; Venezuela, art. 523
C. DC. Brazil, art. 51, L. 4728/65; Costa Rica, art. 632 and 621 C. 50. DC.;
Colombia, art. 728 C. Co.
51.V. Supra 4.1.2.
52. Intal, art. 111; Colombia, art. 720. c. Co.
53. They opt for the last solution: ellntal, art. 108; Colombia, art. 717 C. Co.;
Argentina, L. 24,452/95, art. 23, for the common check; Honduras, art. 601, C.
Co. The exception is constituted by the "deferred payment check" enshrined in
both the legislation of Uruguay and Argentina, L. 24,452/95, arts. 10, and 54 and
ff. v. Supra, note 105.
Also consult RODRÍGUEZ OLlVERA, Nuri. "Checks", 3rd Ed. Ahali.
Montevideo, pp. 203 And ff.
54. PEÑA CASTRILLÓN, Gilberto. "Check protection systems". FELABAN
Magazine, No. 3. Ed. Kelly. Bogotá, 1974, pp. 227-263.
55. They accept this solution In/al, art. 5th; Colombia, establishes that "if...the
difference is relative to the obligation of the same party, the lesser sum expressed
in words will be valid" art. 623 C. Co.; Argentina, art. 2nd Law 24,452 (Check
Law).
56. The Intal system finds its antecedent in the LUG, on checks, art. 32.
Colombia welcomes the system in its article 721 of the C. Co., which establishes
that "when the check has not been presented on time, the drawee must pay it if he
has sufficient funds from the drawer or make the offer of partial payment,
provided that it is presented within six months from its date" .
57. Regarding the partial payment of titles in general in Colombia, art. 693 C.
Co., the holder cannot reject its partial payment, also in Argentina, art. 42 D. L.
5965/63; Mexico, art 130 LGTOC; Honduras, art. 538 C. Co. With respect to the
check, Argentina accepts the impossibility of rejecting it, art. 311nc. 2nd Law
24,452 (Check Law); Honduras, art. 610 C. Co. They leave the holder free to
accept it or not, Colombia, art. 723 C. Co.; Mexico, art. 189 LGTOC.
58. Colombia, generally adopting the project, separated from it at this point and
enshrined the traditional principle in its article 723 of the Commercial Code.
59. Colombia, art 248 Law 599/00 (New CP).
60. Colombia establishes a period of three months from the return of the original
check, article 732 Commercial Code, and 6 months from receipt of the payment
information, article 1391 Commercial Code. The Supreme Court of Justice has
stated that, contrary to what local doctrine generally maintains, there is not a
contradiction between both norms. In effect, he estimates that if the check is
returned, that is a way of providing information about its payment that would be
part of the hypothesis of article 1391. If both things occur, that is, return, on the
one hand, and information by extract, on the other, the period must be counted
from the date on which the first occurs. And that as it concerns the existence of
two different expiration terms, taking into account the principles of hermeneutics,
in particular those enshrined in Law 57 of 1887, the applicable norm is article
1391, because it is later and special (Chamber of Civil and Agrarian Cassation.
M. Q. Jorge Antonio Castillo Rugeles. Sep./99).
61. RODRÍGUEZ R. J. "Banking Law", op. cit., p. 232.
62. Colombia. This has been the jurisprudential position since when it was said
that "...the one who takes advantage is the one who speculates economically, the
one who, by creating a risk for others, creates a source of wealth for himself"
(General Business Room. M. Q. Pedro A. Gómez Naranjo. Aug.l49). In more
recent rulings it has been stated that: "... the exercise of deposit banking is
fundamentally equated to that of a commercial company that, massively attracts
and assumes the risks inherent in the organization and execution of the cash
service, then It is precisely by virtue of this principle of corporate responsibility,
whose objective features cannot go unnoticed, that the banking establishment,
assuming a tacit position of guarantee, is responsible for the payment of checks
subject to falsification, this being understood, it is repeated, that The danger of
falsification is inherent in the circulation and use of bank securities of this
nature..." (Civil Cassation Chamber. M. Q. Carlos Esteban Jaramillo S. Oct./94).
63. Colombia. The Court has said in the ruling of Castillo Rugeles, already cited,
that: ".not any non-compliance attributable to the drawer gives rise to the release
of liability of the bank accused of paying spurious checks, since for such
exoneration to occur it is necessary that the fault of the former is linked to the
falsification of the same, so that it is possible to infer that the latter owes its
existence to the other."
64. Argentina, art. 35 Law 24,452. The check law establishes three cases in
which the bank must respond for the bad payment of a check: 1. When the
drawer's signature was visibly forged. 2. When the document does not meet the
essential requirements indicated in article 2, and 3. When the check has not been
issued in one of the formulas delivered to the drawer. El Salvador, art. 818 C.
Co., also points out three assumptions.
65. Argentina. Check Law, article 36, 1 and 2.
66. Colombia, art. 733 C. Co. "The owner of a checkbook who has lost one or
more forms and has not given timely notice to the bank, may only object to the
payment if the alteration or falsification is obvious." Some have maintained that
the timely notice to which the rule refers would be the one given to the bank
within the three or six month period that it has to notify it about the payment of a
false check or whose amount has been altered, to which they refer. articles 732
and 1391 of the C. Co. We have respectful but severe reservations about such a
position. In effect, the timely notice referred to in article 733 cannot be the 3-
month notice of 732, much less the 6-month notice referred to in 1391. Both,
seriously, would be inopportune in themselves. What the rule reasonably
suggests, in our opinion, is that the notice be given with such alacrity, by
someone who immediately notices it, because he or she is properly guarding his
or her checkbook, that it contributes to the bank taking or attempting to take
corrective precautionary measures. to avoid the commission of an illegal act. And
it is that among the general hypothesis - which provides deadlines to claim for
falsifications that occur, but in the face of which the drawer does not have to wait
for them to occur, in the normal draft of his checks - the hypothesis of article 733
carries an inherent warning sign. If the checkbook was lost, for any reason, but,
in particular, if it was stolen, there is bad faith conduct that makes it highly
probable that the criminal intends to take undue benefit from such circumstance
and the first way is to try to use the checks, falsifying them, therefore, to collect
them or pay third parties with them. Therefore, it is absolutely unrealistic to
assume that a notice given within the broad general period is of any use, since by
the time it occurs, the fraud will have been months ago. That is why the same
rule sanctions the drawer by establishing that if, having been able to contribute
with his timely notice to avoid the bad payment, he did not do so, then the bank
will only be responsible if, in the series claimed - there if within the period of 6
months - it is proven that the falsification or alteration was evident. A
requirement that is not required, otherwise, under the general regulation. See
ruling Supreme Court of Justice, Civil Cassation Chamber. JuI./01. M. Q.
Nicolás Bechara Simancas. Intal, art. 124.
67. Colombian legislation is more severe, as it establishes a penalty of 20% plus
any damages that may be proven, article 722 Commercial Code. It should be
noted, however, that the same sanction is established for the issuer and in favor
of the holder, when non-payment is attributable to the former, article 731
Commercial Code, but even if the symmetry is observed, it is no more than
apparent, because yes, For example, the account holder has sufficient funds and
the bank unjustifiably refuses to pay a check, the claim that the drawer makes
against him will be successful, under the mandate of article 722, but the claim
that the frustrated beneficiary attempts, in turn, must fail. against the drawer,
since in the process it will not be possible to prove that the check stopped being
paid due to the latter's fault, a necessary presupposition for the claim to succeed,
under article 731; Mexico, art. 193 LGTOC does not set the percentage of
compensation.
68. Honduras, art. 966 C. AC.
69. Colombia adopts the principle by saying that the bank "must, however, pay
the checks drawn while there is a provision of funds", art. 1389 C. Co.
70. V. Infra, Chap. V, 7.3.
4.5. NOT PAYING THE CHECKS
Just as we have stated that the bank's primary obligation is to pay, we now have
to maintain that there are cases in which the bank has the obligation not to pay.
This obligation may arise at least in the following cases: existence of a non-
payment order, bankruptcy or bankruptcy of the drawer and untimely
presentation of the check, in some events.
Note that, in principle, these are checks that should be paid, that is, in the case of
which there would be no just causes to stop doing so, except for the debates that
have arisen regarding the thorny issue of late presentation.
4.5.1. Non-payment order
Later, within the client's powers, we will study whether to revoke the payment
order.7o For now, it is enough to note that if there is in the bank's possession an
order to refrain from paying validly issued by the account holder, the
establishment has the right to proceed accordingly, and therefore is obliged not to
pay. And we say that a non-payment order is validly issued because there are
laws in which revocation is not possible, for example, as long as the deadlines for
presenting the instrument have not elapsed. In this case or in other similar cases
in which the order issued could be classified as invalid, the bank would not be
obliged not to pay but could proceed in accordance with the general rules. But in
other cases, if the bank, despite having received the non-payment order on time,
proceeds to make it, it will pay poorly and will not have the right to debit its
client's checking account for the value of the check.
The non-payment order can also come from a judicial authority that, observing
the rituals provided by law, orders the bank to refrain from paying a certain
instrument. This may occur within the general regulations of securities, when the
cancellation of a check is obtained by judicial decision or when, for any other
reason, within a criminal investigation, for example, it is ordered by the judge.
4.5.2. ~ Bankruptcy or contest
The hypothesis evokes not only cases of bankruptcy but all cases of bankruptcy
or universal lawsuits against the account holder that, by virtue of freezing the
debtor's assets and forming the mass of the bankruptcy, insolvency or similar
procedure, inhibit the bank to pay the check. This, of course, once through the
systems provided by law the bank learns of the existence of the bankruptcy or
insolvency proceedings, which will usually happen through the publications
provided for in the legal provisions or direct notification of the debtors. , if that
were the established procedure.71
Just as, as a general rule, the supervening death or incapacity of the drawer does
not relieve the bank of the obligation to pay the previously issued check, since
there the mechanics of the security title and the autonomy that is predicable to it
mean that the events subsequent to its creation or its issuance are irrelevant to its
validity, in this case, the bank's obligation to refrain from paying, even when the
bankruptcy occurs after the moment in which the instrument was issued, obeys a
reason of general interest, of protection of the community and the creditors of the
bankrupt or bankrupt. That is why the particular principles of securities yield in
order to protect a higher category interest, in accordance with most legislation.72
And the bank's obligation not to pay must be predicated, even for checks issued
prior to the date of notification to third parties of the bankruptcy or insolvency
situation, since otherwise it would be enough for a bad faith drawer to predate the
instruments so that they appear to have been issued before the date of the
respective decision.
4.5.3.
Expiration and prescription
There is no absolute agreement among scholars, as there are those who maintain
that it is not up to the bank to classify the very circumstances of prescription or
expiration. On the other hand, and in relation to at least the first, in most systems
it can be susceptible to interruption so that the bank also lacks sufficient elements
of judgment to precisely define whether the expiration date has occurred. or the
prescription.
Others think that, if the debtor must propose one or the other as exceptions in the
event of a lawsuit against him, it will be there that the parties will enjoy the
broadest freedom to prove the facts on which he or she bases his attack, or bases
his defense. , the other.
Those who maintain that prescription or expiration lead to the bank being obliged
not to pay, also think that by incorporating into the contract the laws in force at
the time of its execution and establishing, by legislation or by simple regulations,
that the bank is obliged to pay when the check is presented to him within a
certain period, it can be argued that, acontra sensu, if it is presented to him after
the opportunity provided by law or contract, he is not obliged to pay and even,
for some, is obliged not to pay
In any case, it can be concluded that if the bank refrains from paying the check
because from the date of its creation inserted in the title and the presentation, it
appears that it is untimely or if it had been presented on time, and returned for
just cause For the bank, it occurs months later when it is obvious due to the dates
that the client would not be obliged to pay, since it would have expired, the
bank's attitude could be considered a just cause for non-payment where, if the
client considers that must proceed to pay, the way to reiterate the order is clear,
but without the bank incurring responsibility for its initial attitude. That is to say,
in summary, we think that the prescription or expiration translates for the bank
into an obligation not to pay or, ultimately, into a just cause for not doing so,
where more than a legal qualification a situation is verified. in fact. So, in both
cases, the most reasonable behavior seems to be to refrain from paying.
4.6.
PAY INTEREST
In this matter there is also no uniformity of criteria as we saw in the previous
chapter. There are many reasons not to pay interest on demand deposits. It is
stated that the bank sufficiently remunerates the depositor with the provision of a
set of services linked to the bank checking account such as the cash service. It is
considered advisable to create a difference between demand deposits and time
deposits or other forms of term investment, so that people feel encouraged to
channel their saveable resources towards activities where they will obtain an
interest rate, but with a greater sacrifice in the time during which they part with
their money, which, in turn, allows the collecting entities to allocate them to
more intensive activities where the loans have to be made in the medium and
long term. Regarding these guidelines and, specifically, there is legislation that
prohibits the recognition of interest on demand deposits. Others, however, do not
do so or expressly allow it.73
In cases in which the bank, by legal mandate or as provided in the contract, must
recognize interest on the balances in favor of its clientele, this is an obligation
under its responsibility that it will comply with by paying them with the agreed
frequency by crediting the same account. and on settlement bases constituted by
the averages obtained during the respective period or by the minimum balance
recorded in the period or other similar criteria.
4.7.
MAINTAIN THE BANK RESERVE OR SECRET
This generic obligation for banks, and we could say universal, which we repeat
due to the importance it achieves in this contract, translates into the need for the
institution to keep confidentially and refrain from communicating to third parties,
the private information it contains. has received from its clients about their
activities, businesses, plans, etc., as well as the result of the execution of the
operations between bank and client such as amount, destination, credit
modalities, etc. That is to say, it covers, on the one hand, the privacy of the
client's papers that, due to business relationships, have ended up in the hands of
the bank and that he would not be obliged to show to third parties without prior
to the aforementioned procedural rituals. by the law. Which means that if the
bank has those papers, it must keep them in the same private way that the person
who gave them to it would have the right to keep them.
We have talked about private documents because banking reserve or secrecy
cannot be extended to figures or documents that are intended to be known by
anyone, as would be the case with those that are publicized. Consider a company
that must present its balance sheet to a control entity and publish it in newspapers
with wide national circulation. If the bank provides information about that
balance, it could not then be considered to be missing from the bank reserve,
since said information could be obtained by anyone.
The reserve also covers specific and detailed information on the operations
carried out between the bank and its client, on the amount of existing deposits,
the average volume of checks drawn, the name of the beneficiaries of said
instruments, etc. Of course, this obligation seems to exclude the possibility of
giving negative reports, that is, informing banks that a client has failed to pay his
obligations or that his payment orders have not been honored because they were
issued without sufficient funds, since In these cases, the aim is to protect the
community, so private interest must yield to a higher order interest, which is
added that banking secrecy cannot be constituted as a file to protect bad faith and
commercial immorality, resulting For example, the mismanagement of a
checking account.
We already stopped, back, in the analysis of habeas data and in the way in which
legislation and even norms of constitutional rank grant powers to any interested
party to obtain effective protection that prevents them through databases, such as
those that Banks build to preserve negative customer information, their rights are
violated by recording inaccurate data, from a confidential source, immutable over
time and, in general, out of their reach, to consecrate, in exchange, the possibility
of having access and find out, correct and update the information collected and
even obtain the application of the principle that in some countries has developed
as a consequence and is that of obtaining the "right to be forgotten", after a
certain time. But in order not to incur unnecessary repetition, we refer the reader
to the respective chapter.74
The obligation to maintain confidentiality regarding the information that the bank
has learned in its relations with clients and that includes queries and confidences
regarding the state of its businesses, derives from commercial custom that
generally has the same force as the law or in express legal provisions that
establish this.75
Exceptions from this prohibition are the information that banks have to give to
control and surveillance entities or judicial authorities, in accordance with the
law. The principle underlying the exception continues to be to protect the general
interest over the individual.
-Failure to comply with this obligation may result in the bank being sentenced to
pay any damages that may have been caused to the client and may even result,
depending on the country, in administrative or criminal sanctions for the official
or officials who have incurred in the punishable conduct.
-------------------------------------------------------------------------------
71.V. Infra, Chap. V, 7.3.
72. RODRÍGUEZ, Joaquín. "Banking Law". Op. cit., p. 217, maintains that "the
payment thus made would break the par conditio, at the same time that it would
be a wide path open to fraud that would only have the painful and civil corrective
of the revocation action in fraud of creditors."
73
Colombia understood it to be prohibited for years by virtue of the agreement of
April 18, 1962 entered into between the Banking Superintendence and the Bank
of the Republic, in development of the provision contained in article 5 of the L.
16/36; It is currently allowed and is beginning to be the practice of some banks,
within the strong competition to capture deposits in current accounts. The EOSF
authorizes it in the case of savings for deposits constituted both at sight and in
time (art. 6~; They prohibit paying: El Salvador, art 55, lit. a) of the Banking
Law; Dominican Republic, art 20 L. b. Allow: Argentina, art. 795 C. Co.;
Panama, art. 991 C. Co.; Venezuela, art. 524 C. Co.; Peru, art. 304, D.L. 770/93.
74.V. Supra, Chap. 111, 2.5. Colombia. Constitutional jurisprudence has
considered that the way in which a person meets his or her financial obligations
to financial entities does not belong to the scope of his or her privacy, since being
a good or bad payer is something that not only interests the debtor, but also his or
her creditors. current or potential, which without a doubt shows the public
interest underlying the credit (Sen!. SU-089/95 M. Q. Jorge Arango Mejía).
Ecuador. The financial institution that deliberately provides false or malicious
information to the Risk Center will be sanctioned by the Superintendent of Banks
with a fine of 2,000 units of constant value (UVC) each time and the dismissal of
the responsible official, in case of recidivism, without prejudice to the respective
criminal sanction (General Law of Institutions of the Financial System, art. 94).
75. Honduras, ar!. 956 C. Co. Panama, regarding the encrypted current account,
arts. 2nd and ss. L. 18/59.
As we warned from the beginning, when presenting the client's obligations we
have to save a fair technical-legal reservation to warn that, in particular, having
sufficient funds in the bank's possession, does not strictly constitute an obligation
derived from the contract. Indeed, for those who consider that the contract is real,
the delivery of the sum is the essential and constitutive element of the contract,
without which it cannot be born and, as a consequence, it cannot be properly
spoken of as an obligation of the client. Those of us who believe that the contract
can be consensual and even for those who defend the first thesis, from the
moment the contract is concluded, it cannot properly be said that there is an
obligation borne by the client consisting of having to deposit sums of money. In
the best of cases, one could speak of an expected burden or conduct, which
would be technically different from an obligation in that it could not be
be demanded by the bank, as we had already anticipated at the beginning of the
chapter
/'
it, by general means.
There is the obligation of the bank to receive sums of money on deposit if the
client wishes to use the primary power of the contract and that by which it is
normally concluded.
When we talk about the obligation to maintain sufficient funds, we are referring
to the logical budget necessary so that checks can be regularly issued to the bank.
The same happens when we talk about keeping the checkbook or using certain
documents required by law, cases in which custody, for example, results from
having received the card or checkbook. However, if the contract is studied from a
dynamic point of view through a succession of deposits and withdrawals, the
obligations that we point out below as belonging to the client will be perfectly
understandable and logical.
5.1. MAINTAIN SUFFICIENT FUNDS

The maintenance of funds in the bank's possession or the existence of a provision
justify the possibility for the client to issue orders at the expense of the drawee. It
frequently happens that the provision results from the prior constitution of a
deposit in the credit establishment. It may happen, however, that the current
account begins to operate based on a credit granted by the bank to its client or
that, having started with a deposit, it is settled at a certain moment and a credit is
granted at that moment that allows the client to write checks, no longer against
his own funds, in a figurative sense, but against those advanced by the banker.
The provision is, therefore, a legal concept that implies for the holder to have
access to a credit from the bank, whatever the cause that binds the latter as a
passive subject of the obligation. Either the constitution of a deposit, either the
opening or prior granting of a credit that authorizes it to issue checks, or a credit
granted simultaneously and immediately upon presentation of the instrument, in
the event of no funds or insufficient funds. .
The concept of provision says with the check within the relations between the
account holder and the drawee bank. It is a logical presupposition of the contract,
foreign to the requirements of the check as a security and to the obligations and
rights that arise for those involved in the exchange business. In other words, and
in summary, the problem of provision deals exclusively with the contractual
relationship of a bank current account, while the relationship between the
beneficiary or subsequent holders and the issuer of the instrument is governed by
the exchange regularity of the title, That is, by fulfilling the essential
requirements that allow it to be classified as such. Consequently, a check can be
drawn without a provision of funds, which will make it irregular vis-à-vis the
drawee and allow him to refrain from paying it and, nevertheless, be fully
effective from the exchange point of view, legitimizing the payee to exercise the
action. exchange against the drawer and the other endorsers, if any, and even
exercise the corresponding criminal actions, if the circumstance of issuing a
check without sufficient funds is considered punishable by the respective
legislation.76
There has been discussion, on the other hand, about the timing of the existence of
the provision, whether at the time of creation of the check or whether it only
exists in it after its presentation. Leaving aside legal discussions and arguments
in favor of the thesis that the provision must exist at the time the check is issued,
since that is when it begins to exist as a security, we lean towards the thesis
according to which the provision must exist at the time the check is presented -
for payment. This is what counts in practice and the non-existence before that
presentation is irrelevant, as a general rule, from the legal point of view, because
if there were not enough funds when the check was created, what the beneficiary
or holder who presents it What matters, ultimately, is that it is downloaded at that
moment.77
Contrary to this thesis, at least in the sense that the non-existence of funds at the
time of issuing the check is not indifferent and can produce negative
consequences for the drawer, we find article 120 of the INTAL project in which,
at Talking about the expiration of the exchange action against the libra dar and its
guarantors, it is stated that it will occur if the check is not presented and protested
in time "if during the presentation period the drawer had sufficient funds in the
hands of the drawee. .". Consequently, it can be deduced from the
aforementioned rule that if the drawer did not have sufficient funds when
creating the check, at which point the presentation period begins to run and
constitutes them later within said period, the circumstance that at the end Failure
to present it on time does not cause expiration, since if it is alleged, the payee
will be able to prove that the drawer did not have sufficient funds during the
entire period provided for its presentation. That is, the lack of funds at the time of
issuing the instrument is penalized with the loss of the benefit of expiration that
would arise from not being presented on time. And, on the other hand, those who
did have them are rewarded, favoring them with the expiration due to the simple
circumstance of non-presentation and protest on time, if otherwise the check did
not stop being paid due to them.78
5.1.1. The obligation to have sufficient funds and partial payment
We already saw the problem in this chapter under a similar heading.79 Let us
repeat, however, that there is no contradiction between the obligation to maintain
sufficient funds, as an essential requirement for issuing payment orders to the
bank, and the latter's obligation to offer payment. partial in the systems that
require it. Let us remember that the bank's obligation exists with the account
holder because only with him has a binding legal relationship been established,
as a consequence of which its existence can be predicated. Having no obligation
to the holder of the check, the bank is only bound to the issuer. But this
obligation with the holder has been established, however, for the benefit of the
holder of the check and the parties preceding it, the drawer included, since if the
check is partially discharged, the amount of the credit will be released from the
drawer's responsibility. and endorsers. On the other hand, the obligation to have
funds refers to the logical budget necessary for the account holder to issue
payment orders against the bank, as we have just seen.
5.1.2. The overdraft current account
Some legislations, by recognizing the double source of availability - the irregular

deposit and the opening of credit - have classified the contract as a current
account with a provision of funds, when this has been established by the owner,
and as an overdraft, when it is necessary. of an authorization from the bank
through the opening of credit. Strictly speaking, it should be noted that both are
accounts with provision of funds, if it is noted that the concept of provision is in
essence legal and says with the availability that the owner may have to issue
checks on a regular basis against the bank, which happens in both cases.80
The practical drawback of this classification, which allows the respective
countries to distinguish between one form of provision and another, is that it
gives rise to some confusion with what should technically be considered an
overdraft, that is, the circumstance that the drawee issues an order of payment for
an amount greater than that which is available. If the holder has 100 in the bank,
having deposited them or entered into a credit opening contract for that amount,
usable in a checking account, the circumstance of issuing a check for 150 would
lead to the account operating overdrawn. The first thing that may happen is that
the bank rejects the check for insufficient funds or makes the offer of partial
payment, if optional or imposed by law, as the case may be. But, likewise, the
bank can grant a credit to its client for the difference between the availability and
the total of the amount issued, which will translate, accounting and legally, into
an overdraft in the current account, that is, a credit in charge of the headline.
Exceptionally, it is true, since it is usual for the bank account to record the
fluctuation of balances in favor of the client.
In other words, we can affirm that we must speak of an overdraft account, when
the bank pays checks for a value greater than the availability in its possession,
case in which, legally, whoever issues checks without sufficient funds makes a
contract offer that presents to your bank and which, if accepted by it, results in
the granting of credit.
The classification between the two forms that we have been discussing would
also allow us to express the difference with the overdraft in its restricted
meaning, as follows: an account can be conceived that operates ab initio through
a permanent authorization to issue checks up to a certain amount above the
balance, case in point. which refers to a permanent overdraft or an authorization
to overdraw up to a certain amount. Here, although we speak of "discovered",
there is an indisputable availability, from a legal point of view. On the other
hand, the overdraft, whose technical meaning we would prefer to limit to the
assumption of p~o in excess of availability, is eminently transitory, it does not
obey a preliminary authorization from the bank or the assignment of a quota. It
results from the factual circumstance that the check is presented to the bank and
at that moment lacks sufficient funds.
It is clear that in both cases, whether the check is requested in advance or the
check is issued without authorization, there is in the end an agreement of wills
that translates into payment and the granting of credit. The first difference is that
when the authorization does not exist, higher interest rates are usually charged
for the temporary overdraft than those that would be charged for a permanent
overdraft or overdraft, since the latter is basically a form of granting ordinary
credit, so to speak, while the temporary is an exceptional credit, which the bank
grants somewhat forced by the circumstances and to honor the signature of its
client, despite not having previously authorized the excess transfer.
But perhaps the most important legal note that should be made about the
temporary overdraft is that the doctrine has held that the overdraft is payable
immediately,81 even in countries where the principles of the commercial current
account are applied to the contract, with regard only to The periodic settlement of
the account results in a demandable balance. If this is so when the rules of the
commercial current account are applied, with even more reason and even
expressly the same conclusion has been reached in the countries in which one of
the differences between the bank current account and the commercial account is
that In that case, permanent compensation produces a daily cut and, therefore, a
balance payable by any of the parties. That is, it is not necessary to wait for the
periodic cutoff to be able to establish the existence of an overdraft; It occurs due
to the sole circumstance that more than the provision is paid and is immediately
payable.82
As for the interest rate, it is prudent to agree in the respective bank checking
account contract what should govern in the exceptional case of an overdraft, to
avoid that, in the face of the silence of the parties, the judge chooses to order the
payment of the legal interest rate, usually lower than that agreed contractually.
5.2.
CUSTODY THE CHECK BOOK
Out of an elementary sense of prudence, the holder of a checking account must
keep the check card or checkbook with due precautions and security, since, if
through carelessness or against his or her will, it falls into the hands of a third
party in bad faith, he or she may issue checks. irregularities by the bank,
surprising third parties in good faith due to the appearance of regularity that the
securities will present externally. Especially when in our systems we have seen
that the check can only be issued on forms prepared by the bank or authorized by
- this. One might even think that a third party in good faith, harmed by the
presentation of a check that belonged to a person other than the issuer, could turn
against the owner to prove that the checks left his hands due to manifest
incompetence or carelessness and that, therefore, Therefore, there could be some
type of non-contractual liability.
However, it is interesting to note that this generic obligation to safeguard the
securities delivered translates into concrete and burdensome consequences for
those who do not do so or do not promptly warn the bank of their lack or
disappearance. First of all, let us remember that the drawee bank that has paid a
false check or whose amount has been altered, can, at least in the general
tendency, exonerate itself from liability by proving the fault of the drawer, its
factors, agents or representatives. This means that it is possible to prove improper
custody of the checkbook because, if it involves forgery of the signature without
prior erasure, but rather by seizure of the checkbook or one of them, it will not be
easy for the holder to explain how and in what way. how he was stripped of his
notebook or title without realizing it. To the point that there are laws that
establish
great responsibility of the drawee for the damages caused in the event that his
signature was forged on "any of the checks belonging to the notebooks
received...", if the forgery were not obvious.83 A consequence that is only
explained if the law It is presumed that there is an obligation to safeguard the
checkbook on the part of the owner and that if a third party improperly uses the
check by signing it and impersonating its signature, they can only do so by virtue
of there being fault or negligence on the part of the client in its handling.
The hypothesis that, having lost the checkbook or some of the checks, the drawer
does not give timely notice to the bank is also strictly regulated. Both in the event
that the notebook has been lost or consolidated with its whereabouts unknown,
but without suspecting that there is any malicious action, or when the holder has
lost it due to theft and has well-founded reasons to fear that it will be used
improperly. In both cases, the sanction for the holder consisting of the bank being
free from liability if he pays the check before the client notifies him of the loss is
explained, since a person who is careful in the handling and custody of his
checkbook must realize it immediately. or very quickly, that she has disappeared.
If he does not realize it, if he finds out when he receives the monthly statement
and verifies that checks that he has never issued have been debited from his
account, this will be sufficient indication of his negligence in the custody of the
checkbook, because if he had been prudent in Its management would have
immediately informed the bank so that it, notified of such circumstance, would
refrain from paying the checks. The INTAL project in its article 124 establishes
to this effect that "the drawer who, having lost the form or forms provided by the
drawee, has not given notice to the drawee in a timely manner, may only object
to the payment if the alteration or falsification is obvious."84
5.3. USE THE DOCUMENTS OR SKELETONS REQUIRED BY LAW
It refers to the obligation to issue payment orders in the form of checks on forms
printed by the bank or whose printing by the client has been authorized by the
bank. As we saw in this chapter, in accordance with the contemporary trend, the
title that is issued in the form of a check on a skeleton issued to the bank printed
by the bank will not produce title-value effects; It will be a simple private
document devoid of the advantages and privileges of securities whose payment
may be rejected by the bank. 85 This does not mean that the exclusive instrument
for disposing of your funds is the check. We will see how other possibilities
exist, sometimes invoked in a generic way by the laws. What we want to reiterate
now is that if you wish to write a check payable to the bank to dispose of your
funds by that means, the client must use the skeletons delivered or authorized by
the institution.
5.4. RETURN CHECKS AT THE END OF THE CONTRACT
If the delivery of the checkbook and its conservation by the client are carried out
within the general context of the bank current account contract, at least in the
approach we have adopted for our study, it is logical that in the event of
termination of the account, the client is obliged to return unused skeletons to the
bank. Among other reasons, because from the moment of termination of the
contract there is no right to issue checks payable to the establishment. And,
furthermore, to protect third parties of the same client if it turns out to be bad
faith and even more so, to protect the former client against the risk of loss or theft
of the remaining skeletons in his possession, which could be misused by a third
party in bad faith, which will always produce consequent annoyance if other
people are deceived with said instruments, since the first thing they will do is
direct their civil actions. penalties against whoever appears or has appeared as the
account holder. Therefore, even if there is no obligation, our It is a strong
recommendation that at the end of the contract any excess checks be destroyed
or, at least, visibly cancelled.
Although we do not remember an express provision that with aggression; specific

for those who do not return the checks, we think that it is an obligation to do,
which could be demanded through the ordinary means provided for in the
respective legislation.
contemporary, the title that in the form of a check is issued on a skeleton other
than that printed by the bank will not produce title-value effects; It will be a
simple private document devoid of the advantages and privileges of securities,
the payment of which may be rejected by the bank.85 This does not mean that the
exclusive instrument for disposing of your funds is the check. We will see how
other possibilities exist, sometimes invoked generically by laws. What we want
to reiterate now is that if you wish to write a check payable to the bank to dispose
of your funds through that means, the client must use the templates prepared or
authorized by the institution.
5.4.
RETURN CHECKS AT THE END OF THE CONTRACT
If the delivery of the checkbook and its conservation by the client are explained
within the general context of the bank current account contract, at least in the
approach we have adopted for our study, it is logical that in the event of
termination of the account , the client is obliged to return unused skeletons to the
bank. Among other reasons, because from the moment of termination of the
contract you have no right to issue checks payable to the establishment. And,
furthermore, to protect third parties of the same client if this proves to be in bad
faith and even more, to protect the former client against the risk of loss or theft of
the remaining skeletons in his possession, which could be misused by a third
party. in bad faith, which will always produce annoying consequences if other
people are deceived with these instruments, since the first thing they will do is
direct their civil actions and. penalties against whoever appears or has appeared
as the account holder. Consequently, months or years after having closed it, you
will be forced to incur legal defense expenses, face seizures of your assets, while
the situation is defined judicially, etc.86 Therefore, even if there is no obligation,
our live recommendation is that at the end of the contract any excess checks be
destroyed or, at least, visibly cancelled.
Although we do not remember an express provision that establishes specific
sanctions for those who do not return the checks, we think that it is a typical
obligation to do so, which could be demanded through the ordinary means
provided for in the respective legislation.
------------------------------------------------------------------------------
76. BAUCHE, op. cit., p. 98.
77. RODRIGUEZ, J. "Banking Law". Op. cit., pp. 118 and 119.
78.Colombia, establishes the same principle, arl. 729 C. Co. V. 79. supra, 4.4.3.2.
80
Colombia. There is no doubt about the nature of opening credit given to the
authorization to write an overdraft check, although said agreement does not
require written form (art. 1,404 C. Co.). The interesting thing, and this is why we
highlight it, is that if it were considered as a form of mutual agreement, it would
encounter the insurmountable difficulty, between us, that this is a real contract,
the essence of which is the delivery of money, which, naturally, has not occurred
when the overdraft is authorized. And if it wanted to be seen as a form of mutual
promise, it would have to meet all the requirements, strict, by the way, that are
required to recognize it, among others, the written form. Therefore, the
legislative solution is wise because it recognizes that, ultimately, what is granted,
authorizing an overdraft, is a simple availability in favor of the client,
characteristic of the credit opening contract, to the point that it can be
extinguished at that stage, without a money credit ever being produced, if the
client, for example, despite having the bank's license, fails to write the check or
deposits new resources that make it unnecessary to go to the facility. Venezuela.
See MUCI-ABRAHAM, op. cit., p. 53 AND GOVEA, op. cit., pp. 162-163.
81. See MUCI-ABRAHAM, op. cit. p. 57 that we share in this part, although
something different seems to be maintained a little later, p. 61.
82. Colombia. It establishes that: "..., the surplus will be payable from the day
following the granting of the overdraft, unless otherwise agreed" (D. 663/93, art
125).
83. Argentina, art. 35 Law 24,452 (Check Law), establishes that the drawee is
responsible for the payment of a check, among other events, "when the drawer's
signature was visibly forged."
84. Colombia, in the same sense, art. 733 C. Co.
85.V. Supra, Cap, V, 4.2.
86. Colombia, art 1389 C. AC,
85V. Supra, Chap. v. 4.2.
86. Colombia, art. 1389 C. AC.
6.1. MAKE UP FOR
We are not referring to the permanent compensation produced in current

bank accounts and that occurs, for example, in the overdraft. In effect, when the
bank pays a sum in excess of the provision, a debt is payable in its favor and in
charge of the client. So, when the client later makes a deposit of money into his
account, a debt arises in principle for the bank and in favor of the client to return
that sum of money. The existence of these two reciprocal claims, liquid and
enforceable, means that by compensation they disappear until the value of the
minor is met, leaving a balance for the difference in favor of any of the parties, as
the case may be.
We are referring to the possibility of applying compensation when a legal or

contractual provision provides that, in a certain way, the bank current account
contract regulates the accounting and legal relations of credit and debt between
the parties, so that if there is a balance in favor of the client and at the expense of
the bank, originating from a different legal relationship, the debtor credit
establishment can resolve its obligation by paying the corresponding amount into
the creditor's current account. And likewise, if for any other reason a debt arises
owing to the client, the bank may charge the sum to the current account of its
owner, so that the debt disappears by compensation, if there was a balance in
favor of the client or for that an overdraft or overdraft occurs until the amount not
covered by the existing provision is met.87
This power, which otherwise corresponds to the application of general rules on
compensation, has enormous practical advantages because it allows the bank
current account to be the universal accounting support for the relations between
the bank and its client. And it corresponds to a very widespread practice, as
happens when the client requests the opening of a letter of credit in favor of a
foreign exporter and authorizes the bank to debit his account for the
corresponding amount at the time of its use. If commercial rules seek to adapt as
much as possible to the needs of merchants, it is clear that compensation by
general means, that is, referring to obligations arising from the parties in
contracts other than the bank checking account, but reflected in it, It is widely
beneficial for both.
This principle has exceptions enshrined in the law itself or insurance invoked by
judges by way of interpretation, for example, in the event of a collective account
where it would not seem fair to allow compensation when the obligation was not
borne by all the holders. of the current account. With the exception, we think, of
the case of plurality that we have called joint and several, because in this event
the possibility for each of the holders to dispose of the entire balance would
explain that the obligation of only one of them would be compensated with the
balance in favor of all, existing in the account. H.H
Nor can this form of compensation operate when the current account holder has
been declared bankrupt, liquidated or insolvent, according to the different
legislations, since in this case, as we saw, the debtor's assets are frozen so that the
creditors have to submit to the quota law applicable to universal judgment.
Consequently, allowing banks to compensate after publications are made that
notify all interested parties about the state of bankruptcy or similar, would be
equivalent to enshrining a privileged position for credit institutions, removing
them from the general bankruptcy regime. 89
6.2. DEMAND IMMEDIATELY OVERDRAFTS

We have little to add about this faculty. We have already mentioned it when
talking about overdraft accounts and we simply reiterate that, being a form of
granting credit, it is normal that the bank, once the service has been provided and
the client's signature has been honored, can demand reimbursement immediately.
. Of
If this legal or contractual provision does not exist or if it is rejected by the
judges, the general principle of the mutual contract would apply, in accordance
with which when there is no specific period for the reimbursement of the mutual
sum, it will be set by the judge. taking into account the circumstances in which
the operation was carried out or placing the debtor in default through a payment
requirement, from which it can be understood that the corresponding sum is
payable.9O
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87. Colombia. The doctrinal position, particularly that of the Banking
Superintendency, has been contrary to the admission that, in this way, an
overdraft is generated, although a sufficiently solid motivation is not found to
support it. In fact, the bank would take an executive action against the client - it
has been said that it could not do so if it already has one - if the Superintendency
certifies the unpaid balance, without such a circumstance being strange at all in
the comparative literature (Concept 2000001717-0-28, February 2000).
88.V. Supra, Chap. V, 3.3. Colombia, does not distinguish. There would be no
room for compensation of debts borne by only one of the owners nor in the case
of joint and several plurality (art. 1385 C. Co.).
89. LÓPEZ V ALDERRAMA, Andrés. Op. cyl. It has maintained that within the
professional duty of information, the information that the bank gives to its client
if it makes use of this power must be included.
90. Colombia. d. 663/93, art. 125.
7. POWERS OF THE CUSTOMER
In general, it is enough to affirm that the client's powers are those that correspond
in a correlative manner to the obligations under the bank's responsibility and that,
in this order of ideas, the client can demand that deposits be received, that
adequate skeletons or forms be provided, that an account be kept. daily, send you
periodic statements, etc. However, as it would not make sense to repeat it, we are
going to refer only to three faculties that deserve a more detailed study given
their importance, even though some references have been made to them and that
allow us to present new aspects not contemplated until now. These are the
powers to dispose of your funds, create and demand special checks and revoke
your payment order.
7.1. DISPOSAL OF YOUR FUNDS
Whatever the legal nature of the deposit in a bank current account, it is

indisputable that the bank's fundamental obligation to restore corresponds to the
client's primary right to dispose of their funds, that is, to obtain their direct
reimbursement or allocate them to some purpose, including their delivery to a
third party. This last scenario is possible thanks to the fact that it benefits from a
set of services, such as cash, transfer, direct debit of invoices, etc. Let's see below
some of the most common modalities through which the account holder disposes
of the funds held by the bank, or better, the credit that the transfer of these funds
into deposit causes to arise in his favor.
7.1.1. direct receipt
Even though we have insisted that in the management of checks the bank current
account found its richest applications in Latin American contractual practice, it is
possible that the contract works without the existence of a checkbook or that
even if he can obtain it or have it in his possession, the holder is not necessarily
obliged to withdraw funds by using it. It can be conceived that, at a given
moment, the client being before his banker and lacking his own card or book,
requests and obtains all or part of the deposited sums by issuing a simple receipt
that will serve as documentary support for the celebration of the corresponding
accounting operations. It is, of course, not the most common; The bank will
ensure that a check is issued from the client's card or will provide one as a
replacement or will issue a cashier's or cashier's check to be charged to the
client's account, but we want to highlight the possibility, nothing prevents it in
principle, that the client make a direct withdrawal not instrumented in a check but
in a written request and the issuance of the corresponding receipt.
7.1.2. counter check
We already hinted at it in the previous point. Given the inability of the client to
write a check on the skeletons received from the bank, credit institutions can
provide their clients with a skeleton that, unlike those in their possession, will not
have all the pre-printed data, such as the number of the account and his name, if
the law or custom of the country requires it on the checkbook, but it will allow
the client to obtain a payment in his own favor over the counter. This check, also
called by some systems or banks "related check", then fulfills the function of
allowing a sum to be withdrawn in favor of the account holder, through the use of
a skeleton that is not part of the passbooks received by him.
7.1.3. ordinary check
The most general way in which the funds are available is the issuance of checks
by the bank, which may be in favor of the holder himself or in favor of a third
party or simply to the bearer. There is nothing to add on this aspect, since it is not
about the study of the title, in relation to which we have already made numerous
mentions, but only to remember that it is the most peculiar way of disposing of
the sums deposited in the bank.
7.1.4. Transfers
Another way for the client to dispose of his funds is to order that all or part of
them be transferred to another checking account of the same or another bank, in
that place or in a different place or to an account of a bank domiciled outside the
country. . Transfers are services frequently used by clients and, as they are
charged to their balances, they are a way of using existing resources.
7.1.5. Charge on account
In all cases, a charge or debit occurs in the bank current account, from an
accounting point of view. However, we are referring to the case in which,
without using checks or transferring resources to another account, the debit is
produced by the simple authorization to charge, given by the owner! This
possibility is of great application when there are numerous business relationships
with the bank from which various obligations arise for the client. To avoid all of
them having to be settled separately, the current account file is used, as we saw
when talking about compensation, so that the debits or debts owed by the client
are charged to the current account and affect the available balance. This is the
case, as we said, of the opening of a documentary credit for the use of which the
account debit is foreseen; the periodic payment of accounts in favor of public
service companies and, in general, other banking services linked to
intermediation in payments, which we will see in chapter XIX when talking
about the mandate, and which constitute a way of disposing of the existing
resources.
From all of the above, it can be concluded that the ordinary way in which the
client disposes of his funds is the use of checks drawn on the bank, but this does
not mean that in practice different procedures are not used, that is, payment
orders are issued. payment in different documents and to fulfill different
purposes, as we have just seen. Even though we consider that these modalities
correspond to almost universal customs, there are laws that even establish the
possibility of disposing of balances through "another way previously agreed upon
with the bank."91
7.1.6. Debit card
But, without a doubt, the most widely used contemporary form, for the disposal
of account balances, is linked to plastic money, which is already mentioned more
and a disposal card - commonly known until now, as a "debit card". - by virtue of
which it is possible, in a large number of establishments linked to an
administrative system, to make payments by automatic credit and in real time to
the account of the seller of products or provider of services, charged to that of the
cardholder who with it he acquires them.92
7.2. CREATE AND DEMAND SPECIAL CHECKS
Although it is possible for third parties not linked to the bank to request some
special checks, it is the account holders who can create them naturally, in certain
cases and in their own checkbooks or request them from the bank, as an
additional service.
7.2.1. Non-negotiable checks
One might think that it is a contradiction to speak of non-negotiable checks if we

take into account that securities are instruments intended for circulation and have
even been called by some "circulatory securities".93 It should be noted, however,
first of all, that the possibility The circulation of checks is smaller than that of
other securities, since, as payment instruments, they have a short life that
translates into brief presentation terms established by law. Within this context,
practice has demonstrated the necessity of the check not being negotiable in
certain cases, at the will of the parties, and the law itself has chosen to indicate
cases in which negotiation is not possible. Consequently, non-negotiability
comes from the legal mandate, in some cases, or from the insertion of the
corresponding clause in the text of the check itself, except in those countries in
which imitation is expressly prohibited.
Non-negotiability translates into the impossibility of using the expeditious and
prerogative route of endorsement to transfer the rights derived from the title and
having, instead, to submit to the ordinary transfer route, with the limitations that
it imposes and with the loss of some privileges that make the possibility of
endorsement more advantageous. The above because, in principle, everything is
The asset is assignable or alienable and what the law or clause seeks is not to
limit such possibility, but rather to use the expeditious means of endorsement,
which in practice leads to the check not being negotiated or assigned but instead
collect immediately in the form and with the modalities that we will see below.94
Non-negotiability has an exception consisting of that the check can always be
endorsed, but only in favor of a bank so that it, as agent of the depositor,
proceeds to present for collection.
Among the checks that are usually non-negotiable by legal mandate, we have the
check in favor of the drawee and the certified check, in some legislations such as
the Mexican one and the INT AL. 95 In the latter case, for monetary reasons to
prevent species similar to currency from being circulated through certification,
even though there are other reasons, linked to risk, which we will see later.
Likewise, checks drawn in favor of public law entities, for security reasons.96
In relation to the insertion of a clause that indicates that the check is not
negotiable, the problem arises, if it can be inserted by any holder, that practical
difficulties arise regarding the precision of the moment in which the clause was
inserted. . In sound logic it should be thought that if the clause is used by the
drawer, it must appear on the front of the check and if it is used by one of the
endorsers it must appear accompanying the respective signature. Because if an
endorser places the clause on the obverse, in fact and by definition, it will make
the transmission in favor of his predecessors and in favor of himself irregular
because it contravenes the restriction that the creator would have apparently
placed. As the power is consecrated primarily in favor of the drawer, we have
included it within his powers and we study the non-negotiable check as special,
even when it is an ordinary check subject to a specific modality, which imposes
its collection on the first beneficiary. .97
7.2.2. Crossed checks
It is also enshrined in Geneva legislation and is one of the most widespread types
of special check. The crossing seeks for the check to be cashed through a specific
person, in modern legislation a bank, excluding cash payment over the counter. It
is a negotiable check, transferable by endorsement, but the last holder must
deposit it in his checking account. Exceptionally, it could be conceived to deliver
it to the collections section of a bank so that it can be presented for collection
without the endorsee having a current bank account relationship with it. This
would satisfy the requirement that it be collected through a banking
establishment.
Two types of crossed check are recognized: the generally crossed one, which is
expressed by the imposition of two parallel bars on the obverse, and the
especially crossed one, which is rarely used in practice and which includes the
name of a bank within said bars. In the first case, the modality of the instrument
is fulfilled by presenting it for payment through a bank. In the second, the
presentation must be made through the specific bank indicated among the
parallels.
It has been argued that the crossed check must be made to order and that the
crossing does not fit into a bearer check. This statement, valid in the case of non-
negotiable items, does not seem valid in crossed checks, unless the law of the
respective country so establishes. We think that the crossing seeks to
unequivocally verify the identity of the collector or last holder and that this has
no relationship with its circulation law, although we admit that, in practice,
crossed checks are made to order. We separate ourselves from those who
maintain that the crossed check must always be nominative (understood as the
order) by stating that "the credit institution that must cash the check is supposed
to know the holder of the check and can certify the legitimacy of its
possession."98 We do not agree because the same occurs if the check is bearer in
that the undetermined payee is identified at the time of consignment of the check
and the bank can both attest to the legitimacy of its possession and fully identify
it for all purposes. This way, it will be possible to have evidence about the
beneficiary and the circumstances of the payment and to trace the negotiation of
the check, from a known person, which does not happen when the title is
presented over the counter.
7.2.3. Checks for credit into account
This modality seeks to ensure that the check is not paid in cash but by a simple
accounting entry. From the wording of the Geneva Law and the legislation that
has followed the system arises the difficulty of knowing whether the check for
credit to the account can be deposited in an entity other than the bank issued.
According to the relevant part of article 39 of the Geneva compilation "... the
drawee may only pay the check by making an entry in the books (account credit,
transfer or offset)." This wording has made it possible to maintain that the check
could be presented for payment through another bank, since the latter receives its
payment through an account credit through the clearing house. The argument is
not compelling, since not all interbank payments are made using this mechanism
and invites us to analyze other regulations. The INT AL project establishes that
"the drawee may only pay the amount of the check into the account maintained
or opened by the holder" (art. 129) and adds in the following article: "if the
holder does not have an account and the drawee refuses to open it, he will deny
payment of the check." From which it follows that in this system and in the
countries that accept it, the problem is solved since the check can only be paid
through an entry in the account of a client of the institution. It must, therefore, be
deposited in the same drawee bank. Another argument in favor of this thesis is
that if it could be deposited in any bank, there would be no difference between
the check for credit into the account and the crossed check. In both cases they
would be checks that would have to be presented for payment through an
intermediary bank. And by application of an elementary principle of legal
hermeneutics, it cannot be considered that legislation regulates two mechanisms,
one following the other, to enshrine exactly the same structure and identical
possibilities.
It is logical to assume that if the legislation regulates the crossed check and at the
same time the check for credit into account, they must be different institutions
that cannot be interpreted in a way that fully coincides, when on the other hand
the history suggests that it is, for this case, of a credit to the account of the same
bank issued.99
Another position, in which we separate ourselves, is to maintain that checks for

credit to the account are not negotiable. In effect, if the purpose is for the check
to be paid by a simple credit to the account of the drawn bank and it translates
into the need that the beneficiary has or opens an account there, nothing prevents
him from being able to negotiate because if he does not have an account in the
bank and fears that it will not be opened or does not want to try, one could
imagine that he negotiate it with a third party, that owner. of a checking account
at the institution.
7.2.4. Certified checks

This is one of the most interesting figures since it entails the only exception to
the principle according to which the bank does not acquire exchange
responsibility towards the holder of the check. Indeed, in the case of the
certification of a check, the drawee guarantees under his signature that the
instrument has sufficient funds and that it will be paid upon presentation, if this is
done within the terms established by law. The legislations seem to be identified
in that the certification of a check cannot be done partially but for its total value
and that it does not fit into bearer checks. On the other hand, in some legislations
the power to request certification is limited to the drawer, who can be sued before
the check is issued and the negotiation of said instrument is prohibited once
certified by the bank. 101 Characteristics that duly and satisfactorily meet the
practical purposes sought with the certification.
There are two purposes that are obvious and benefit the issuer and the recipient
alike. It avoids the risks of physically holding money and provides security for
the check coverage. Take a sale of a personal property of a certain value in which
the buyer offers to pay the price with a check. The seller does not want to run the
risk of the check being dishonored when presented for payment. You want, as
much as possible, to have absolute certainty about the existence of a sufficient
supply to care for you. The buyer, for his part, needs to pay by check because he
does not want to run the risks of holding and transferring the respective sum.
Therefore, if he can go to his bank and obtain a certification on the existence of
sufficient funds to cover the check, both parties will find adequate satisfaction of
their requirements.
When it is established that the check is not negotiable, the aim is to prevent it
from circulating in this way with conditions of certainty that place the bank in the
position of an issuer, which would also happen with the certification of a bearer
check. The non-negotiability and the impossibility of requesting certification by
third parties other than the party are also explained by a risk aspect that, although
it does not exist to the same extent in all countries, would consist of the following
te: a person in bad faith receives a check for 100 and goes to the drawer's bank to
obtain certification; Once in his possession, he alters the amount, transforming it
into 10,000 and with it, thus falsified, he presents himself to buy goods or
services. This check, certified by the bank and surely well forged, will be
accepted more easily than any other. Under these conditions, the bank's signature
on the certification will mislead third parties in good faith, who in the end will
bear the damage when the bank refuses to pay the instrument. Although this is a
meta-legal and remote aspect in many countries, it would be sufficient in others
to prohibit the negotiation of certified checks and explains why some banks
prefer to replace the certification with the issuance of a cashier's or cashier's
check.102
Certification, moreover, does not imply the requirement of sacramental forms

and, in general, it is accepted that the inclusion of expressions such as
"certificate", "approval" or other equivalents is sufficient to have the check as a
visa or certificate. Once done, it authorizes the immediate debit to the account of
the corresponding sum so that the rights of the holder cannot be affected by any
external circumstance, such as the issuance of other checks by the holder, or the
receipt of an order freezing the funds. balances derived from an embargo, the
bankruptcy of the owner, etc.
The INTAL project establishes that "the drawer may not revoke the certified
check before the presentation period has elapsed" (art. 138).103 In this regard,
two observations are worth making. Firstly, a criticism of the provision because,
if the certification binds the bank exchange rate and releases the other parties,
including the drawer, it is obvious that the latter lacks any power to revoke the
instrument. There would be no legal interest to support his decision.
Secondly, it is not evident in terms of the INT AL project, even though in some
countries the problem is resolved specifically in the law, how long the
certification must be maintained with all its effects. Because it is obvious that it
is not an irredeemable obligation, nor can it be subject, if the law does not
establish it, to a special regime that makes the presentation of the instrument
more favorable for the policyholder, due to having exceptional deadlines.
Therefore, we believe that the bank is obliged to maintain the effects of the
certification until the submission period ends. Once it has expired, the accounting
operation must be reversed and the check will be subject to the general rules on
presentation for payment.104 This interpretation could also be supported by the
wording of article 138 of the INTAL and the legislation that enshrines a similar
principle, understanding that the possibility of Revoking the check by the drawer,
once the presentation deadline has expired, necessarily implies the exchange
release of the drawee establishment.
Note, in conclusion, the curious situation of the drawer who is released by virtue
of the bank's certification, but not definitively, because if the payee does not
present the check during the period, the drawee's obligation ceases and he is
reborn, so to speak, that of the drawer, the guarantors and the endorsers. Of
course, if the release of the bank's liability coincides with the expiration of the
presentation deadlines, without the check having been presented for payment, at
the same time the action of the payee against the previous parties and even
against the drawer will expire. , in systems in which expiration is linked to said
deadlines.l05
7.2.5. Checks with guaranteed provision
This check is characterized by carrying among its printed elements the maximum
amount up to which it can be issued with the certainty that it will have sufficient
funds. As the guarantee is granted by the bank, it participates in the nature of the
certification and implies for the entity a direct responsibility with the borrower.
106
The delivery of the checkbook entitles the entity to debit the account up to the
maximum for which they can be issued, making adjustments in favor of the client
if upon presentation they turn out to have been issued for a lower amount or if,
after the presentation period, which in INTAL is one year, the checks or part of
them have not been presented for payment. This solution, however, seems
discouraging for the development of the institution, since, unless they were to be
used immediately, clients would not be interested in obtaining checks, the debit
of which will be immediately produced in the account, when the availability of
The funds will only be made later. For this reason, the possibility should not be
ruled out that banks interested in using this file deliver the checkbooks in
consideration of the credit that their client deserves, which would constitute a
typical signature credit, 107 under the modality of opening credit for up to the
total value of the checks delivered. All of which is with the understanding that
the client is obliged by virtue of the contract to maintain a sufficient supply of
funds and that the latter would be an obvious way to have it. With this advantage
and for certain cases in which clients need to make disbursements for more or
less large sums, but want to eliminate the risk of physically holding the money
and as soon as the receipt of this type of instrument becomes popular, it could
have a great development in commercial life.
The existence of a maximum period within which the bank is responsible for the
existence of funds implies that the check appears printed on the date of its
creation (delivery by the bank) from which said term is counted, to which must
be added the date of issuance (made by the client), when the ordinary deadlines
for presentation of the instrument will begin to run.
7.2.6. Cashier's or cashier's check
The bank has the possibility of issuing checks at its own expense. This is not a
creation power assigned to the account holder but, rather, of using a service that
we mention because it is a special check.
The title is characterized because the drawer and the drawee are the same person;
There is no payment order issued by the clients but, better, if you want to put it
that way, a promise of payment from the bank issued to its own expense or to the
responsibility of one of its branches.
The cashier's check can come from any cause for which the bank appears as a
debtor and intends to resolve the corresponding obligation. Whether it is, for
example, the purchase of equipment, where the bank issues a check to pay or to
the supplier; of the presentation of a service to one of your clients, such as when
you have received a transfer order from one city to another and to pay the
beneficiary you issue a cashier's check; or that the account holder wants to have
resources in a place other than the one in which he has his funds, in which case,
instead of requesting a direct transfer, he can issue a cashier's check payable to
the branch located in the city to which you plan to move and where you will
directly present the instrument.
Unless prohibited by law, the cashier's check is negotiable.108 Non-negotiability,
by mandate of the law or inclusion of the clause, contributes to the solution of a
cumbersome problem derived from the risk that, paradoxically, the possession of
a cashiers check. In effect, if, in order not to carry cash, someone requests a
check against the city to which they are going and by misfortune it is lost and is
negotiable, a problem arises in that there is no person authorized to give an order.
of non-payment and it would be necessary to resort to the judicial procedure
aimed at obtaining the cancellation of the instrument, to prevent it from
becoming effective. We affirm that legally there is no one who can give the non-
payment order, since it can only be given by the drawer. Now, since in this case
it is the same bank, admitting such a possibility would be equivalent to allowing
the revocation of its promise to pay, based on the statement of a third party, who
supposedly has lost it. If the check is negotiable, then, and a third payee appears
to have collected it, proving the formal regularity of the endorsements and,
therefore, its legitimacy, the bank will have no alternative other than paying it.
Based on the above, we consider that if the law does not prohibit negotiation, a
prudent practice would consist of making them "non-negotiable" by the
respective clause, in order to force their collection by the first beneficiary,
through a bank, and eliminate as much as possible. the risk that may result from
the loss of the instrument. Since it cannot be transferred to a third party, the
possibility of a different holder presenting it is eliminated and the bank, after
obtaining a guarantee from its client in the event that it appears and requesting
publicity, including a criminal complaint, if applicable, upon loss, it will surely
issue a substitute cashier's check. Of course, it could go to the extent of
requesting the client to process a replacement and cancellation process for the
instrument, if given the circumstances of what happened, it was found necessary
to reach that situation that would be the safest.
7.2.7.
Travelers checks
The traveler's check does not constitute a way for the holder to dispose of his
funds, although nothing prevents it from being obtained by debiting his current
account. This type of check replaced, in the past, the so-called credit order letters
that we will see later, but which today have disappeared because they are totally
anachronistic, as in fact, the traveler's check itself has lost practical importance
compared to plastic money.109 characterized by being issued by the bank itself,
which is liable to the policyholders as a consequence of its own latent payment
promise until it is put into execution at the will of the beneficiary. It is payable by
the issuer itself, by its branch network and by correspondent offices, when it has
international circulation. In addition to the creator's subscription, it requires a
double signature on the part of the beneficiary: one, before the drawee bank or
the agent that places them on the market and another, before the branch or
correspondent when it is presented for payment or before whoever receives it in
payment for a good or service, so that the previously stamped signature can be
compared with the one placed at that time.
The terms of presentation and prescription of the traveler's check are longer than
those of ordinary checks and in accordance, for example, with the INT AL
project, the actions do not prescribe against the person who issues it and against
the correspondent who puts them into circulation they prescribe. in five years.!!O
We consider the solution of the INT AL project inadequate, because we think
that in countries in which the principle that there are no irredeemable obligations
is accepted, a limitation period must necessarily be indicated.!1!
We will return to this topic in chapter VIII because, in practice, the massive use
of the traveler's check was for a long time an important mechanism for raising
resources.
7.3.
REVOCATE YOUR PAYMENT ORDER
To finish the study of the client's powers, we mention the possibility of revoking,
that is, rendering the payment order contained in the check void. In this matter,
however, there is no unanimity of opinion and there are several theses about the
possibility or impossibility of doing so and about the circumstances in which it
would be appropriate. Furthermore, doctrinal differences are noted between the
revocation itself, on the one hand, and the opposition or justified order of non-
payment, on the other.
7.3.1. Legislative systems
It can be said that there are three systems regarding revocation. The one who
maintains that he is free, starts from the basis that, before being known by the
bank, the order itself lacks virtuality as such and, consequently, the creditor who
thought of having part of the credit in his favor through You can modify your
opinion if you notify the bank and the check has not yet been paid. To which is
added that the holder has no exchange action against the drawee, so that the
acceptance of the counterorder does not bind the recipient bank.
The second system does not allow revocation and is linked to the theory
according to which the issuance of the check entails the transfer of the provision
held by the bank and the negotiations carried out on the title imply successive
transfers of those resources so that, once Once the check has left the hands of the
drawer, its credit disappears in relation to the incorporated sum, as it can only be
validly demanded by the person who acquired it, or better, having validly entered
into a legal transaction with the beneficiary, the drawer could not modify his
effects without your consent. Consequently, it lacks legal basis that would allow
it to validly issue a non-payment order regarding a credit that has ceased to form
part of its assets. Add to the above that, for these or other reasons, this solution is
defended by those who consider that the best way to protect the credibility of the
community in the check and, therefore, its growing acceptance, is to close the
door to a file that It could lead to all forms of abuse by bad faith deliverers,
thereby generating a natural distrust in potential recipients.112
The latter system allows revocation once the presentation deadlines have passed
and is intended to effectively support the check as a security, providing it with
absolute security against the takers who know that, while the deadlines
established by law are pending, the drawer He may not abuse his position by
rendering the order issued void. It is a moralizing principle that strengthens the
check as a payment instrument and gives seriousness to the negotiations carried
out on it, so that it can contribute to being an agile instrument for wealth
mobilization. In summary, the three systems correspond to the Anglo-American,
the French and the German in their order.1l3 The latter was the one adopted by
the Geneva Uniform Law in its article 32.
As can be deduced from the arguments invoked, each system has a set of logical
reasons that support it and it cannot be defined, a priori, which is the most
accurate. It could be noted, however, that better protection of the check and its
seriousness results from the impossibility of revoking it before the presentation
deadline has elapsed. 114
7.3.2.
Revocation and opposition
We said that a distinction is made between simple revocation, that is, the
manifestation by which the drawer voids his payment order - and which could be
imagined capricious - and the opposition or justified order of non-payment, by
which the drawer expresses its willingness to reduce the effectiveness of the
order for a reason that is fully justified, in its opinion or in accordance with the
law.
This doctrinal distinction would lead to maintaining that, even in systems in
which revocation is not allowed until after the presentation period has elapsed, it
would be possible to oppose the payment of the check, in a hypothesis such as its
theft or misappropriation, which which will ordinarily involve the commission of
a crime and the bank is asked to cooperate to prevent the bad faith of the usurper
from causing undue harm to the beneficiary or the drawer. Of course, there is
always the problem of the legitimate holder, who, having acquired the title in
good faith, presents himself to the bank to collect it. Since, however, there is no
action against the drawee, he does not acquire any responsibility since the only
one who could deduct it, his client, is the one who has precisely instructed him to
refrain from paying. Without, on the other hand, the interests of the holder being
harmed, since it keeps his actions safe against the issuer of the instrument. In this
order of ideas, the solution of not paying is the most equitable and results from
the adoption of a reasonable eclectic formula.
The difference is enshrined in some commercial laws115 and can be translated

into criminal provisions. Such is the case when the free revocation of the
payment order is allowed, that is, without having to invoke any cause to do so,
but the fact that it is unjustified is penalized. In accordance with the rules on the
contract, the client may contact the bank before payment of the title to cancel the
payment order issued; However, if your conduct is capricious, if there is, so to
speak, an abuse of the right, because it lacks justification, you may be subject to
criminal sanctions that will result from the broad assessment that the judge in the
case makes of his decision.116
The conceptual difference that legitimizes the opposition or justified order of
non-payment has a non-negligible practical importance because, even if the laws
establish the possibility of resorting to a relatively agile process to obtain the
cancellation of the instrument and inhibit its payment, this process takes a time
greater than that required by a holder to present the check - and the time taken by
whoever stole the document will be minimal, for example, since the speed with
which he acts will depend, in large part, on whether he manages to complete the
fraud - which would lead to render nugatory, because it is untimely, the judicial
decision that is produced.
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92 V. Supra Chap.lIl, 3.4.4.
93. GUALTIERI, Giuseppe and WINISKY, Ignacio. "Circulatory Titles". Ed.
Eudeba, Buenos Aires, 1966, pp. 17 And ff.
94. LUG, art. 14; In such, art. 105; Argentina states that the inclusion of the
words "non-negotiable" means "that the person receiving the check does not
have, nor can he transmit, any more rights over it than those who gave it to him"
(L. 24,452/95, art. 50), which obviously separates itself from the general meaning
that we have assigned to it; Colombia, establishes that "checks that are not
negotiable by the corresponding clause or by provision of the law, may only be
cashed through a bank" (art. 715 C. Co.); El Salvador, art. 799 C. Co.
95. Mexico, art. 199, LGTOC; Intal, art. 134.
96. Colombia. They are established as non-negotiable and for credit to the
account of the beneficiary entity (L. 1a/80).
97. Colombia. The position of the Banking Superintendency was notoriously
hesitant on this matter. But after having interpreted the norm in a res
trictiva, maintaining that it was not possible to endorse the check as property or
collect it at the counter, has adopted, in a position that today seems peaceful, the
thesis that it is possible for the beneficiary to collect it in cash for the latter and,
naturally, it can be done through from a bank, to which it has been endorsed in
proxy, as is the case with all checks deposited in a bank current account (v. c.
AND. 026/91 Y C. 007/96) In a similar sense and with identical conclusions, the
Council of State ruled (Sent. Mar./93. M. Q. Jaime Abella Zárate).
98 BAUCHE, op. cit., p. 107.
99. The Banking Superintendence of Colombia has maintained, wrongly in our
opinion, that the check for credit to the account can be cashed through another
bank (Circular D8-040 of April 13/81). The lack of existence in Colombia of a
provision similar to article 130 of IINTAL could explain, in some way, said
conclusion, but we do not believe that it distorts the reservations made above.
100 RODRÍGUEZ, Joaquín. Op. cit., pp. 187/188. Colombia. The Constitutional
Court declared the enforceability of articles 734, 736 and 737 of the Commercial
Code, which regulate crossed checks and for credit into accounts (Sent. C-041/00
Jan. 2000. M. Q. José Gregario Hernández Galindo).
101 These characteristics appear, among others, in eIINTAL, arts, 132 to 135;
Mexico, art. 199 LGTOC; El Salvador, art. 825, C. Co.
102 This happens in Colombia where the Code has been separated from the
criminal regime by allowing certified checks to be certified at the request of the
issuer or bearer (art. 739 C. Co.) and not prohibiting negotiation. In the same
sense Argentina, art. 48, L. 24.452/95.
103 In the same sense Colombia, art. 742 C. Co.
104 Argentina, for example, establishes in article 49 of Law 24,452 (Check
Law): "Certification can be made for a conventional period that should not
exceed five banking days. If the check has not been cashed upon expiration, the
drawee will credit the drawer's account with the sum that was previously debited.
The certified check expired as such, subsists with all the effects of the check."
105 Colombia. The Supreme Court of Justice has said: "While the submission
period for payment is in force, as deduced from the aforementioned articles (arts.
739, 740 and 742 of the C. Co.), the drawer and the endorsers are exonerated
from exchange responsibility, but once this has passed, the certification expires,
without prejudice, of the exchange effectiveness of the check, vis-à-vis the
drawer and endorsers. It is that the certification of the drawee bank, which is
obtained with the expression 'approval' or other similar ones signed by it, or with
its sole signature, as alleged here (art. 741). of funds intended for the payment of
the check that had to be certified and, therefore, the exchange responsibility in
the terms of article 740,..." (Civil Cassation Chamber. Aug./2000. M. Q. José
Fernando Ramírez Gómez).
106 As occurs in ellntal, art. 140 and Colombia, art. 743. c. Co. 107 V. infra,
Chap. X, 8.
108 In Mexico, for example, they are not negotiable V. CERV BEFORE, op, cit.,
p. 121.
109 V. Infra, Chap. X, 8.4.
110 Article 150.
111 In Colombia, 10 years against the issuer and 5 against the person who puts
them into circulation
(art. 751 C. Co.). In Argentina, this type of title is no longer mentioned in the
Check Law.
112 Colombia, oo... whoever after issuing it (the check) gives an unjustified
order of non-payment, will incur a prison sentence of one to three years, provided
that the conduct does not constitute a crime punishable by a greater penalty" (L.
599/00 art. 248).
113 GIRALDI, Pedro M. "Current account...". Op. cit., pp. 273 And ff.
114 Allow free revocation Costa Rica, art. 825 C. Co.; Colombia, art. 724 C.
Co. Only after the submission deadlines have elapsed: Argentina, art. 29 Law
24,452 (Check Law); Mexico, art. 185 LGTOC; Honduras, art. 606 C. Co.
115 Mexico, case of theft or loss of the checkbook, art. 194 LGTOC. 116
Colombia, art 248 new C. Q.
8.1. ODDS
The current account held for a fixed term ends upon its expiration. That which is
held for an indefinite period, as usually happens, can be terminated by mutual
agreement, by mandate or provision of the law or unilaterally. In the latter case,
termination by the bank may correspond to causes strictly indicated by law that
authorize it to do so or, simply and plainly, at the will of the institution without
being subject to any legal fee. Likewise, unilateral termination may be with or
without notice, depending on what the law or contract establishes.
The existence of prior notice or exhaustive causes, when there is the possibility
of unilateral termination, which is otherwise logical in an indefinite-term
contract, seeks to protect the rights of the client and its commercial image against
third parties and avoid the negative consequences that arise. of account closure.
The most worrying and immediate is the possibility that checks drawn before
receiving the notice of termination are presented, in which case the damage to the
drawer would be evident. For this reason, the different systems seek to ensure
that there is a notice with a sufficient number of days so that within it the
presentation period established in the law for checks expires or they force the
bank to give a period so that the issued checks can be presented. before the notice
or, finally, they terminate the contract, but obliging the bank to pay the checks
presented to it as long as there is a supply of funds. 117
8.2. CAUSES
We will study some causes frequently enshrined in the law or in the contract or
that internally induce the bank to terminate the checking account.
8.2.1. Death of the owner
Since the contract is intuitu personae, the death of the owner puts an end to it and
freezes the existing balances. These become part of the successor assets, which
will be awarded in accordance with the laws of each country, which may
contemplate, by exception, the delivery of all or part of the sums to relatives or
creditors, through the presentation of certain evidence. Termination does not
mean that the bank may refuse to pay checks drawn prior to the death of the
holder if, otherwise, they were validly and regularly issued.118
8.2.2., Bankruptcy or contest
Bankruptcy states require the bank to refrain from paying checks, even those
issued prior to the date of declaration, in the interest of third-party creditors.
Furthermore, they produce the termination of the contract, the balance of which
will add to the general amount of the insolvency or bankruptcy.
8.2.3. Bad driving
This generic cause, against which some laws require closure,119 but which, in
any case, is a rule of prudent conduct for banks, lies in the improper behavior of
the owner in the management of the account and is generally reflected in the
writing of checks without sufficient funds, so that, if some returns occur, the
bank may conclude that its client does not have the conditions of solvency and
morality required to maintain it as such.
In addition to the criminal sanctions that are imposed, if the beneficiaries of the
unpaid checks exercise the actions conferred on them by law, the client rejected
for mishandling may have to endure others of a commercial nature, such as the
decision of all banks. not to open new accounts for a certain period of time or
indefinitely or to cancel current ones with the natural disruptions that this
entails.l20
Mishandling can also consist of other manifestations such as the deliberate
alteration or scratching of the title to suggest the presence of an irregularity,
which if not noticed by the bank could lead to the rejection of payment or the
signing of checks with a signature other than the recording or issuing of checks
against accounts whose balances are seized or repeated and unjustified non-
payment orders, which indicate to the bank that its client, taking advantage of the
legal possibility, is trying to evade legitimately contracted obligations, etc. There
is, therefore, a whole range of behaviors that can be classified as mismanagement
and lead to the termination of the contract.
A warning should be made in the sense that when, by virtue of interbank
agreements or legal provisions, the cancellation of the account due to
mismanagement entails sanctions, a clear distinction must be made between the
closure of the account for this reason and the unilateral termination for different
causes, where there is no bad behavior on the part of the client but rather the
bank, for other reasons, decides to end the contractual relationship. This could
happen due to the existence of very low and unaffordable average balances or the
fact that news arrives about some risky business of your client, which could put
you in difficulties, etc., but, in any case, cases in which there is no bad handling.
If this clear distinction is not made, the bank could be sued for the damages
suffered by its former client as a result of third parties assuming that the account
was canceled due to mismanagement, when in reality that was not the reason.
8.2.4.
Extinguishment or mobilization of the balance
In principle, the sole circumstance that the account is settled, that is, that its
balance remains at zero due to the owner having disposed of what existed at a
given time in his favor, is not sufficient reason to terminate the contract. Some
tendency in this sense can be linked to the conceptual relationship between the
current account contract and the deposit, considered as a real contract, a situation
in which, if the deposited sum is reimbursed, the contract ends due to subtraction
of matter. However, in practice this does not happen and, at most, laws or
regulations usually establish that the contract will end if a certain period of time
passes without new credits being made to the account.121
The same can be said if any balance exists, although there is always the
possibility of unilateral termination, as in the previous case, when it is admitted
without specific causes. But some legal provisions on this matter usually
establish that banks are relieved from sending periodic statements, and can
terminate the account after a more or less long period of time has elapsed. In this
formula there is a sanction for those who do not exercise their right and if the
balances are small or a lot of time has passed, it may happen that the balance is
lost in favor of a charitable or social utility entity. 122
There are other causes for termination of the contract, especially when it is
unilateral. We have only wanted to present the most representative and common
ones.
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117 Honduras, obliges the bank to give a reasonable period of time, art. 966 C.
Co.; Argentina, art. 60 Check Law: "The closing of the checking account
prevents the registration of new checks. The drawee must receive the deposits
made to cover the checks that had been previously recorded. Colombia, obliges
bank to pay checks drawn while there is a provision of funds, art. 1389 C. Co. V.
supra, Chap. v. 4.4.6. The Banking Superintendency, for its part, has demanded
that, except for security reasons, which require acting more quickly, the bank
must announce to its client the decision to terminate the contract, with no less
than two weeks' notice and pay the checks presented to you later, for up to a
period of six months (C. AND. 044/89). This last period, we add, would have to
be counted from the date of the check or the date of presentation of the
instrument, since, otherwise, the bank would be obliged not to pay, even for
current contracts. v. Supra. 4.5.
118 Colombia, arts. 725 and 1390, C.
119. Co. Costa Rica, art. 616 C. Co.
120 The Banking Superintendence of Colombia has classified as an unsafe
practice, opening current accounts for people who have had accounts in other
banks canceled due to mismanagement, Cir. OJ 032.87. On this matter, however,
review the abundant reflections we have made on "habeas data." Chap. 111, 2.5.
And 3.10.3.
121. Honduras, art. 966 C. Co.
122. Ecuador, after 5 years the balances that are immobilized go to the National
Institute for Children and the Family -INNFA-; Colombia, after 6 months the
inactive balances go to the National Provident Fund, D. 1208/73. In return, the
Council of State has considered unacceptable the collection of a management
commission in the event of inactive accounts, considering that its imposition
would be clearly abusive (Fourth Section. Sent. Aug./95).
Chapter VI
TERM DEPOSITS
1. NOTION
1.1. CHAPTER CONTENT
We studied back the notion of irregular deposits of money, transfers in which the
bank acquires the property with the sole obligation under its responsibility to
return an equivalent amount and we saw how, due to their enforceability, they
were classified into demand deposits and term deposits. or with prior notice.1 Let
us now say that in most legislations its regulation is brief and by express
invocation of the law or by analogy the rules of demand deposits that do not
contradict their nature are applied to term deposits. It is convenient to add that if
the classification results from enforceability, term savings deposits may also be
recognized. We will limit ourselves to adding some notions in relation to those
already seen in chapter IV, leaving these last deposits to be mentioned in the next
chapter.
Strictly speaking, a deposit is term when the depositor cannot demand the return
of the sum without having elapsed the period provided for in the contract.
Exception to the general principle, according to which the depositor may request
the return of the good under contract at any time, which is explained by the
remuneration that the entity recognizes in term deposits, in exchange for being
able to use the assets in its active operations. resources obtained.
1.2. SIMILARITY WITH THE MUTUAL
We saw that when the irregular deposit of money is for a term and the depositor
receives an interest rate for the time during which it remains in the hands of the
bank, the similarity with the mutual deposit is very sensitive, to the point that
only subtle differences can be found that allow qualified as a deposit. One of
them is that the depositor makes the contract in consideration of the moral,
solvency and security qualities of the banking establishment and trusts that the
equivalent of his money will be properly guarded. To which is added a
pedagogical reason as the contract is known in our countries as a deposit.
Therefore, although the observations on its similarity with the mutual deposit are
important to specify the legal scope of the figure, it seems legal to use the license
to continue talking about irregular deposit in the case of term deposits.
Finally, remember that in the ordinary commercial warehouse, a contract by
which one person delivers an asset to another so that it can be kept, guarded and
returned later, as would happen in a general warehouse, the contract is
remunerated in favor of the depositary, That is, the customer pays the customer a
sum of money as consideration for the service provided by the warehouse. On the
other hand, in the term deposit the remuneration exists, but not in favor of the
bank, which would occupy the same place in the warehouse, but in favor of the
client because it is the client who provides a service to the client, providing him
with part of the resources that the institution used to carry out its active
operations. There is, therefore, a typical credit contract with the transfer content
already studied.
1.3.
ECONOMIC FUNCTION
Term deposits fulfill a different economic function than demand deposits, even
those deposited in a bank checking account. In effect, the latter are made up of a
volume of resources coming from individuals, companies and the State, destined
for imminent or short-term expenses. Its permanence is explained by an
empirically deduced law, according to which not all depositors withdraw their
deposits at the same time and there is always a two-way flow that allows for
more or less constant volumes. However, these are treasury resources that entities
and individuals maintain to pay their suppliers, their employees, their current
expenses, etc. Consider the case of a person who receives income from work
periodically and deposits it in his bank. It seeks to have availability through the
check to meet its ordinary expenses for maintenance, accommodation, education,
etc., and to cover some small unforeseen events of small amounts. For this
individual, the bank checking account is intended to maintain the resources used
in consumption and, by exception, in some investments. In any case, as long as
you do not receive interest in return, it is clear that the deposit cannot be
considered an investment.2
In term deposits there is a typical collection of savings, that is, that part of the
income that is not intended to be consumed immediately and can be kept
productively for a more or less long time. If the same individual in our example
receives his income and finds that he can save part of it, he constitutes a term
deposit with it, obtaining a return that he considers more or less adequate or that,
if it is low, is compensated by the security and confidence that the depository
entity deserves. We have here what we could describe as a "rentier saver": a
person who deposits his excess resources in good hands, to obtain absolute
security regarding their conservation, but who at the same time seeks and
receives remuneration.
Add another substantial difference between term deposits and current account
deposits: in the latter, banks create money, as a result of the multiplier that results
from the deposit-loan mechanics and the possibility of disposing of new
resources through checks. In term deposits, this possibility does not exist with the
same meaning. The bank uses them to carry out active operations, but the same
multiplier phenomenon does not occur because, although the credits granted
based on them increase the community's purchasing capacity, the deposits cannot
be made through checks.
All these reasons explain why in practice both types of deposits receive different
treatment, especially with regard to the establishment of reserves or reserves that
must be established in relation to them and which are usually lower for term
deposits. Not only because there their sterilization does not have identical
monetary effects, but as a way to stimulate the channeling of resources towards
savings and allow banks to pay more remunerative rates for them.
2. CLASSES
They can be classified into term or term deposits, themselves, and deposits with
notice.
2.1.
TERM
In this case there is a period before which the return of the money cannot be
demanded, as a general rule. We make the reservation, since some authors
maintain that the client can always obtain an early refund of the sum, in this case
losing the interest rate or reducing it proportionally if there is a scale according to
which, the longer the stay, a credit is recognized. highest interest rate. Remember
that this is one of the arguments used to demonstrate that, despite the similarities
with the mutual deposit, the term deposit is still a true deposit. We do not entirely
share this opinion because if a term has been established and an interest rate
recognized, the term is also in favor of the bank and it should not be able to be
forced to give it up. 3
There is a tendency to consider as term deposits only those whose payability is
more than thirty days. Consequently, a shorter term deposit, because it has been
agreed that way or because part of the term has elapsed, is usually assimilated to
a demand deposit for the purposes, above all, of monetary regulations.4 A
peculiar solution in that, from the point of view From a technical-legal point of
view, a six-month deposit is just as time-sensitive as a twenty-day deposit.5
2.2. WITH PRE NOTICE
In the case of deposits with advance notice, there is no fixed and determined
period, that is, a certain date on which the bank knows that the deposit can be
withdrawn. There is a minimum period to notify the bank that the money will be
withdrawn. There is an uncertainty that will be cleared up when the client notifies
the bank that he is going to withdraw his deposit. This notice, usually short,
fifteen days or a month, is intended, at least in theory, to allow the bank to take
the necessary steps to return the money, without trauma to its operators.
2.3.
SUPPLETORY TERMS
Even though it may seem like a contradiction, the truth is that some legislation
regulates a hypothesis according to which if a sum is deposited on time or with
notice, without precisely specifying one or the other, they will be replaced by
those established in the law. Those who criticize this solution state that it makes
no sense to talk about a term deposit if none has been indicated. However, if the
willingness of the parties to enter into a term deposit contract appears clearly
proven, for which, for example, the forms provided for this operation have been
used, the corresponding accountings have been made, a communication has been
sent requesting its constitution for a certain sum charged to your current account,
etc., it is sought that the simple lack of mention of the term or the advance notice
due to inadvertence or carelessness, does not deprive the depositor of the
advantages derived from the contract, among them, the remuneration.6
3. DOCUMENTS
Let's study the possibilities that arise to represent the deposit or record its
constitution.
3.1.
SIMPLE RECEIPT
The first and simplest consists of issuing a document in the name of the depositor
in which the most significant elements of the contract are recorded: date of
completion, amount of the deposit, maturity date, interest rate and the other
conditions that result from the legal regulations. or the bank's regulations. It is a
simple document of duty, non-negotiable, and which certifies the creation of the
deposit without incorporating, properly speaking, the credit right that arises from
the contract. There are numerous names given to the document in different
countries such as certificates of deposit, cash bonds, cash vouchers, etc., with the
aggravating factor that while one may express the idea of a simple receipt in one
country, in another it may suggest the existence of a security. 7
3.2.
TITLE VALUE
The second possibility, much more interesting, is to represent the credit right
derived from the deposit in a document endowed with the characteristics and
prerogatives of securities, susceptible to circulation and taking the forms of
nominative, to order, or to the bearer, according to the specific provisions of each
country. This title, like the previous ones, has different names and can even be
confused with current securities when, as a result of the deposit, the bank must
accept bills of exchange drawn by its client with the maturity stipulated in the
contract.8
The representation of the credit in a security entails obvious advantages for the
parties; for the client, because if he needs resources before maturity, he can go to
the market and easily obtain an advance or limit himself to negotiating or
discounting with a third party.
and for the bank, at least in the case of deposits with advance notice, because if
the holder of the deposit needs his money, he may choose between giving
advance notice or negotiating the title with a third party, who, less pressured than
his predecessor , can be preserved for another time.
An interesting complementary possibility arising from the fact that the
incorporated obligation has a divisible object, is that the title can be divided
before its maturity or on the occasion of it, for normally market reasons.9
3.3.
DIFFERENCE WITH BONDS OR OBLIGATIONS
We will have the opportunity to study these titles in detail in chapter VIII. For
now we want to note that there are profound differences between the certificates
or documents that we have mentioned and the bonds, obligations or debentures,
in Argentine terminology. If the bank raises resources through both channels, the
bonds or obligations are characterized by being issued in a serial and massive
manner, in favor of undetermined borrowers at the time of issuance and are
subject to complex regulations by the surveillance entities, since These are
typical debt systems, with respect to which the State wants to know their
destination, the guarantees and the solvency of the debtor. The certificates,
vouchers or cash bonds obey a specific term deposit contract and are a
documentary consequence of the conclusion of the contract and the raising of the
resource.
In other words, while the bonds or obligations are the cause of the deposit, the
securities that are issued as a consequence of a term deposit are the result of it.
Due to the economic function they fulfill, their position in the intermediation
structure and the characteristics that we briefly mentioned, it can be concluded
that there is an absolute conceptual difference between the two types of
securities. 10
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1.V. Supra, Chap. IV, 3.4.2.
2. Even if you receive interest, it is usually significantly lower than what you
could obtain by placing the same amount in a term deposit.
3. Colombia establishes this by establishing in article 1393 of the Commercial
Code that: "term deposits are those in which advance notice or a term to demand
their restitution has been stipulated in favor of the bank." In the past, the
Monetary Board accepted the possibility of the client demanding early
repayment, losing part of the interest rate in accordance with a scale established
by the respective provisions, R. 69/71. It later established the impossibility of
redeeming them before their expiration. R. 12/74, R. 51/74, R. 10/80. El
Salvador, art. 1199 4. c. Co.; Honduras, art. 969 C. Co.; Colombia, as established
in art. 14 of the repealed L. 45/23. Ecuador. Banking Law, art. 51, lit. to);
Venezuela establishes that "...sight deposits will be considered those payable for
a term equal to or less than thirty (30) continuous days, and time deposits will be
considered those payable for a term greater than thirty (30) continuous days."
LGBIF, Decree 3,228 dated October 28, 1993, article 22.
5. In Colombia, banks were also prohibited from capturing them for less than 90
days. R. 10 of 1980 of the Monetary Board. Today the minimum period is 30
days.
6. Honduras, if advance notice is not required, 24 hours will suffice, art. 969 C.
Co.; Colombia, if the expiration or notice period is omitted, it will be understood
that the deposit will not be payable before 30 days, art. 1393 C. Co.
7. For example, in Colombia Term Deposit Certificates are securities (OfL OJ-
055 of March 5, 1982 Superbancaria). In Mexico, simple receipts were
distinguished by that name, while securities were called Cash Bonds.
RODRIGUEZ, Joaquín. "Banking Law". 1974, p. 263.
8. Argentina, V. MURATTI, Natalio. "Elements of science and banking
technique", 4" ed. Ed. The Ateneo, Buenos Aires, 1960, pp. 322 AND 323.
Venezuela. It establishes that "... they will be documented by negotiable or non-
negotiable certificates, ... in successively numbered titles, which must be
registered in the records kept for this purpose" LGBIF (D. 3,228 dated October
28, 1993), inc. 2nd, art 22.
9. Colombia. The Banking Superintendence has found this possibility compatible
with the essential elements of the document (Conc. OJ-221/85). l
10. Colombia. The registration of term deposit certificates on the Stock
Exchanges, created by the financial institution to be issued or placed by
commission agents, is permitted, thereby partially distorting the importance of
this difference.
Chapter VII
SAVINGS DEPOSITS
1. NOTION
1.1. SOCIOECONOMIC CONTEXT
It is an irregular deposit of money, which shares with term deposits the purpose
of preserving part of people's income in anticipation of future needs or the
formation of capital. Unlike, however, the term depositor that we describe as a
"rentian saver," here we find a saver whose purpose of contracting, rather than
obtaining an adequate remuneration for his capital, even if he receives interest, is
to count on its conservation, its increase, its custody and management by the
bank. The notion is linked to the need to provide small savers with the possibility
of depositing their money under conditions that stimulate their tendency to save
and taking into account peculiarities that distinguish, within the Latin American
economic context, the classes with the lowest saving capacity. . They usually
enjoy certain prerogatives related to these socioeconomic considerations.
1.2. CHARACTERISTICS
1.2.1. Multiplicity of clients
As the resources come from small savers and given the high population growth
rates in Latin America, this translates into the existence of a high number of
savings clients and low account averages, as a result of receiving small sums to
stimulate deposits. The concurrence of both factors causes high operating costs
for institutions that work with savings and sometimes explains why interest rates
are lower than those recognized for other deposits. This technical reason, linked
to the construction of prices, would be the reasonable explanation for the
difference, which could not be based, of course, on the use of the same
conditions derived from the profile of savers, since this would constitute an abuse
1.2.2.
Deposit permanence
The permanence of deposits is explainable, even in those that are constituted on
demand and even in countries that do not know certain mechanisms to make their
withdrawal difficult, because ordinarily people save to prepare for a future and
unforeseen need or to achieve some satisfactions that involve persevering in
saving for a certain time.
This does not prevent the savings account from being used in some sectors as a
substitute by those who, not being able to access a checking account, still need to
keep their resources in the hands of a banking entity. Such is the case of small
farmers who, after a semester or the entire year, sell their crops, whose produce,
and here the typical purpose of custody, is much better in the hands of the bank
than in their own hands and who go to withdraw slowly to meet the expenses
they must make during the unproductive period. But even in this case, the deposit
and withdrawal cycles are much broader than in the case of someone who
receives a wage or salary that they deposit in their checking account. The
permanence of deposits allows institutions to allocate them to investments with a
liquidity lower than that required by resources collected through checking
accounts.
1.2.3. Limitation on maximum amounts
Some countries have established limitations on the maximum amount that can be
maintained in savings deposits, among other things because, by enjoying the
privileges that we will see later, they want them to benefit lower-income classes
who, by definition, cannot make deposits. for very high amounts.1
1.2.4.
Non-monetary incentives
We have already said that for the majority of small-income savers, the reason that
leads them to make the deposit, rather than obtaining remuneration, is to have
custody of their money and thereby prepare themselves for difficult times or
carry out some programs to which have to undergo a severe savings plan. This
explains why when the bank, in addition to safeguarding the money, recognizes
an interest rate, even if it is not very high, the holder finds it reasonable in the
light of achieving the main purpose pursued. But in addition, and taking into
account, we could say, the natural expectations of the socioeconomic group that
usually uses these savings systems in most countries, there is the possibility of
establishing non-monetary incentives, formed especially by raffles or raffles that
can refer to the balance. existing or a multiplier thereof or may consist of sums
for the acquisition of durable consumer goods including motor vehicles or
houses, etc. Experience seems to prove that this group of savers responds
favorably to non-monetary incentives, particularly to raffles, surely because in
many cases these are goods whose acquisition is difficult with the individual's
own resources, in which case The possibility of acquiring them in this way, even
if remote, constitutes a strong motivation.
Now, for them to really be incentives, those offered must represent an advantage
over the natural consideration that the saver could obtain in the market. That is,
those that, ultimately, were detrimental or borne by the saver could not be
classified as such, or they would have to be presented in an absolutely transparent
manner so that there was a conscious decision to sacrifice their profitability, for
example, in exchange for participate in raffles.2
2. CLASSES
We will see immediately the modalities that, in general, savings deposits take.
2.1.
SIMPLE AND CONSIDERATE
In the first case, it is a contract that is made by the constitution of the deposit and
that concludes by its withdrawal. In the second, the holder can make payments
and withdrawals uninterruptedly during the duration of the contract. The support
in the latter is the existence of a current account from an accounting point of
view and, therefore, in these savings accounts the most prominent legal
principles of the bank current account are generally applicable. They are
distinguished from this, however, by several notes: there are no checks; The
account holder disposes of his balances through payment orders, the satisfaction
of which is recorded in the booklet or in the document that replaces it; The
deposited amounts receive a remuneration that is exceptional in current accounts;
Frequently, a maximum deposit amount is established in a savings account,
which does not occur in the others; Withdrawals are made by the client or his
representative, while in the current account the check allows them to be made by
a third party beneficiary; and, finally, in the savings account the passbook plays
the role of an exclusive document of legitimation and proof of the movement that
does not exist in the checking account.
deposited receive a remuneration that is exceptional in current accounts;
Frequently, a maximum deposit amount is established in a savings account,
which does not occur in the others; Withdrawals are made by the client or his
representative, while in the checking account the check allows them to be made
by a third party beneficiary; and, finally, in the account of others the passbook
plays a role as an exclusive document of legitimation and proof of the movement
that does not exist in the checkbook.
2.2. ON SIGHT AND IN DEADLINE
Due to their enforceability, they are at sight or in installments. However, a very

interesting modality is presented that often leads to an eclectic system with two
manifestations: there are laws that establish the impossibility for the holder to
withdraw all the sums in his favor at a single time, so that he must give advance
notice to withdraw part of the deposits made. That is, the balances existing at a
given time are withdrawable partly at sight and partly on time.3 Others, without
enshrining a similar provision, provide that the bank may, at any time, during the
term of the contract, notify its holders that Deposits may only be withdrawn with
a specific prior notice.4
An interesting modality that reconciles compliance with advance notices for
withdrawal with the liquidity needs of the holder consists of the bank delivering
acceptances at the expiration dates provided for by law or regulation. In this way,
the disbursement by the depository institution is only made upon expiration of
the deadlines, but the client, provided with the acceptances, can obtain a discount
for them in the market and obtain the necessary resources. 5
2.3.
CONTRACTUAL OR PERIODIC SAVINGS
We use the contractual expression because it is used in some countries, but
admitting that it is generic because it is inappropriate since all savings deposits
imply the conclusion of a contract.
It is intended to indicate with it or with the periodic savings, that the amount and
periodicity of the deposits do not obey the simple initiative of the owner, but
rather a program agreed upon from the beginning with the bank and aimed at
accumulating a certain amount of money that It allows the saver to obtain a loan
from the credit institution and achieve a certain purpose. The large housing
deficit in many countries means that the most frequent option is the acquisition or
construction of a home.
Periodic savings plans successively share some characteristics of capitalization
and credit opening contracts. Indeed, in the first stage the client agrees to
contribute a periodic sum until a certain amount is reached, assimilating its
purpose to a capitalization program, without the attraction of early
reimbursement through raffles. Once the sum has been obtained through
perseverance in building successive savings, the client normally acquires the
right to obtain a loan from the bank. The obligation of the latter can be framed
within those of the credit opening contract, since from that moment on the client
has the availability in his favor to request the delivery of the loan that, together
with his resources, will allow him to carry out mackerel intended purpose. It
could also be argued that a conditional mutual promise exists from the beginning,
as long as the legal requirements for it are met, which in practice leads to the
same result.6
It is natural that when the loan is verified, it is guaranteed with the property
acquired or under construction.
3.
REPRESENTATIVE DOCUMENT
Savings deposits can be represented in a simple receipt or in a security called, in
some countries, a savings bond, which as such is negotiable and has the
characteristics that we discussed in the previous chapter.7 We will limit ourselves
to talking at this point about savings stamps and the passbook, as a typical
document used in the management of savings accounts.
3.1.
NOTEPAD
3.1.1.
Its reason for being
Although with technological development this document tends to disappear as
such, the mention of the notebook is useful to understand, from its origins, and in
a real environment, the role it has played for years. Without a doubt, it is one of
the instruments that most clearly reflects the fact that savings are largely formed
by small savers. Remember that, although the evolution of recent years seems to
be encouraging, in some of our countries high illiteracy rates have been recorded
for a long time. In some rural sectors, a good part of the recipients of the savings
systems were illiterate people or people with basic knowledge of reading and
writing, but without enough knowledge to handle simple accounting, obtain
balances, etc. The use of this instrument saved the inconveniences, transferring
the accounting of its client to the credit institution, which, on the other hand, was
not difficult, if we remember that it is obliged to keep a daily account of the
deposit relationships with its clients. . Consequently, once this obligation has
been displaced, the bank undertakes to record the credits, charges and permanent
balance in the booklet, under the rubric of one of its officials. In this way, the
owner, who must present the book to verify credits or withdrawals, has full faith
in the accounting capacity of the institution and in the appropriate way in which
it records the items and, in a certain way, can thus compensate for his own
deficiency without no risk, since the seriousness of banking and the special
controls that are exercised over it are well known.
3.1.2.
Legal nature
Although most laws and regulations require the presentation of the booklet,
which is nominative, that is, to the order of a specific person, this does not mean
that it is a security. 8 It fulfills an evidentiary function that explains its necessary
presentation to deposit or withdraw and allows the risks of loss to be ruled out in
practice, since the document is not negotiable. In this case, the holder must meet
the requirements to obtain the issuance of a duplicate.9
The booklet allows proof of the existence of a balance available to the holder by
signing requests-receipts in which the withdrawal recorded in it is recorded,
unlike the bank checking account in which the withdrawal is made through
checks, most of the time.
Now, it is evident, as we already noted, that current techniques provide more
suitable support instruments than the old notebooks. In fact, it is not strange to
find that savings customers now have "debit cards" that allow them, among other
things, to withdraw their funds from dispensers or ATMs. But this does not
modify the characteristics that we have stated about the book, in that it is a non-
negotiable title, it does not allow payment orders to be given in the form of
checks - although it would allow requesting transfers of funds through the same
ATM - and above all, it does not relieves the bank of the obligation to guarantee
that there is unquestionable evidence of the operation that, as in the passbook, is
left to its management and control.1o
3.2.
SAVINGS STAMPS
This system, although much more obsolete than the passbook, sought to establish
savings channels for the smallest sums that, due to their amount, could not be
received in an ordinary savings account, because although these facilitate the
deposit of small sums, some are so insignificant that, given the costs for the bank,
it is inadvisable to receive them. To allow, then, that fractional sums, of cents, for
example, could be saved, especially in savings promotion programs such as those
that can be carried out at the level of colleges or schools, spreadsheets were
created with pre-printed spaces so that They will place the stamps. They were
acquired for their nominal value and were added until the form was completed or
the minimum amount required by the institution was accumulated to open the
account or make the accounting entry, as the case may be. The stamps were
securities issued by the bank, representing the sums saved.
If we mention them in the text, perhaps for the last time, it will be to insist on the
absolute need to encourage savings, the accumulation of which is vital in the
challenge of building solid economies with investment capacity and aware that
the enormous merit of stamps is It was linked to the purpose of stimulating
young people, at ages, precisely, where it is possible to create the best habits.
Other techniques will now allow us to do it more adequately, but the important
thing, when remembering the function of stamps, is not to forget the fundamental
importance of creating and maintaining a collective savings culture.
4. PRIVILEGES THAT THEY USUALLY ENJOY
Because they come from small subscribers and form an important part of a
country's internal resources, savings are subject to strict protection regulations by
state powers. This is how the credit institution had to allocate the resources raised
to specific purposes indicated by the monetary authorities, often taking into
account the solidity rather than the profitability of the investments. But even if
such interventions have tended to disappear, it is about keeping savers' money
safe so that the risk is truly remote. But they are not only protected in a special
way but are encouraged by enshrining some privileges that we briefly mention
below.
';,
4.1.
NON-EMBARGABILITY
It is well known that a person's assets, or better, their assets, serve as collateral
for third parties who contract with them to support the debts under their charge,
which is why it is stated that it is "the general pledge of creditors." ". This
explains that, among the measures available to the creditor to obtain indirect
compliance with the obligation, is that of requesting the seizure and seizure of the
debtor's assets, with the aim of having them auctioned off and the proceeds paid
for. debt in your favor. This is a general principle for the protection and interest
of creditors and protection of the good faith with which obligations must be
contracted. However, in the presence of higher-ranking interests, the legislator
has chosen to introduce exceptions in this matter, in the specific case of savings
accounts, establishing Seizure of all or part of them, either because it is said so,
or because it is considered the heritage of a family that enjoys this privilege; in
all cases, trying to protect the interests of savers and their families.11
4.2. DELIVERY OF BALANCES TO HEIRS
The general principle is that, although the heirs succeed the deceased from the
moment of death, a judicial or administrative process is required for the assets to
be awarded to them.12 Here a new exception is presented by authorizing the
delivery to the heirs directly, because the account holder has designated them as
such at the time of entering into the contract or they prove it by presenting the
evidence established by law. Some legislation even provides for the possibility of
making this delivery to creditors, which does not seem sufficiently secure. 13
4.3. SPECIAL TAX TREATMENT
Regarding direct and indirect taxes, legislation also usually establishes privileges
in favor of the holders, exonerating them from payment or reducing the rates that
must be applied to taxable events.14
4.4. PRIVILEGED CREDITS
Finally, as we have already said, it may be established that the credits in favor of
the depositors are excluded from the estate of the bankruptcy, insolvency or
administrative liquidation or in privileged conditions for the purposes of the
priority of credits that is established. fifteen
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1. El Salvador establishes that there will be no limit, art. 56 literal e) Banking
Law; Honduras art. 974 C. Co.; Colombia, art. 127 no. 1° EOSF: "Every banking
establishment may limit the amount that an individual or an association can
deposit in its savings section, to the sum it deems appropriate...".
2. Colombia. The law ordered the Government "...to dictate' regulations in order
to prevent the cost of premiums or insurance from translating into greater charges
or lower returns or rewards to the saver or user of the promoted product or
service" (EOSF, art. . 99) For this purpose, D was issued. 2204/98 which
empowers the Superintendency to object and order the dismantling of plans that
produce such a result.
4. Colombia, EOSF, art. 127.5; Ecuador, art. 181 Banking Law. 5.
RODRIGUEZ, Joaquín. "Banking Law", 1974, p. 275.
6. Honduras, art. 70DL 135; Colombia, EOSF, art. 126, No. 2. It establishes the
possibility, but does not link the right to obtain credit to the program. This does
not prevent us from insisting on the undoubted convenience of doing so.
7.V. Supra, Chap. VI, 3.2.
8. RODRIGUEZ, J. "Banking Law", 1974, brings up the example of bearer
savings books, accepted in Italy, p. 271.
9. Ecuador, art. 183 LG of B.; Colombia. Savings may not be paid "". an
electronic document that allows reliable evidence of the transaction carried out"
EOSF, art. 127, 6; El Salvador, art. 1219 C. Co.
10.V. Chap. 111, 3.3.
11. Honduras, art. 977 C. Co.; Venezuela, LGBOIF. art. 27; El Salvador, art. 56
lit. j) Banking Law; Guatemala, art. 52DL 315 (Banking Law). Colombia
establishes non-seizure protection up to a certain sum that is adjusted annually.
EOSF. Art. 126, 4. Until September 30, 2002, it has been indicated at
$16,693,945, something like US$ 7,500 (Banking Superintendence. C. Circular
128/01).
12. Colombia. Authorizes succession processes, where there is no conflict, to be
carried out before Public Notaries. In this regard, consult Decrees 902 of 1988
and 1729 of 1989.
13. Colombia, art. 127 N" 7 EOSF; El Salvador, art. 56 literal h) Banking Law;
Honduras, art. 976 C. Co.; Colombia authorizes the delivery to the heirs or the
surviving spouse or to one or the other up to a sum that is adjusted annually.
Until September 30, 2002 it is $27,823,239, something like US$12,500 (Banking
Superintendency. C. Circular 128/01).
14. Honduras, art. 976 inc. 10 C. Co.; In Colombia they do not have special tax
treatment, although in some taxes they do have relative privileges, art. 879 E. T.
15. Colombia, art. 1399 C. Co.; El Salvador, art. 109 lit. d) And e) Banking Law.
Chapter VIII
ISSUANCE OF OBLIGATIONS AND OTHER TITLES
1. CHAPTER CONTENT
1.1. BONDS OR OBLIGATIONS
The inclusion of the topic in this second part indicates that we are referring to the
issuance of documents through which banks obtain resources in the market.
However, when talking about the issuance of bonds or obligations we can
distinguish two hypotheses in which the participation of a bank is always
possible, without one of them involving the execution of a contract intended to
raise resources. In effect, it is necessary to distinguish between the issuance made
by commercial companies, an event in which they choose to go to the capital
market with the purpose of directly obtaining resources, without having to go
through financial intermediation, that is, without requesting bank credit in where
the bank intervenes only as a fiduciary agent02 and the issuance by the credit
institution of securities that allow it to obtain resources in the market.
In truth, the study of the issuance of securities by commercial companies and the
fiduciary participation of banks is a topic that should rather be studied in chapters
XIX and XXII. It is there, when talking about mandate and trust, that we will see
how banks, within the multiple trust orders that they can receive, have the
responsibility of participating in this issuance process. However, we have chosen
to study the topic in this chapter because the issuance of securities directly by the
credit institution is largely subject to the general principles applicable to
commercial companies in this regard. In this order of ideas and from the
pedagogical point of view, it seems more beneficial to analyze what these
principles are to be invoked in the case of credit institutions, as long as the
legislation so provides or analogy is possible in the application of these rules.
Regarding direct issuance by banks, it is also worth making a preliminary
clarification. We will see that there are two typical modalities that these
documentary obligations or liabilities have: the so-called financial bonds - we
simplify from now on the very rich and inconsistent Latin American terminology
issued by banks or other financial entities; and the so-called securities or bonds
or bonds or mortgage bills, issued by mortgage banks or by mortgage sections of
commercial banks. From which it follows that, according to
ity with the initial plan, the chapter only finds its meaning when commercial
banks carry out an issuance activity itself, since in general terms they will be
securities issued by other financial or mortgage entities, whose functions
commercial banks cannot always perform. or short-term credit.
With these two reservations made, the purpose of the chapter will be understood
to present an outline of the principles that regulate the issuance of obligations by
commercial companies and that can be, in many cases, applicable to banks. This
possibility does not always coincide with the reality of each of the countries,
which is usually complex, full of small details and difficult to generalize, due to
the terminological differences that are used, but it will allow us to obtain in the
end a global and relatively acceptable vision of what which can be considered a
general theory on the issuance of serial debt securities by entities, which may
well be banks.3
1.2: OTHER TITLES
We will also mention other documents that serve the bank to raise resources
without meeting the requirements to consider them as bonds or obligations or
being subject to the restrictions established for the latter. With a peculiarity that
is worth repeating: in both cases they are titles whose issuance serves as a cause
for attracting resources and not those that are a consequence of having obtained
them. They are, therefore, those whose issuance induces third parties to channel
their funds towards the bank and not those that are issued to prove the making of
a deposit or investment.
2.
NOTION OF OBLIGATIONS, BONDS OR DEBENTURES
When we talk about obligations we refer to the titles that, covered by this generic
expression, are known by that name in Mexico, or to the so-called bonds, simply,
in Colombian legislation, or debentures, to cite another example, in Argentina or
in the INT AL project. All of them, despite their different names, obey the same
conceptual principle that identifies them. The latter defines them by saying that
"bentures are securities that incorporate an aliquot part of a collective credit
constituted by a public limited company."4
They correspond to the procedure used by companies to increase external
resources by inviting third parties to make them a collective loan in which, in
exchange for not enjoying the eventual benefits that would correspond to them of
being partners and having increased capital, they can count on with a
profitability, in principle, fixed, and susceptible to improvement through raffles,
when such a system is foreseen.
The third-party bondholders see the rights arising from the conclusion of the
contract incorporated into a security, which represents the proportional part in
which each of them participates in relation to the collective credit and any
guarantees that support it. As a security title, it has two main characteristics: it is
a title with credit content but, in addition, a participation or corporate title in that
it not only grants the right to the payment of a sum of money but, in the
contemporary trend, empowers the holder to exercise of different rights such as
participating in the assembly of holders, when such body exists or acting through
their common representative and demanding certain behavior; powers that
exceed those derived simply from a title with credit content.
It constitutes, on the other hand, a typical modality of the so-called serial

securities, which are issued and issued en masse, representing the total of the
maximum sum of the planned indebtedness and using the series so that each one
corresponds to homogeneous values of issue. The modality of the serial title is
explainable in this matter because the interesting thing about the issue, in terms
of the contractual relationship, lies in the fact that the offer is issued in favor of
an unknown and indeterminate number of possible holders of the titles, so that
the The issuing entity does not know the fate of its debt proposal, the support it
has among the public, the number of borrowers who are interested, etc. For this
range of indefinite possibilities, serial titles fulfill the specific function of
allowing those who are interested to take any part of the broadcast, no matter
how small it may be. In practice, of course, the market analyzes carried out by
the issuing companies, motu proprio or by legal provision and the agreements
entered into with specialized brokers, which may even include underwriting
contracts for the placement of the issue , make it possible for a company to know
more or less with certainty what the volume and price of the resources that can be
placed on the market will be, taking into account the interest rate or discount
conditions that govern at that time, according to the modality that is used. adopt.5
This being the case, it seems interesting to make a parallel between obligations
and actions.
Remember to begin with that the latter are also corporate participation titles. Its
holders acquire the fundamental rights of the shareholder such as electing and
being elected; participate in the decisions and life of the company through the
general assembly where they enjoy the right to vote; participate in the social
benefits pro rata of their quota and bear the company's losses if they occur, etc.
That is, whoever acquires a share is linked to the fate of the company,
indefinitely, that is, during the life of the company. That is precisely where their
desire to associate lies:
provides resources or efforts to achieve a certain economic goal with the hope of
obtaining benefits, but assuming the risk of bearing losses.
The holder of an obligation is, unlike the shareholder, an external term creditor
for whom the economic result of the company is indifferent, in principle, as long
as it is in a position to pay the returns offered. Obligation borne by the company
without regard to the circumstance of having obtained more or less profits or
having suffered losses in a financial year.
On the other hand, shares are usually placed at least at their nominal value, while
bonds can be placed at a discount; The former are supported by the company's
own operating capacity and will ultimately represent the share in the equity that
remains once the external liability has been paid, while the bonds can be issued
backed by specific guarantees; The latter, finally, can be repurchased on the
market, without legal limitations, while the repurchase of shares is usually linked
to certain legal or statutory requirements.6
Some forms of shareholding have similarities with the obligation in that they
grant the shareholder the right to receive a fixed dividend, when he or she is the
owner, for example, of privileged shares.7 But in the opinion of the majority of
authors and in accordance with A logical analysis, the position of both is
different, due to legal and economic aspects.
Later we will return to the titles to better specify some of their elements.8
3.
ISSUANCE OF OBLIGATIONS BY COMMERCIAL COMPANIES
With the exception made about the intervention of the banks in this process that
results from a fiduciary order, we will review some characteristic principles in
the issuance of obligations, without this meaning that they correspond to those
established by the different Latin American legislation on the matter, since This
is a topic not specifically consulted because it is, in principle, unrelated to the
purpose of the book.9
3.1.
ISSUE LIMITED TO CERTAIN TYPES OF COMPANIES
The possibility of issuing debentures, bonds or debentures is restricted to certain
types of companies, that is, to obtain external financing through the issuance of
serial securities at their expense. This limitation is frequently linked to the capital
structure of the companies, limiting the issuance to those of capital or shares,
rather than to partnerships. What in practice is explained by those usually being
subject to particular State surveillance that allows for better control of the set of
requirements established for the issuance. 10
3.2. MINIMUM REQUIREMENTS
Usually some minimum requirements are established without which the planned
issue would not be justified.
3.2.1. Fully paid subscribed capital
This first requirement seems logical, since it is not understood that the company
intends to turn to third parties if it has not been able to obtain them through the
direct means of obtaining resources, that is, the contributions promised by the
partners. In effect, society offers to support its invitation the very solidity that
derives from its economic structure. It would not be reassuring for third parties to
note that the partners themselves, who better than anyone should know about it,
are pending completing their capital contributions. It means, in other words, that
before inviting third parties to invest in the securities issued by the company, it
must prove that its partners have fully paid the capital they had subscribed before
the issue.ll
3.2.2.
Complete placement of previously issued securities
If it is a company that is not making its first issue, that has already resorted to this
form of financing in the past, it seems necessary to require the total placement of
the securities issued previously, before assuming a new commitment to third
parties, to unless there are reasons to explain why it expects to obtain a certain
volume of resources when part of a previous issue is unplaced. One explanation
could be that the conditions of the new issue, in terms of the interest rate or
discount percentage, are more advantageous and, therefore, greater public
demand can be expected. Hypothesis that cannot be ruled out in practice since it
can be assumed, at a given moment, that the interest rate has risen unexpectedly
in the market as a result, for example, of monetary measures dictated by the
Government, so that the interest rates current broadcast are not attractive.
Therefore, although the restriction seems logical, in practice it still raises serious
questions, in the face of hypotheses such as the one we have just raised, since it
would place society in a difficult position to obtain new resources.12
3.2.3.
Issuance limited to the amount of capital and reserve
Another restriction is constituted by a quantitative limit established in relation to
the capital and reserves of the company, so that the issuance does not exceed the
total of both items. A limitation that seems clear since it can be considered that,
ultimately, the guarantee of the issue, if there is no specific one, is made up of the
released capital and the company's reserves. However, some exceptions are
conceived when there are sufficient guarantees from private third parties, credit
institutions or insurance companies - who are jointly and severally liable for the
issue or, at least, for the part that exceeds the indicated limit. Likewise, an
exception can be considered when the resources are allocated to investments in
capital goods that increase the installed capacity of the company and serve as
additional guarantee for creditors or when the loan is intended to cancel debts
originated in investments of said company. nature, because in this case also a
new asset results that fulfills the same backup function. 13
3.3.
ISSUANCE PROCESS
3.3.1.
Decision of the competent body
The logical sequence in the issuance process is based on the decision made by the
competent body of the company, whether it is the General Assembly or Board of
Partners or, simply, the Board of Directors or Board of Directors, as provided by
law or the statutes, in each case. Budget that does not require further explanation
and that allows us to remember that legal entities are bound by the decisions
made by their competent bodies.
3.3.2.
Prospectus or issuance project
As soon as the social decision must be submitted to governmental approval,
before being implemented, it is worth considering the existence of a project that
must be presented to the entity empowered to grant approval.
It could be said, in broad terms, that this prospectus must contain all the
necessary data to be able to evaluate not only compliance with the minimum
requirements but also the viability of the financial project, to which the issue is
linked. Among others, all the data that identifies the company must be indicated,
such as name, address, object, etc., accompanied by the evidentiary elements that
support them; Financial statements; the description of the loan indicating its
amount and its validity; the allocation of resources and the amortization project;
the indication of the fiduciary entity that will be representative of the holders; the
rights and obligations of the holders
as long as the law does not expressly indicate them or does so order that they be
included: the nature and amount of the guarantees offered; the legal nature of the
bonds or obligations according to the circulation law, that is, nominative to the
order or to the bearer; the rules on replacement, fractionation and consolidation
of titles; the authentic copy of the decision of the corporate body and, in general,
all those elements of judgment that seem necessary to make the decision by the
government entity.14
But perhaps the most important aspect, from a material point of view, is
constituted by the quality of the studies that are essential in any process of
issuing securities to be placed on a market and whose conclusions must be
reported in the prospectus. In carrying out such studies, the so-called "investment
bankers" play an important role, who precisely advise the businessman in the
prior analysis on the possibilities of direct access to the capital markets
compared, even, to options such as obtaining strategic partners that place the
funds or use corporate transformation mechanisms such as mergers, spin-offs or
acquisitions, to name a few. Well, if the issue of securities is chosen, the
investment banker will be responsible for the financial structuring, including the
preparation of the projections, the recommendation of the rate, the terms and the
form of amortization and, in general, the technical aspects whose definition will
depend, to a high degree, on the fate of the project.15
3.3.3. Contract or act of issuance
Once the prospectus has been prepared and submitted to the consideration of the
competent authorities, along with the other documents, it is necessary that by
unilateral act of the issuing company or by contract entered into with the
representative of the holders, in the laws that so require, a document containing
all the requirements to which the prospectus refers, together with proof of the
authorization obtained; the precise data on the amount of each series, the interest
rate and the forms of amortization; the opening and closing date of the issue, that
is, the period within which the interested third parties are in a position to take the
bonds or obligations under the conditions indicated in the respective document
and, finally, the indications about the representative of the holders, if any, and the
terms of their agreement with the issuing company. Document intended to be
solemnized by means of a procedure before a notary or public notary, to be kept
indefinitely and thus facilitate consultation by the interested parties.
3.3.4.
Advertising
and as a logical conclusion of the process, the notarial act is usually accompanied
by registration in the public commercial registry, so that those who inquire about
the existence of the company, its limitations, etc., can find in the extracts issued
by the chambers of commerce or the entities that act in their place, the conditions
of the issue in force at a given time.16
A copy of the respective document with proof of registration must be sent to the
entity in charge and the approval is given, so that it can verify compliance with
all the requirements demanded by law.
3.4. SPECIAL STATE INTERVENTION
3.4.1. Reason to be
In the issuance of obligations there is a special participation of the State that is

generally due to the protection of creditors and corresponds to the general
protection over savings systems since, the issuance refers to the possibility of
raising resources of an indeterminate number. of individuals, the State considers
it necessary to ensure that the loan is made within security conditions that allow
investors to guarantee the proper use of resources by the company, within
conditions of financial capacity and economic realism in the formulation of
investment plans. investment, that make feasible the timely reimbursement of the
sums received.17
3.4.2. Content and powers
3.4.2.1. Prior authorization and subsequent control

State intervention is presented in a preliminary form in the study of compliance
with the minimum requirements required to grant the authorization and,
subsequently, through control over the development of the issue and compliance
with the obligations assumed by the company.
3.4.2.2. Faculties
A succinct list of the possible powers assigned to the state entity is as follows:
a) Demand guarantees
If it appears from the financial project that the company's released capital is not
sufficient support due to the current risks of the sector, for example, the
authorization could be conditioned on the constitution of additional guarantees to
give a reasonable margin of coverage to the holders of the obligations.
b) Ensure the destination of the loan
The government entity is responsible for monitoring the economic results, a task
that will be facilitated as the issuing company must send it financial statements or
certificates by its tax auditor or auditor and from whose study it can be deduced
whether the proposed programs have been fulfilled. To which could be added the
review of the accounting books, to obtain any additional details that were
necessary.
c)
Monitor compliance with obligations derived from the titles
Not only must it verify that the resources are allocated to the proposed purpose
and that the results are satisfactory, but that the obligations are met on a regular
basis, especially the payment of interest to the holders.
d)
Watch the draws
If the reimbursement of the titles is done through the lottery system, the control
entity can witness them through its delegate to verify that they are carried out in
accordance with the law.
and)
Send observers to the general assembly
It also has the power to be present at the General Assembly of bondholders as
soon as the mechanism exists in the respective country. The presence of their
representatives seeks, as in all cases, to compare the actions of those under
surveillance with the provisions that regulate their activity.
f) Call the general assembly
If circumstances indicate it, it can even convene the General Assembly of
bondholders.
g) Impose sanctions
In case of non-compliance, sanctions may be imposed such as fines aimed at
correcting some attitudes of the issuing company that are considered not in
accordance with the law; withdrawal of bonds or obligations from the market,
inhibiting new placements; suspension of the company's operating permit and
even a decree of dissolution. Note that, as a general rule, the entity from which
authorization for the issuance of bonds must be obtained is the same to which the
company as a legal entity is subject and therefore, within the scale of sanctions,
they know those that compromise the very fate of the legal entity.]8
3.5.
TITLES
Next, we will make some details about the titles, bonds, obligations or
debentures:
3.5.1.
Form of creation
3.5.1.1.
Due to its traffic law
Like all securities, obligations can be nominative, to order, or to bearer,
depending on whether simple delivery is sufficient for their transfer, if they are to
bearer, or endorsement and delivery are required, if they are to order, or The
registration in the books kept for this purpose by the issuing company must be
added to the endorsement and delivery, in the case of nominative ones. The
application of the traffic law results in determining who is entitled to collect and
who is validly paid by the company.19
3.5.1.2.
For the series and values
We have said that these are serial titles of those that are issued in large numbers
to be offered to undetermined buyers at the beginning. The existence of series
enables the issuing company to establish different conditions in each of them,
especially with respect to the value of the securities. Each series will serve, then,
to identify the issuance of securities of a certain nominal value and within them
there will be a successive numbering that makes it possible to specify, by a
simple arithmetic calculation, the total value of each group issued. The rights of
the holders of securities, in each series, will be identical.20
3.5.1.3.
ISSUANCE OF OBLIGATIONS AND OTHER SECURITIES 445
Content
As securities, they derive their formal existence from the incorporation of a right
and the subscription made by the creator. They also contain quite complete
information in relation to other securities, which is explained by the fact that they
are causal securities. The doctrine understands by them the titles that, bringing
together the characteristics of incorporation, literality, legitimation and
autonomy, have a permanent relationship with the cause that gave rise to them.
Therefore, the rights and obligations derived from the title are not only those that
are literally indicated therein, but both can arise from the law or other documents,
such as those that account for the issuance of the bonds, with the complex
structure that we have presented. In abstract titles, however, as is the case with a
check or a bill of exchange, the content and scope of the incorporated rights are
determined by the literal wording of the title itself and regardless of the cause
that gave rise to them.
Thus, we can say that the bonds or obligations must contain, among others, the
following mentions:
a) About the company, such as name, address, capital, reserves, etc.
b) About the issue, such as amount, series, numbers by series, values, premiums,
interest rate, form, place and term of amortization of capital and interest,
guarantees, etc.
c) Regarding compliance with the legal requirements, such as the number and
date of the public deed through which the unilateral act or contract was
formalized,21 mention of the administrative decision that authorized the
issuance, proof of the date and number of the registry, etc.
, The titles may be subject to another series of eminently formal requirements
such as size, use of security paper, insertion of removable coupons for the
collection of interest, when this is the form of remuneration and, in this case,
indication of the number of attached coupons, etc.
3.5.2. Qualification
Under the contemporary trend of obtaining the best control of public debt of
companies, through knowledge of their figures and supporting issues in private
evaluation mechanisms, the obligation to have the rating issued by an authorized
agency has been established, which stimulates the dynamics of the securities and
provides the market with a complementary tool for measuring the risk implicit in
the papers.
In this regard, it is worth emphasizing that the rating agencies give a reference
value to each of the issues and not to the issuer. This means that at a given time
there may be a simultaneous placement of papers on the market issued by the
same entity, with different ratings due to the intrinsic characteristics that identify
each one.
3.6.
OBLIGATIONS OF THE ISSUING COMPANY
Let's briefly look at some obligations of the company in relation to the issue,
considered in itself and with other usual possibilities within the business, which
are inhibited as a consequence of there being an issue in the process of being
amortized.
3.6.1.
Repay the loan
The fundamental obligation, since it is a credit operation, is to reimburse the
sums received from third parties and to which the titles refer. Reimbursement is
verified at the expiration of the term, through periodic drawings or through a
mixed system, of early reimbursement of part of the titles by drawing and
payment of the rest at the end of the contract.
Reimbursement through drawings is subject to requirements such as the
intervention of a legal representative of the issuing company, a representative of
the holders, if the associative form for the latter is provided for, an observer from
the government entity; and certain advertising formalities thanks to which
interested parties can gain control of the result.
3.6.2. Pay remuneration
Because it is a credit contract and there is a transfer of ownership of the money

from the acquirers to the issuing entity, it must pay remuneration during the time
in which the resources remain in its possession. It can take two forms: the
recognition of an interest rate, to which refers the system of removable coupons
that must be presented with the periodicity provided for in the issuance
document, and the placement of securities with a discount.' In this case, at
maturity or upon being favored in the drawing, the company is obliged to pay the
face value of the securities, so that the return is constituted by the difference
between the sum delivered by the acquirer and the higher amount received in the
time of reimbursement. A simple calculation will allow you to deduce the rate of
profitability that can be obtained in the operation.
3.6.3.
Publish financial statements
In most systems, capital companies are required to publish their balance sheets
and profit and loss statements at the end of fiscal years. It is possible that as they
are issuers of bonds, debentures or debentures, additional burdens may be
imposed on them, such as greater frequency in publications or including more
detailed financial statements with reference to investment projects. It can
sometimes be replaced by sending said statements directly to the interested
parties, which will be possible if they are registered titles whose holders are
registered in the company's books.
3.6.4. Provide eventual information
Given the importance for the market of following the fate of the issuing company
while the papers are pending redemption, the obligation to notify the control
entity and, through that, the public securities registry, of the occurrence of
supervening circumstances is usually enshrined. that may significantly affect
both the conditions of the company and the market price of the securities.22
3.6.5. Stop the legal representative and the expenses of the assemblies
It assumes the existence of the mechanism of collectively linked holders. If it
exists, the company must bear the costs of the remuneration of the common
representative of the holders and the expenses that arise from holding the
meetings.
3.6.6. Maintain social identity
Under this section a set of obligations is covered that may include the
impossibility of reducing its capital, except up to the concurrence of the amount
of the bonds reimbursed and the prohibition of changing address, nationality,
denomination, etc., without authorization from the assembly of holders. .
Furthermore, it is usual to establish that the company cannot merge or transform
itself until it has fully repaid the amount of the loan. All of these are obstacles to
decisions that could ordinarily be adopted without difficulty, but which are
inhibited while the broadcast is in progress.23
3.6.7.
Establish a code of good governance
In order to strengthen the self-regulation and control mechanisms as much as
possible, the need has been established to design and publicize the so-called
"codes of conduct or good governance" that must include, among others,
business policies on matters such as appointment and integration. of the
management and administration bodies and the tax auditor, selection of
contractors and suppliers, relations with the majority shareholders and with the
parent company and related companies, criteria for making investment decisions,
way of addressing and resolving conflicts of interest , policies to guarantee the
transparency of information to third parties and the nature and frequency of
reports to third parties and, in general, the way in which ethical principles are
reflected in the entity's orientation.24
3.7. OF THE BONDHOLDERS AND THEIR REPRESENTATIVE
A modern characteristic of the issuance of obligations is the possibility for

holders to group together and express, through the body constituted by them,
their opinions or objections in relation to the management of resources by the
company. Benefit that is added to the older one of having a fiduciary entity that
looks after your interests. That is, to reverse the terms and follow the logical
sequence, for years we have known the system according to which a banking
entity acts as a fiduciary in the issues to collaborate in meeting part of the
obligations imposed on the issuing company and take care of the interests of the
holders, who can, within the most legislative manifestations, group together in an
assembly to fulfill the functions that we will see later.25
3.7.1. Appointment by the issuing company
The direct designation by the issuing company, which could seem somewhat
curious, since it involves appointing the person who must be the representative of
the holders, is explained by noting that the latter has to fulfill a series of functions
before the holders exist. . In order to comply with them, it is essential to
designate them as representatives of the future holders before the presumed
representatives appear; fiction that does not prevent them from later removing
him if they consider that he has not fulfilled his duties well or they simply want
another representative.
3.7.2. Duties of the common representative
As a representative, tacitly ratified, if the assembly does not remove him, the
representative fulfills preliminary and permanent functions that can be
summarized below:
3.7.2.1. Preliminary features
a) Verify the accuracy of the documents and requirements to be filled out.
Function of verification between the company's statements and the reality with
which it is committed and supported before the holders and the State.
b) Ensure that the formalities prescribed by law are complied with.
c) Demand guarantees. Accept them and ensure that the assets that constitute
them are secured.
3.7.2.2. Permanent functions
a) Represent the holders in safeguarding the collective interest.

b) Report irregularities. Obligation that it undertakes towards the holders and the
competent authorities themselves, to monitor the progress of the issue.
c) Request reports and visits from the State. At a given moment and despite its
broad powers, it may require the assistance of the state authority to verify a
situation, to have better elements of judgment to carry out its task or to verify
alleged irregularities, the commission of which it fears has occurred.
d) Promote conservation and security measures. Especially those that relate to the
contracting of insurance for the guarantees established and in general for the
safekeeping and adequate conservation of the company's assets.
e) Require timely deposit of funds. Obligation that tends to guarantee the
existence of sufficient resources to meet the fulfillment of the company's two
main obligations, that is, to pay interest and repay the obligations when due.
f) Attend the draws and check that the refunded bonuses and coupons are
canceled immediately.
g) Act on behalf of holders in bankruptcy and liquidation processes. As long as
they defend collective interests and without prejudice to the individual powers of
the holders.
h) Call and preside over the assembly of holders with voice but without vote.
Logical assignment in light of the obligations and functions that we have
indicated.
Individual powers of bondholders
Although they can meet in an assembly, there are powers that they exercise
directly and individually.
3.7.3.1.
Those of the holders of a security
Remembering that the law may provide that securities registered in a public
securities registry do not grant return exchange action.26
They derive from legitimation and allow the holder of a security to be validly
transmitted or collected. The form of transfer will depend on the law of
circulation of the security. 27
3.7.3.2.
Take legal action
As soon as it is not foreseen that legal actions for non-compliance must be
brought forward collectively, the holder may exercise the exchange action that
corresponds to him. The advancement of a collective trial can be foreseen, with
the characteristic of the so-called universal processes, that is, the attraction for
the judicial processes in progress at that moment to be processed
simultaneously.28
Actions to collect interest and principal on bonds are usually subject to special
prescription terms.29
3.7.4.
General Assembly
We have repeatedly talked about the legislative tendency for holders to meet in a
general assembly of bondholders.
3.7.4.1. Announcement
The call can be made by the debtor company; by the holders, directly or
indirectly, when a number of them, in the latter case, address the common
representative and demand the call; by the same common representative and by
the government entity that oversees the company. Like any call, it must comply
with the provisions of the law or the statutes and, fundamentally, the sending of
an individual summons to the holders or their collective call through publications
in the press or other media that make it presume, in terms of the law or the
statutes, that the holders have been duly notified of the date and place in which it
will be carried out. 3D
3.7.4.2.
Quorum and decisions
As in all assembly meetings, two types of quorum are usually established: one to
deliberate and another to decide. Unless otherwise established in the law or
regulations, the general principle is that of simple majority, that is, half plus one
of the rights represented by the holders to meet and, of these, half plus one to
take decisions validly. Sometimes it is also established that if it is impossible to
obtain a quorum at the first meeting, a second meeting can be held with any
plural number of holders. The vagueness with which these points are presented is
due to the fact that they are casuist aspects regulated in a particular way by each
country.
3.7.4.3. Faculties
The assemblies are designed to make general decisions, in order to protect the
common interests of bondholders. Decisions adopted in accordance with the law
bind those who are absent, even though it can be established that, if they affect
individual rights of the holders, the dissident and non-present minority may
separate themselves from the majority decision.31
Another function that the assembly generally performs is to appoint a common
representative and, consequently, remove the one who had been designated by
the issuing company, if his performance does not seem satisfactory, or simply if
the majority finds a name that deserves greater confidence.
-------------------------------------------------------------------------------
1. The doctrine has pointed out the main differences that exist in theory between
resorting to bank credit or the issuance of bonds, among which can be mentioned:
a) for those who receive the credit, the issuance of documents that is necessary to
place the paper is not required. (unless, of course, the issue is completely
dematerialized because it is linked, from the beginning, to a centralized securities
depository), b) credit contracts can be negotiated to obtain partial disbursements
or under a rotating system, by virtue of which the credits reconstitute the
availability, while the resources from the placement of bonds are received
definitively and for a single time, c) there are no special requirements to be a
bank debtor, except for the obvious ones linked to moral conditions and
economic capacity, while the issuance of papers is limited to certain types of
companies and implies special authorizations in many countries, d) issuers go to
broad markets of potential investors which allows them to seek fixed interest
rates and, if possible, lower than bank active rates. and longer terms, which is
much more difficult to obtain, if not impossible, in a bank loan, e) for the banks,
curiously, it is more convenient, sometimes, from what it says with the
qualification and protection of your portfolio , invest in papers, (under the rules
on the "trading book") than lend money, under often more severe rules ("banking
book'j, which, by the way, can generate an inconvenient tendency that leads the
bank to lean by abandoning its traditional function as a mobilizer of direct credit
resources, f) the issuance involves a detailed and frequent supply of information
("disclosure") that is not always attractive for certain closed and low-profile
companies, while access to bank credit It implies providing information, accurate
and sufficient, but subject to the reserve of the respective entity, and g) it is easier
to renegotiate bank loans than the conditions with bondholders, among other
things, due to the difference in the number of interlocutors that makes It is
practically impossible, when there is an appreciable dispersion, to reach an
agreement between the bondholders. This seems to have happened in Ecuador, to
give an example, when it attempted to renegotiate part of the debt represented in
"Brady bonds."
2. Colombia, The execution of contracts for the placement of bonds or other
securities in the market is limited to trust companies, financial corporations and
stock brokerage companies, with the exception of public debt securities, in whose
placement the banks in own account operations (EOSF, art. 70, D. 1638/96).
3. Colombia establishes the possibility for banks and other credit entities to issue
bonds that are compulsorily convertible into shares, as a mechanism aimed at
strengthening their assets, R. 60 of 1984 of the Monetary Board, Possibility
generically enshrined in the R. 400/95 Superintendence of Securities C. AND.
007/96, Banking Superintendence. TI, Ch. 8, 1.1. a, modified by C. AND. 41/96.
v. infra, Chap. VIII, 3.8.2.
Additionally, it has been established that "". Documents of a serial or massive
nature issued by credit establishments supervised by the Banking
Superintendency, in the development of passive operations carried out on a
regular or sporadic basis, will be understood to be registered in the National
Securities Registry for all legal effects..." (EOSF. Art. 111, 3). Those intended to
be issued by financial services companies and insurance companies require prior
registration in said registry (C. AND. 41/96, S.8.)
4. INTAL, Art. 153. Colombia. Joint-stock companies and autonomous trusts can
issue bonds to be placed through public offering. Credit establishments that are
not going to place them through a public offer will only require the authorization
of the Banking Superintendency and will not require that of the Securities
Superintendency (R. 400/95, art. 1.2.4.1). MARTINS, Fran. Op. cit., pp. 311 And
ff. Ecuador. It defines them as "...the securities issued by anonymous companies,
liability companies, branches of foreign companies domiciled in Ecuador or
sectional organizations that recognize or create a debt in charge of the issuer...
the obligations may be represented in securities or in accounts in a centralized
securities clearing and settlement depository. Both the titles and the certificates
of the accounts will have the characteristics of executives and their content will
be subject to what the CNV will dictate for this purpose. (National Securities
Council)". L. 1107/98, art. 160.
5. The underwriting contract can be understood as one by virtue of which a
person undertakes to place or purchase from the issuer of debt documents, all or
part of the issue it makes. In practice, they can take different forms, such as a
firm sale, in which case the underwriter assumes the total risk of the purchase, or
it can be done on a best-effort basis for a certain period of time, or it can be
guaranteed that, if it has not been placed within a period of time, all or part of the
issuance, the underwriter will acquire the papers required to reach the guaranteed
amount. Normally, this type of issue leads the underwriter to assign part of the
papers to third parties, disseminating the placement, so that the risk of it being
unsold, in a substantial part, is significantly reduced.
6. Colombia. The repurchase of own shares implies a decision of the General
Assembly of Shareholders and can only be done by taking funds from liquid
profits (C. Co., art. 396).
7. RODRIGUEZ, J. "Banking Law", pp. 349 And ff. 8. v. Infra Chap. VIII, 3.5.
9. We have taken as references the Intal project, arts. 153 et seq. And the R.
400/95 of the Colombian Securities Superintendency. When we cite an article in
relation to this country, without further warning, it corresponds to the
aforementioned resolution.
10. Colombia, any entity that "in accordance with its legal regime has the
capacity to do so" is authorized to issue bonds (R. 135/01 General Chamber SV).
On the other hand, it is possible to carry out syndicated or collective bond issues
if the special requirements established by law are met (R. 400/95, 1.2.4.1.1
modified by R. 135/01).
11. Colombia eliminated this requirement and the following one, with D.
1914/83. Currently the requirements are enshrined in the R. 400/95, art. 1.2.4.2
of the SV
12. Intal, art. 156, Colombia, prohibits a new issue when the obligations of a
previous issue have been breached, or the bonds have been placed under
conditions other than those authorized, or the subscription period for a previous
issue is pending (R. 400/95, art. 1.2.4.2. SV).
13. Colombia. The amount of the bond issuance through public offering cannot
be less than two thousand legal minimum wages, that is, close to 600 million
pesos in 2002 (approximately US $ 280.000).
14. Colombia, R. 400/95, arts. 1.2.2.2 and 1.2.2.4 Modified by R. 1210/95.
15. Although it has been argued that, as is logical for an advisor with his profile,
the obligations of the investment banker are of means and not of results, it is
obvious that as a professional he must perform his work displaying his particular
"expertise." and assuming the accumulation of obligations that are imposed on
professionals today and, of course, the eventual liability that could arise from
their negligent actions. v. Supra Chap. 1, 1.3.3.2 and Chap. 111,2.3.
Colombia. In some ways, it has been leaning towards leaving greater freedom to
the investor, in exchange for demanding more information from the issuer, on the
one hand, and has relieved the representative of the bondholders of certain
responsibilities, making them fall to the "advisor in investment banking" (R.
400/95, 1.2.2.2. No. 10 AND R. 1210/95, SV).
16. Colombia. The registration of the resolution by which the issuance of bonds
has been authorized is required in the Commercial Registry of the Chamber of
Commerce of the main domicile of the issuing entity (R. 400/95, art. 1.2.4.7).
17. Colombia. All authorizations correspond to the Securities Superintendency,
which functionally replaced the National Securities Commission. The only
exception is constituted by issues made by financial entities, when they are not
going to be made through public offering, an event in which this is sufficient.
will be authorized by the Banking Superintendence (aft. 1.2.4.1). In short, the
Securities Superintendency has three types of powers: regulation, in all matters
related to bonds, whether they are placed through public or private offering; of
authorization of the issues, without this entailing a guarantee regarding the
solvency of the issuer or the goodness of the issue; and control and monitoring of
securities issuers, which includes the power to sanction.
18. Colombia. The Banking and Corporate Superintendencies will have the
respective sanctioning powers against the entities whose issues they have
authorized (art. 1.2.4.44).
19. Colombia establishes that bonds can be nominative, to order or to bearer,
except those that are compulsorily convertible into shares, which will be
nominative. R. 400/95, arts. 1.2.2.2 N" 2, 1.2.4.23 AND 1.2.4.33.
20 Intal, art. 155. Colombia, art. 1.2.2.2, N" 2.
21. Colombia tacitly eliminated this requirement, art. 4th, D. 1914/83. Today the
requirements are in R. 400/95 S. v.
22. Colombia. R, 1242/93 Y Cir. External 14/94 SV,
23. Colombia. "During the term of the issue, the issuing entity may not change its
corporate purpose, split, merge or transform, unless authorized by the assembly
of holders with the majority necessary to approve the modification of the
conditions of the loan..." except that substitute guarantees evaluated by the
Superintendency of Securities are offered and accepted or the loan is paid in
advance (art. 1.2.4.41).
24. Colombia. R. 275/01 SV
25. Colombia, it is mandatory to have a legal representative of bondholders (R.
400/95, 1.2.4.4).
Colombia. Art. 1.2.7.1.
27.V. Supra, Chap. VIII, 3.5.
28. Intal, art. 167. Colombia. The holders may individually exercise the actions
that correspond to them, when they do not contradict those of collective interest
adopted by the Assembly or when the legal representative of the holders has not
exercised them (art. 1.2.4.15).
29. Intal, art. 181: five years for the collection of interest and ten years for the
collection of the principal. Colombia. Four years in both cases, counted from its
demand (art. 1.2.4.38).
30. Colombia demands, given the silence of the issuance contract, that the call be
made by means of a notice published 8 business days in advance, in a newspaper
with wide national circulation (art. 1.2.4.17).
31. In tal, article 171.
3.8. BONDS CONVERTIBLE INTO SHARES
3.8.1. Facultative
In this aspect we just want to add the possibility enshrined in some laws that
bonds or debentures are convertible into shares, in which case all the general
rules that we have exposed are applied with some additions, among which we can
mention the which we quote below.
A period and unchangeable bases must be established for the conversion, so that
the holders have the security that during the established term they will be able to
use the option consecrated in their favor. The issuing company must have enough
shares in reserve to meet the eventual demand of bondholders or be in a position
to increase capital to meet said obligation. It is reasonable to think that a
preferential right will be established in favor of shareholders to be able to
subscribe to the convertible bonds that are issued.32
3.8.2.
Mandatory
In addition, the issuance of bonds may be foreseen that force both the company
and the holders to convert them at the expiration of the term or, in advance, under
the conditions indicated, into released shares of the company.
In this case and in the case of the power granted, both to banks and to any capital
company, it is obvious that it is no longer a mechanism for attracting external
resources, but rather an alternative instrument to go to the market. of capital,
strengthening in advance the assets of the receiving entity, to the extent that, by
force and without option, in the end the assumed obligations translate into the
delivery of shares. That is to say, it is not, strictly speaking, a credit operation,
with the well-known connotation and, consequently, the holder of the bond does
not have the right to be paid a sum of money, but rather to receive, at the time, a
corporate title that represents your rights as a shareholder of the issuing entity.33
This is the case of bank bonds convertible into shares, an example of which
appears in Peruvian legislation and which are allowed in all banking
establishments, with the exception of branches of foreign banking companies.
They are computed as liabilities of the company and, more precisely, as part of
its capital for all purposes in which, in accordance with the law, the total
operations are limited based on the paid-in capital.34
4.
ISSUANCE OF OBLIGATIONS BY A CREDIT ENTITY
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It constitutes the topic of the chapter, since it is about the passive operation
through which banks raise resources and is added to the previous possibility
when it is allowed to the banks. It was preceded, as we said, by the issuance of
obligations by companies due to their importance and since some provisions that
we have analyzed are applicable to the issuance by banks.
There is, yes, a fundamental difference between both contracts, regarding the
corporate purpose. In effect, the issuance of bonds constitutes an exceptional
system for commercial companies, through which they access the capital market
by offering papers to investors and, from this point of view, dispensing with
financial intermediaries, focused on obtaining external resources, while Passive
operations - including the issuance of bonds or debentures - constitute, precisely,
the development of the corporate purpose of banks and, specifically, of those
who are allowed to do so.
4.1.
ISSUE LIMITED TO CERTAIN TYPES OF BANKING ENTITIES
Just as not all companies have the possibility of issuing obligations, since it is
limited to capital bonds, the same occurs in the case of banks; For all of them, it
is not a function of their own; there are many for whom it is an activity foreign to
their social purpose. In summary, the possibility of issuing obligations is directly
related to the function that each group of banks fulfills as a financial
intermediary. It is not the same, in effect, to intervene in the market to place
resources in the short term, in which case their demand deposit seems to be the
appropriate and necessary instrument, than to mediate to place resources in the
medium and long term, where, By definition, it is necessary to look for financing
sources with similar duration characteristics. It can be stated that, in general
terms and within the classification of banks that we saw at the time, the issuance
of obligations was limited to mortgage banks and development banks or financial
companies, since in both cases their placements must be made at medium long
term. And that, as a corollary of the above, commercial banks or short-term credit
banks had no vocation, in principle, to issue obligations and only by exception,
as such or through mortgage sections, was the issuance of these titles possible.
Currently, however, there is a clear trend to extend, as a generic power of
financial entities, the issuance of this type of debt securities.
4.2.
APPLICATION OF THE GENERAL PRINCIPLES
The principles and procedures established for commercial companies in the
issuance process are applicable to banks authorized to issue obligations, with the
exception of maintaining a representative of the holders, that is, a fiduciary agent.
Exception that finds its basis in the particular surveillance of banks by the State,
on the one hand, and its traditional seriousness, on the other, which make
unnecessary, at least as a mandatory mandate, the existence of a fiduciary agent
for the placement of the titles, the management of the obligations of the issuer
and the safeguarding of the interests of third parties.
It can be said, in summary, that the issuance of securities includes the preparation
of a prospectus or issuance project and its approval; the elevation to a solemn
form of the document containing the conditions of the issue, the characteristics of
the securities, etc., and the use of a publicity mechanism designed so that
interested parties can fully understand the content of the offer and the compliance
with legal requirements. The titles must be issued in serial form and be
nominative, to order, or to bearer. Many Latin American legislations repeat the
requirement that the credit institution obtain approval from a government body or
entity before proceeding with the placement.35
4.3.
ISSUANCE OF OBLIGATIONS SUCH AS
There is, as we saw, a direct relationship between the function that the bank
performs as an intermediary and the type of securities it can issue. In general, the
issuance is based on precise guarantees, in terms of their nature and
characteristics, which determine the name, class and peculiarities of the bond,
obligation or debenture that is issued. In broad terms, the issuance finds its
support in the existence of mortgage loans or mortgages directly constituted to
guarantee the titles, on the one hand, and in industrial or commercial loans or
guarantees granted to back them, on the other. The securities issued based on the
first possibility are usually issued under the name of mortgage bonds and
mortgage bonds, while the latter have names such as general, financial or
commercial bonds, to name three possibilities. It is not possible to start from
univocal denominations since it frequently happens, for example, that what in
one country corresponds to the notion of mortgage bond, in another is called a
mortgage bond and vice versa, presenting identical denominations with different
conceptual scope. That is why we limit ourselves to indicating the most
outstanding possibilities from a theoretical point of view.
The principle applicable to all is that through the issuance of securities, it is
possible for banking entities to mobilize part of the credits that partially make up
their assets. That is to say, the title is an instrument for raising resources based on
previous credit operations. In this way, a dynamic cycle is integrated in which the
granting of credit serves as the basis for the issuance of securities that, when
placed on the market, allow the recovery of previously committed resources,
guaranteeing new deposits with the same credits that originated them. .
4.3.1. Mortgage securities 36
They have two main modalities, which we do not distinguish as bonds or bonds,
due to the aforementioned difficulty, limiting ourselves to explaining the
technical basis of each of them.
According to one modality, the securities are issued based on the mortgage loans
established by the debtors in favor of the credit institution, so that the purchasers
have the general support of such credits. They grant bondholders a preferential
guarantee over the said volume of mortgage loans, which in practice can lead to
them being awarded in the event of default. As there must be a proportion
between the securities placed on the market and the amount of the mortgage
loans that back them, legislation usually establishes a certain percentage
relationship that means that, in the best of cases, the issue cannot exceed one
hundred percent of mortgage loans, but, in many cases, it must be a lower
percentage.
The other type of issuance of securities is one that is based on a mortgage
guarantee directly established by the owner of the property, which is endorsed or
guaranteed by the bank that places them. In this case the support is not
constituted by a certain volume of mortgage loans in favor of the bank, but by
one or several specific mortgages in favor of the holders of the securities, where
the intervention of the bank binds it jointly with the mortgager. In this case, the
holder has an executive action against the bank and the constituent of the
mortgage and, in addition, a real or mortgage action against the latter and over
the encumbered assets.
If the issuance is made directly by the owner of the property, it cannot, strictly
speaking, be spoken of as a fundraising instrument by the bank, since the latter
does not obtain resources by this means, but rather grants a signature credit,
when contracting a contingent obligation towards the policyholders, on behalf of
its client. In the event that the latter fails to comply, the bank must pay for the
remuneration of the securities and their reimbursement. However, it should not
be forgotten that banks use effective instruments to avoid the risks inherent to
this possibility, among which, obtaining counterguarantees and assuming the
administration of the property, to allocate their proceeds to the due attention of
the credits. Furthermore, even though it may seem superfluous, banks do not
intervene in such an operation without a prior financial and legal study that
allows them to carry out the operation with the lowest risk.
It is also possible, as in the first modality, that the issuance be made by the bank
based on a mortgage loan in its favor, but with the endorsement or guarantee of
the owner of the property, a modality that would allow us to speak of a
fundraising by the bank. of the issuer.
As can be seen, the two modalities are clearly distinguished, since they start from
different bases of support, which confer different rights to the holders, always
under the responsibility of the bank.37
4.3.2.
Financial securities
Financial securities are intended to mobilize industrial credits, for the most part,
intended for medium and long-term investments and operations carried out by
companies.
These titles also have two main modalities, which does not prevent there from
being many variants in the different legislations.
The former, which we could call general guarantee, are issued based on the
company's own capital and reserves or on mortgage or pledge credits constituted
in its favor. They usually confer a privileged position on their holders in relation
to those assets and against any other claims against the issuing entity.
The other titles, which we could call specific guarantee, are issued based on
securities, such as bills, shares or bonds held by the issuing entity, specifically
assigned to serve as guarantee for the issuance or even with the support of real
guarantees constituted by third parties in favor of the entity, for the mobilization
of which the owners of the encumbered assets intervene as guarantors or
guarantors.38
4.4. ACCESS TO INTERNATIONAL MARKETS
Just as banks access the institutional international credit market, both through
obtaining special lines of credit from multilateral banks, in some cases, and the
commercial lines they obtain with their correspondents, especially for the
management and financing of foreign trade operations of their clients,39 it would
be conceivable that they resort to international capital markets by placing their
bonds in other countries through the different channels that can be used there.
Naturally, in practice and from a strictly legal point of view, the placement of
these obligations will depend on compliance with the required provisions, both in
the country of domicile of the issuer and in the country in which they plan to be
placed.4o
In this regard and given the importance of the North American market, it is
convenient to highlight the development of the so-called "Depositary Receipts"
as mechanisms aimed at allowing the negotiation of shares and fixed income
securities issued by a company not domiciled in the United States and placed
indirectly through those, who know two modalities, the so-called ADR's
(American Deposit Receipts) and those known as GDR's (Global Deposit
Receipts). The former are intended to be placed in the United States, while the
latter are aimed at a broader market, usually made up of the main financial
centers of the rest of the world.
For the projected placement to be successful, it is essential that the securities
intended to be mobilized have a high local marketability, since the effective
support that investors have in the derivative products depends largely on their
possibilities of realization at a given time ( DR's) that are issued based on them.
The assembly of the issue assumes the presence of a local "custodian bank", in
whose possession the respective supporting documents are deposited, and a
"custodian bank", in the United States, the axis and driving force of the
operation. In effect, it intervenes in the entire process and is responsible for the
valuation of the respective company, in order to establish the correct price of the
issue and for relations with the SEC (Securities and Exchange Commission), the
tax authorities, the brokers, legal advisors and of course, the investors, towards
whom it assumes its own obligations such as the issuance of securities and the
payments of interest and capital that may arise.41
4.5.
OBLIGATIONS OF THE ISSUING COMPANY
The bank's obligations are the same as those we have seen for commercial
companies, as far as they are pertinent and compatible with the nature of the
issue, where the presence of a common representative of the holders is not
necessary nor is there the possibility of hold a general meeting. The credit
institution is responsible for paying the interest or remuneration corresponding to
the subscribed securities and reimbursing them upon maturity or by drawing lots,
according to the established system.
As we saw, there is a substantial difference between issuance by commercial
companies and that carried out by banking entities. The former use this expedient
to capture extraordinary resources - replacing the cost of financial intermediation
with the costs inherent to the issue they aspire to, naturally lower - while the
latter use it permanently and in the development of their corporate purpose.
Therefore, there is no specific project to which the resources are allocated, but
rather they serve the function of credit intermediation. That is why they do not
have controls over compliance with a program, but rather monetary and
technical-accounting provisions are applied, which establish certain coverage
percentages to support compliance with interest and capital obligations. This is
an actuarial problem where, somewhat similar to what happens with the reserve
requirement on demand deposits but, more exactly, what happens with insurance
or capitalization plans, there is a need to have an liquidity that guarantees
attention to the flow of disbursements borne by the issuing company.
5. ISSUE OF OTHER SECURITIES BY A BANKING ENTITY
5.1. CONTENT
We have said repeatedly that when studying the issuance of obligations or other
securities we refer to those that serve as a cause for the raising of resources and
not to those that are a simple consequence of having obtained them in the market,
since they do not correspond to the operation. passive that is intended to be
analyzed. It is now a matter of studying other titles that meet this requirement but
that, unlike bonds, do not correspond to the concept of collective borrowing or
whose issuance is made in an indeterminate amount and without any relationship
with a specific support. They constitute relatively exceptional hypotheses.
5.2.
TICKETS
It is more of a remembrance than a contemporary reality. Indeed, currently and
almost without exception, the issuance of banknotes is reserved to the State,
which exercises the right through the Central Bank or another entity authorized to
do so. That is to say that fiduciary currency, whose creation in other times was an
outstanding instrument for raising resources, is only mentioned to cover the
hypothesis that in a country its issuance by deposit banking is accepted. This is
not, however, what happens in the vast majority of countries.
5.3.
TRAVELERS CHECKS
When studying the bank checking account contract we had the opportunity to talk
about them. Here is an interesting example that contemporary practice offers us
regarding an instrument for raising resources, at least in the international
development that they had until some time ago. Remember that there are
differences between the traveler's check and the check itself. This last instrument
presupposes the existence of a provision as a result of a deposit, an opening of
credit, or the simultaneous granting of credit when the check is presented without
sufficient funds. On the other hand, the traveler's check is a title issued by the
bank at its own expense, as is the case with cashier's or cashier's checks, with the
regular use of which the bank raises resources, since the acquisition of checks by
an individual is done charged to your current bank account, if it is a regular
customer, but, generally, by delivering the corresponding counterpart in national
or foreign currency, in other cases. When this happens, the issue becomes an
instrument for raising resources whose usefulness for the bank as an intermediary
results, as in all credit contracts, from obtaining the funds immediately to return
them at a more or less distant date, which is seen paid for the long established
prescription terms. To the extent that the acquirer takes longer to use it, the
greater the economic advantage derived by the issuing bank, by being able to
dispose of the resources without any consideration.
It is not, therefore, from the commission that is usually charged for the placement
of the title that the benefits are obtained, since the operating costs in these
systems are very high, but in the use by banks of universal reputation of a
gigantic volume of resources without compensation and on a permanent basis,
therefore, in practice a type of revolving fund is formed and there is always a
significant volume of unclaimed funds.
There are some similarities with the issuance of debentures, but they are more
apparent than real. The checks are issued serially with consecutive numbering,
but the amount of their issuance is not related to a quantitative support pre-
established by law but is a function of the possibilities of placement in the market
and the trust that people place in a certain entity. It cannot be said, then, that the
holders of a traveler's check are creditors for an aliquot part of a collective credit
borne by the bank, but rather they are simply creditors for a specific sum
incorporated in the check, which they can make payable in a more or less long
time. The possibilities of reimbursement through draws used by commercial
companies are, of course, ruled out.
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The use of this instrument whose use was highly recommended, particularly due
to the replacement guarantee in case of loss, and which is still acquired by some
segment of travelers, has been losing importance compared to the various
manifestations of plastic money that allow cardholders obtain benefits identical
or superior to those derived from the traveler's check. In fact, with credit or debit
cards you can obtain local currencies, charged to your credit or balance, at
usually fair exchange rates and eliminating, of course,
. contera, traditional commissions for currency exchange. This implies,
furthermore, that they only go into debt or have the funds they need at a specific
time, without freezing resources in advance and in excess, as usually happens
when they purchase these checks. And in the event of the eventual loss of the
cards, the possibility of obtaining their replacement is almost equally agile.42
5.4.
CHECKS WITH GUARANTEED PROVISION
We commented back43 that these checks could be titles for collecting resources
if the bank promotes them as a system of substitution of the risk derived from the
physical possession of money, to be placed not only among the holders of current
accounts, in which case they would hardly be a form of disposition of the
balances, but even offering them to third parties against the c-institution of the
equivalent provision. In other words, it could be assumed that if the instrument is
accepted, the bank will promote its placement among the public, thus capturing
resources that it did not have before. However, the limited development of this
check in Latin America, as far as we know, makes its short-term use as an
instrument for raising resources unlikely.
5.5.
SAVINGS STAMPS
Studied in the previous chapter,44 they also constituted at the time a means to
obtain resources, since they were issued to induce the public to save. Indeed, the
stamps were intended to collect sums so small that they would not justify
opening a savings account or moving one-time. What was happening in practice
then? Once the issue was made, which otherwise had no specific support, the
interested parties acquired stamps of different denominations that they placed on
a form in their possession until it was completed, in which case they opened a
savings account or increased the balance of the existing one. Well, in the
interregnum there was fundraising, which, furthermore, only became a liability
payable by the bank at the time of liquidating the payroll and making the entry in
the corresponding savings account. Unfortunately, as in the previous case, they
included titles that were of little circulation and had, in practice, disappeared.
-------------------------------------------------------------------------------
32. It is mandatory to do so in the Intal project, art. 188 and optional in
Colombia, art. 1.2.4.26.
33. Colombia. R. 400/95 SV
34. Colombia, art. 1.2.4.31; Peru. General Law of the Financial System, art. 184.
35. Venezuela does not contemplate this requirement, although article 19 of the
LGBOIF should be noted as relevant; Ecuador, art. 51 LGISF; Peru, art. 4th
Banking Law 7159; Dominican Republic, art. 55 Agricultural Promotion Law
No. 6186; El Salvador, art. 1222 C. Co.; Colombia, art. 129, EOSF; Costa Rica,
art. 133 L. 1644 (LOSBN).
36. Colombia, the resources raised through mortgage bonds must be obligatorily
used for housing financing, which is not required for the issuance of ordinary
bonds (L. 546/99).
37. Examples of the first: Honduras, art 992 C. CO. with the name of IDs; El
Salvador, art. 1226 C. Co. Examples of the latter: Honduras, art. 999 C. Co.,
under the name of bonds; El Salvador, art 1229 C. Co.
38. Honduras, arts. 1000 and 1005 C. Co.; art. 4th L. 2646 of Financial
Companies; Dominican Republic, art. 43 L. of Agricultural Development W
6186. Colombia, the regime for issuing these bonds by Financial Corporations is
governed by its particular provisions, EOSF, art. 133, CE007/96, S. b.
39 V. Infra, Chap. XI.
40. Colombia. It authorizes it both for papers that must be the subject of an
exclusive offer abroad, and for simultaneous offers in the local market and
abroad (R. 400/95, arts. 1.2.4.68 to 1.2.4.74).
41. ESPINOSA PÉREZ, Carlos Antonio. "Global and American Depositary
Receipts: an opportunity in the capital market." Private Law Magazine. W 16
University of Los Andes, 1995.
42V. Supra, Chap. 111,3.4.3. And 3.4.4.
43.V. Supra, Chap. V, 7.2.5.
44. 228V. Supra, Chap. VII, 3. We have maintained the references to reiterate the
importance of creating savings habits from an early age, a purpose for which they
contributed significantly. And, of course, to recommend the convenience of using
new technology to achieve the same purpose.
Chapter IX
REDIDCOUNT
1. WARNING
It can be formulated in relation to rediscount and other contracts in which the

bank may be placed in the position of debtor and not creditor, as would normally
be the case. This is the case of rediscount, passive advance, passive mutual, etc.
In all of them there is an absolute legal correspondence that does not justify a
separate study, when the standard contracts are studied in other chapters of the
book.
We make, however, a brief reference to rediscounting, due to its importance as a
source of resources and its relationships with monetary policy, 1 but, especially,
because when it is used as an instrument to provide liquidity to the banks of the
system, it is evident that The rediscount operation is a simple credit operation
with security of securities, or advance, in which the difference between what the
commercial bank receives and the value of the securities is not the value of the
interest of the operation, but the coverage that the central bank takes over the
asset that is transferred to it as property but that, ultimately, fulfills an economic
function of guarantee. And for this reason, there are substantial differences
regarding the form of remuneration and the way of determining the amount of the
credit obtained.
2. AS A SOURCE OF RESOURCES AND INSTRUMENT OF MONETARY

POLICY
We have said that the Central Bank acts as a bank of banks, providing
commercial or deposit banks, among others, with the services that they ordinarily
offer to individuals. It is conceivable, then, that the commercial bank discounts
securities in the Central Bank, that is, obtains a sum of money based on the
transfer, under certain conditions, of securities granted in its favor (promissory
notes) or endorsed by its clients (bills). of exchange), as a consequence in this
case, of a discount contract entered into with them. In the first case, it should
technically be said that the commercial bank carries out a discount operation with
the Central Bank and, in the second, a rediscount operation, although in practice
and to be distinguished from the active contract that banks enter into with their
clients. , the doctrine uses the expression ultimate to cover both hypotheses.2
There is also support from the Central Bank for the system's banks that gives a
new dynamic to the possibility of discounting.
In effect, through the credit they obtain from it, deposit banks can solve
situations of temporary illiquidity that arise, as a consequence of exceptional
circumstances, so that at no time is there even the most remote risk of real
illiquidity, in front of the clientele. For this reason, Central Bank credit is, first
and foremost, a support instrument for the system's banks to address exceptional
situations of temporary illiquidity.3
On the other hand, given the influence that the volume of bank deposits has on
the composition of the means of payment and the impact of the latter on the price
level - due to the greater credit capacity that results from the increase in deposits
- the credit of the The Central Bank is not only a support mechanism for the
system's banks, but also an instrument for controlling their resources, whose
management is of great importance in the application of monetary and credit
policies.
It has been argued that the Central Bank would have discretionary power, by
virtue of which it could refuse to carry out rediscount operations, even in the
hypothesis that the intermediary Bank met all the requirements established by
law. The statement could merit some consideration with respect to special or
promotional credits when, not capriciously, of course, but for reasons other than
the assessment of the conduct of the intermediary bank, the conclusion was
reached of the serious inconvenience that this could represent. Such could be the
case of a bank that, at a given time, presented such a significant volume of
rediscount operations that it seemed excessive for its capacity because it implied,
to that extent, an inconvenient concentration of risk in its head. Likewise, the
conclusion could be assumed valid in the hypothesis of non-existence of funds
available to carry out the rediscount operation.
But, the conclusion would be extremely serious in hypotheses in which it is
- access to quotas that address emergency situations and prior to compliance with
the requirements of the law, because, at that moment, the fundamental reason for
being of the Central Bank as a provider of resources of last resort appears
manifest. And although it could be conceived that, even in the anguishing
situation of the petitioner, the Central Bank refused to approve the operation of
Tale networks - despite, it is repeated, meeting the requirements established by
law - it is no less true that such delicate decision could compromise the
responsibility of the Central Bank, if a financial panic occurred that surprised the
commercial banks without support and their attitude of rejection was not
sufficiently founded in the end. For the rest, and in strictly legal terms, these are
regulated functions and powers with respect to which the administrative
authorities not only do not enjoy discretionary power but must act, precisely, in
the appropriate manner to achieve the higher objectives of the State. that are
entrusted to them and that do not leave room for subjective or capricious actions.
2.1. QUANTITATIVE CONTROL
As soon as the possibility of using credit from the Central Bank is expanded or
restricted, commercial banks will be in a position to increase, with greater or
lesser intensity, credit in favor of individuals. Consequently and in a simple way,
when it is considered that there is an excess in the credit capacity of the
intermediaries, it is enough for the Central Bank, as it says with this instrument,
to close access to credit by suspending the rediscount or raising interest rates in
in such a way that they do not make it attractive for the commercial bank to
resort to this file. On the contrary, in the event of a freeze in bank credit, because
its placement capacity is limited, the Central Bank can increase the quotas or
reduce the rates, stimulating the banks to rediscount their securities and acquire
new resources that they can immediately place in the market.4
It could be stated, however, from the above, that the regulatory tendency is to
seek that the support strictly contributes to returning to the requesting entity the
lost liquidity, but does not grant it additional credit granting capacity, not only
because it becomes so expensive to access. that discourages it, as we will see
shortly, but because it is simply prohibited.5
2.2. QUALITATIVE CONTROL
Just as there may be a simply quantitative control over the available resources, a
qualitative control policy can be carried out that allows the resources allocated to
a certain sector to be restricted or those intended to be directed to others to be
increased. In this event, there will be selective management of the rediscount,
raising, for example, the interest rate for operations coming from commercial
activities and lowering it, on the other hand, for the discount of securities that
come from credits destined for agriculture, dairy farming , etc. In this way, by
expanding or restricting sectoral quotas and managing the interest rate, banks can
be induced to channel their resources towards certain activities.
This possibility is obvious in the application of the policy of the so-called

development banks but is unrelated to the function of the central banks, which
have been freed from fulfilling that role in economic activity, to concentrate their
activities on those of the monetary authorities and the fulfillment of their
fundamental role vis-à-vis the Government and the financial system, in general,
as their banker and bank of banks and not as a stimulator or person responsible
for the definition or achievement of sectoral policies that, naturally, should be in
the hands of other administrative officials.
2.3. RATE, MARGIN AND PERCENTAGE OF COUNT NETWORKS
The rediscount rate is the interest rate that the central bank charges commercial
banks for access to their resources. The rediscount margin is constituted by the
difference between the interests that the commercial bank charges its client and
those that it must recognize to the central bank and its variations constitute agile
resources within the aforementioned mechanism. On the other hand, the
percentage of
- Tale networks constitute the sum that the bank receives in exchange for the
securities which, when it is less than one hundred percent, implies the financing
of the difference with its own resources, in the development credit hypotheses or
simply reflects the coverage implicit that the central bank requires when to grant
a credit of 70 it requires the transfer of an admissible title worth 100.
This mechanism constitutes a clear difference with the discount remuneration
system, which would equate the operation to an advance payment rather than this
last contract. In effect, when a client discounts a title of 100 in his bank, with a
maturity of 90 days and receives 95, the 5 difference does not constitute a casual
or capricious sum but must technically reflect and be equivalent to the interest
between the date of the operation and the expiration of the document, because
there is an intimate relationship between both dates, as they delimit the term of
the credit operation. If at expiration I wanted it back or had to do it, I would have
to pay 100 for it. On the other hand, if a bank does the same with the Central
Bank, the discount percentage is not equivalent to the remuneration of the
contract, since it consists of an interest rate, but to the participation that it
ultimately takes in the financing. of the operation, when it acts as a development
bank or in the coverage or safety margin that any financial creditor may require
when granting a credit for a value lower than that of the asset that is the subject
of the guarantee. Therefore, in the same case, when the commercial bank
recovers the title at the expiration of the term of the rediscount operation, it pays
for it the same sum for capital that it had received as a credit.
It is therefore, for this aspect and insofar as the interest rate and percentage file is
used, a loan with title guarantee or advance payment, rather than a discount itself.
In other words, the central bank defines, within the possibilities granted by law,
the amount of credit that can be granted to the commercial bank, approves the
operation for a certain period that has no relationship with that of the securities
that you are going to receive and, finally, it tells you in what percentage you
receive them, that is, what is the coverage margin that you need or that your
regulations impose on you. Traditional and typical practice of guarantees, as
would occur with a mortgage loan, in which the uses and even the laws
themselves, sometimes, lead to the amount of the credit not being granted for one
hundred percent of the value of the mortgaged asset but for a percentage of it.
And there is no doubt that, in essence, it is a guarantee, because the central bank
retains the power to demand from the commercial bank the payment of the sum
constituting the facility at the expiration of the operation, so the transfer of the
securities has It must be understood - there, as occurs in the discount - to be made
pro solvendo, that is, to be paid with its proceeds, if it has to resort to collecting
the securities and not pro solutum or in payment or as definitive consideration for
the money received, as This would occur if it were a firm purchase made by the
central bank for which it has paid a price, in which case it would not be able to
collect anything from the commercial bank at the expiration of the operation.
What does this mean? That if, for example, within the option that the central
bank has of collecting the securities, as endorsee of property, it obtains its
payment from the assigned debtors, the sum resulting from the collection must be
applied to cancel the amount of the credit operation carried out. with the
commercial bank, naturally including interest, if any is due, and that the balance
must be returned to the latter, since there would be no cause that would
legitimize the central bank to retain the difference.6
It has been argued that this characteristic of the percentage of networks counts,
that is, the circumstance that the Central Bank limits itself to networks that count
a part. of the credit, forcing the intermediary to assume the difference with its
own resources, must lead to two promissory notes being granted by the final
debtor so that one is rediscounted as property, so to speak, and the other as
collateral. Such a possibility is operationally possible if the rediscount regulatory
standards impose it on the banks and refers, of course, to the hypothesis of the
so-called development credit or for special purposes. But nothing would prevent,
in our opinion, from using a single promissory note that was endorsed for its total
value, of course, with the good understanding that in the case of having to
exercise exchange actions and make them effective, the Bank of the Republic
only required from the intermediary the amount actually counted or would credit
the difference into its account, if it obtained payment directly from the final
debtor.
3. REQUIREMENTS REQUIRED BY THE CENTRAL BANK
Not all documents that the bank has in its possession, as a result of direct credit
or discount operations, are susceptible to being discounted or rediscounted before
the Central Bank. This usually requires certain requirements aimed at ensuring
that the securities provide sufficient guarantees of liquidity and security. Let's
look at some defendants frequently.7
3.1. NATURE OF DISCOUNTABLE TITLES
In principle, only the rediscounting of securities with credit content is permitted,

that is, those that incorporate the obligation to pay specific sums of money.
3.2. TERM
Discountable securities must have short maturity periods, since it is considered

that the Central Bank cannot keep part of its resources in illiquid obligations, due
to their due date. It is established, then, that only securities whose maturity period
does not exceed 180 days from the date of rediscount will be accounting
networks, to speak of an apparently reasonable period. However, if there is an
adequate valuation of the portfolio at market prices and this exists, it would be
possible to receive longer-term securities.
3.3. GUARANTEE
It is frequently required that the securities bear at least two signatures, allowing
the Central Bank to exercise its recourse actions against a plural number of
debtors, in the unlikely event that the discounted bank does not satisfy its
obligations. It is also assumed that these are signatures previously qualified by
the lending bank. But more importantly today, it is required that they be titles
with optimal qualifications that must be maintained during the life of the credit.
3.4. TYPE OF INTEREST
As a form of intervention by the monetary authority in its setting, it is usual to

establish that only securities whose interest rate does not exceed that indicated by
the authorities will be discountable. In this way, the rediscount rules indirectly
serve to moderate the rate, by prohibiting the rediscount of titles whose rate is
higher than the maximum allowed.
3.5. PURPOSE OF THE LOAN

Finally, the titles with the required terms, number of signatures, interest rate and
nature must correspond to credit operations intended for productive activities
rather than speculation. For this reason, securities whose causal antecedent is
constituted by the execution of a loan for the acquisition or negotiation of real
estate or similar activities are usually rejected, which do not imply a commercial
or industrial rotation, eminently productive, but rather favor speculation or the
increase of capital by the simple passage of time.
All securities constituting the bank's investment portfolio are usually admissible,
whether forced or voluntary investments.
------------------------------------------------------------------------------
1. Consult LEÓN CUERVO, Luis Carlos. "The Rediscount Contract", published
in the Banco de la Magazine, Republic of Colombia, May 1989, pp. 49 And ff.
GARRIGUES, Joaquín. "Banking Contracts". Second edition. Madrid. 1975, p.
286.
2. Colombia. The provisions of the Bank of the Republic distinguish both
hypotheses, depending on whether credit securities that the commercial bank has
acquired through discounts are mobilized, in which case we will speak of
rediscount, or securities from the bank's portfolio that are part of it for any other
cause, event in which we will talk about discount (R. 18/99, JOBR, art.3").
3. Colombia. With the creation of FOGAFIN, which has conceptually involved
the creation of an entity specialized in granting financial support to credit
institutions, when they face problems of soundness; that is, linked to structural
deficits (v. Supra Chap. 11.2.5) And not with simple temporary treasury
problems, the orientation of the resources of the Bank of the Republic, as lender
of last resort, to the attention of the latter has been necessarily limited. In fact, it
is noted that "in no case may liquidity support be granted to insolvent entities or
have the purpose or effect of resolving an insolvency problem." For this reason,
in practice there is only one type of access, in contrast to the existence, in the
past, of the so-called ordinary, extraordinary and special quotas, the latter linked
to the former function of development bank that it had before the constitutional
reform of 1991 (R. 18/99, JOBR).
4. Colombia. "The credits granted as temporary liquidity support represent a
primary issue for the economy, therefore, the higher the discount or rediscount
rate, the greater the disincentive for banks to request temporary liquidity support.
commercial, the need having to be satisfied through a different mechanism. Thus,
to the extent that the discount operation stops being carried out, less primary
issuance is produced, depriving the economy of liquidity, while the lower the
discount or rediscount rate, the request for temporary liquidity support is
stimulated, generating greater primary emission and providing this form of
liquidity to the economy". "Introduction to economic analysis, the Colombian
case." 2nd Ed., Edil. Century of Man. Bank of the Republic, 1988. pp. 336 to
381.
5. Colombia. "During the period in which the resources are being used, the credit
establishment may not increase, with any type of funds, the total value of its
active credit operations, assets leased, investments, available in foreign currency
and funds interbank sold and resale agreements...", with specific exceptions (R.
18/99, JOBR, art. 12).
6. Colombia. The Banco de la República has quantitative limits for the amount of
credits that a commercial bank can obtain as liquidity support, which are
determined based on the amount of the assets of the petitioning bank during the
15 days prior to the date of application. The initial term is 30 days, extendable up
to 180, and no bank can use this type of credit for more than 270 calendar days
during the year. "The percentage of the value for which the eligible securities
will be received" will be set periodically by the bank itself (R. 18/99, arts. 70, 10
AND 15, No. 5). Recently, the obligation of the discounted bank to have
sufficient funds in the Bank of the Republic at the expiration of the established
period has been reiterated, to allow the latter to debit the amount owed. Likewise,
it has been stated that the central bank is obliged to return the securities to the
commercial bank, which ratifies what has been stated on the matter (Cir. External
Regulation DODM-55 of 2001 Banco de la República).
7. Colombia. R. 18/99 JDBR.
Third part
Contracts that precede the realization
of active operations
INTRODUCTION
We studied the concept of banking operations and within it the concept of typical
operations that we divided into active and passive, depending on the bank placing
or raising resources, respectively.l
Active operations are characterized because by executing the contracts that
precede them, an effective or potential transfer of a sum of money from the bank
to one of its clients occurs. This distinction allows us to affirm that not always
when an accounting movement of the asset occurs we are faced with an operation
that can be classified as such, as happens with the purchase of foreign currency,
which produces a change in the lines of the asset, but does not mean a placement
of resources. .
We also separate ourselves from the criterion followed by some authors
according to which all active operations and, consequently, the contracts that
precede them, can be explained through the theory of credit opening. This
didactic possibility only fits if the mutual contract is considered consensual, but it
is insufficient when it is considered a real contract, since, while in this case
delivery is an essential element for its formation, in the opening of credit and in
contracts that can be disciplined in accordance with their general principles, their
celebration only produces an availability for the client, that is, a possibility of
obtaining credit that will depend on actors usually foreign to the bank and does
not imply, in a first stage or necessarily, a delivery of money.
Therefore, there are three schematic possibilities that we predicate from the
appearance of the work to the contracts that precede the carrying out of active
operations.
The first, that in which ab initio and essentially, a transfer of resources from the
bank to its clientele occurs, as happens in the case of the mutual.
The next two constituted by the opening of credit, with the specific meaning that
we will see in due course, characterized by an availability in favor of the client
that can be satisfied in different ways and, the contracts that we have covered
under the generic possibility of signature credit , that is, the intervention of the
bank as a simple signatory that enables the client to obtain resources from a third
party or obtain advantages or results that would be equivalent to those derived
from the money credit itself. Now, and strictly speaking, we have concluded,
over the years, that both the credit opening contract and the documentary credit
contract fit under the generic concept of signature credit, since in their formation
they simply enable the client to obtain an economic advantage, in some way
equivalent to that which they would obtain if they had received the money credit,
the disbursement of which, in any case, is not concomitant with the execution of
the contract and may even never occur. This notion, then, would extend to both
and the traditional recognized forms of endorsements, acceptances and
guarantees. Its recognition ordinarily constitutes for the credit intermediary a
contingent obligation that, if it becomes payable, will impose on the bank the
need to make a disbursement, becoming a creditor to its client.
Additionally, we have considered it convenient to highlight, for a simple

pedagogical purpose, how a plural number of credit contracts serve to mobilize
portfolios and, in general, securities or financial assets, either because they serve
as support for the operation or because they end up being transferred to the bank
or to a third definitively. This is the case with advance payment, discount,
factoring, repo and securitization contracts, in this case, at least, from what is
said by the most common and well-known modalities.
All of which enriches, compared to previous editions, the conceptual panorama

of reference with which we began the study of the third part of the book.
-------------------------------------------------------------------------------
1. v. Supra, Chap. 11, 3.
Chapter X
MUTUAL
1. PRELIMINARY WARNING
Several observations should be made at the beginning of this chapter.
Firstly, it is necessary to take into account that when it comes to a banking

technique book, the active operations derived from the mutual are studied
separately in relation to their object or with different modalities regarding their
instrumentation, their guarantees. , your destination, etc. We talk about -
exchange loans, account credits, credits for consumption or investment, credits
with a simple signature or with guarantee, etc., all modalities that, although they
may have an individuality from the technical point of view, correspond to the
same support. conceptual, legally considered: the conclusion of a mutual
contract. That is, for all modalities the general principles of delivery, restitution
and deadline are applicable, without distinction.
Secondly, it is worth noting that mutual operations are the most prominent
among the active ones, since the respective contracts constitute a useful file to
transfer a good part of the resources available to the institution.
It is the exchange rate, implemented in a promissory note granted by the client in

favor of the bank, that is used most frequently. Which means that, given its
proportions and without having the same structural importance, the promissory
note is for the mutual fund somewhat what the check is for the current bank
account. The promissory note is a security title with credit content, through
which the grantor unconditionally undertakes to pay the beneficiary or whoever
is the legitimate holder of the instrument, in accordance with its circulation law, a
certain sum of money. It is a promise to pay, in contrast to the bill of exchange
which is an order to pay. Unlike the check, one of whose parties must necessarily
be a bank, the promissory note - like the bill - can be executed by any capable
person and in favor of any beneficiary.
It is an abstract title that can be granted to the order or to the bearer, excluding
the nominative form, generally reserved for causal titles, such as the shares of a
company. The rules of the bill of exchange regarding presentation for payment
are applicable to it, since it cannot be done for acceptance since the grantor's
obligation arises without the intervention of a third party. The provisions on
protest also apply, if it is required by law or by its insertion in the title. Exchange
actions arise from the promissory note that are exercised to obtain payment of the
rights incorporated therein. Its prescription terms are established by law, they are
usually longer than those of the check and coincide with the general terms of the
bill of exchange. Given the impossibility of making a broader review of the
general theory of securities, we believe that these notes are sufficient to specify
the legal location of the promissory note.l
2. NOTION
The mutual agreement is a credit contract and as such implies a transfer of

ownership with a charge for the recipient to subsequently return goods of the
same type and quality. In classical French theory, which is known as a consumer
loan to differentiate it from bailment, it is a contract in which one of the parties
delivers to another a certain amount of fungible things with the obligation for the
latter to return the same. quantity identified by its gender and quality. Its object is
constituted by movable property that, whether consumable or not due to its use,
can in any case be fully used by the person who receives it (mutual property),
since these are fungible things, replaceable one by another. In the case of a
banking contract, its almost invariable object is money, since, if the contract can
also be concluded in relation to credit instruments, in practice this possibility is
remote and secondary compared to those whose object is a sum of money.
2.1. MERCANTILITY
The mutual contract is a classic contract enshrined in civil law that has the
characteristics of commercial in different hypotheses indicated in the legislation,
among which we can mention that one of the contracting parties is a merchant or
that the things lent are used for commercial acts or that the contract is made for
consideration.2 In any case, when it comes to the mutual agreement concluded by
a bank, it can be stated without hesitation that one of the requirements is met
since it is a merchant. It will depend on each legislation whether the presence of
an additional requirement that coincides with the previous one is required.
The definition of mutual insurance as commercial is necessary to know which
provisions apply to it first, whether those of civil law or those of commercial law
and, in addition, it plays an important role in systems in which there are
jurisdictions separate from civil and commercial law. trade. In any case, the
principles of civil mutual insurance are, in general, applicable to commercial
mutual insurance, which is only distinguished by some characteristics such as
onerousness, which we will see below.
2.2. REMUNERATION
It constitutes the aspect that fundamentally distinguishes the commercial mutual

from the civil. The latter is a naturally free contract, as a general rule, while the
former is remunerated in principle. What is also logical when a merchant
intervenes as a lender or mutual funder, since he carries out his activities for
profit and it would not be conceivable that he would transfer his resources, which
entail a cost, without obtaining remuneration in return.3
Add to the above, in the case of banks, since the development of their corporate
purpose is to serve as financial intermediaries, the price at which they place their
resources is not only a function of the cost they represent and the time during
which they are deprived of its availability but that risk plays an important role in
its determination, that is, the set of circumstances that determine the type of
credit, its destination, the solvency of the debtor, the market situation, the
exchange conditions, if it is loan in foreign currency, etc. A bank cannot ignore
these circumstances since it is a professional activity that involves defending
both its interests and those of the depositors who provide a good part of the
resources it has. It must, therefore, ensure that they are provided in the safest
manner and with adequate remuneration rates that compensate for the risk that
must be assumed in the respective operation, as we will see later.4
Credit analysis plays a fundamental role in the banking business and corresponds
to refined techniques of financial investigation and analysis of accounting
statements, that is, the balance sheet and profit and loss statements of clients;
establishment of coefficients or financial ratios of solidity, profitability,
indebtedness, liquidity, etc., all of which makes it possible to decide whether to
carry out the credit operation and its remuneration conditions.
3. LEGAL NATURE
We have said that it is a transfer contract of property. Therefore, becoming the

owner of the goods received, the debtor's obligation is typically gender-returning
an equivalent amount-and allows us to distinguish the mutual from the loan or
loan of use where, unlike the former, the bailor is obliged to return the same
good. that you have received. Therefore, the object of the mutual agreement is
fungible goods, substitutable for each other, and generally consumable, that is,
they are exhausted by their use.
In bailment, on the other hand, the object is made up of non-fungible and, in any
case, non-consumable goods.
The mutual agreement also differs from the discount because the latter contract
always operates in relation to unexpired credits whose value serves as a reference
point to determine the amount delivered by the bank. Some practical similarities
may arise when the loan is made with a guarantee granted by the debtor,
consisting of overdue credits, but while in this case it is an accessory operation,
intended to guarantee the timely delivery of the sum received, in the discount, the
assignment of the credit or the endorsement of the titles are essential elements for
the execution of the contract, although, ultimately, they fulfill the same function
of guarantee from the economic point of view.5 This is what, we also rightly
point out, when speaking of the rediscount contract.6
As in all contracts we will make a slight mention of the point, since its notions
were seen in a relatively broad way.? We will stop at some aspects that require
additional explanation.
The mutual agreement is a typical contract, regulated without exception in all

legislations, main, real, onerous, as long as it is commercial and unilateral since
only obligations arise from its conclusion under the responsibility of the
borrower. The only point that merits a slightly broader comment is to affirm that
it is a real contract, that is, that it is perfected by the delivery of the thing. It is the
characteristic that corresponds to the classic concept of the contract and the one
that is still maintained in most of our legislation, although it must be admitted
that there is some tendency towards the consecration of the contract as a
consensual agreement, perfectable by the simple expression of will. of the parts.
Tendency that is favored by commercial practice, in the case of banking

operations, which leads customers to understand that the contract has been
perfected by the simple agreement with the bank on the amount of credit granted
and the terms and conditions. remuneration and that even translates into the
signing of blank promissory notes, when this modality exists, so that the bank
can later deliver the money, usually through an account credit. It could be argued,
given these external and preparatory manifestations, that it is a mutual promise,
which in essence is also a contract, and which constrains the bank to deliver the
sum of money to its client, once they have agreed. agreement on the fundamental
conditions already mentioned.
The distinction between a real and consensual contract, in any case, continues to
be the subject of arduous debates, as some believe that there is no technical legal
reason to require the delivery of the thing as a requirement for the perfection of
the business and that it is simply a delay. formalist of Roman law. Others,
however, consider that the figure of the real contract is fully justified, not only
because the obligation of restitution - typical of real contracts - would not arise
with the contract but with the delivery, contrary to the general principle, but also
because There are economic requirements that justify it, for example, in the
pledge, the delivery guarantees the creditor that the asset will not be disposed of
illegitimately by the debtor. 8
It seems to us that in the current state of affairs the contract continues to be

considered real and that, consequently, the possible possibility for the client to
demand delivery would have to be based on the existence of a mutual promise,
when this is not required. the written form, but which could not be based, strictly
speaking, on the existence of a mutual contract.9
5. OBLIGATIONS OF THE MUTANT
This is a point closely linked to the previous one because if it is a real, unilateral
contract, the mutual party has no obligations under its responsibility. In other
words, to present the problem in practical terms, when the bank delivers the sum
of money the contract is born and from that moment on the only obligations are
borne by the client, since the credit institution has already fulfilled its constitutive
"obligation". of the contract, if we are allowed to use this expression in a broad
sense.
Now, practice shows us mixed modalities where the bank delivers a sum of
money, but undertakes to make additional deliveries in the future. Such is the
case of an agreement with the client in relation to a specific sum of money, but
which, due to imposition of the bank or due to the nature of the investment,
involves periodic disbursements during a certain period. There, breaking down
the agreement, we would find a contract where there is simultaneously a mutual
agreement for the amount delivered and an opening of credit for the rest of the
money. Strictly speaking, then, once the mutual contract is concluded, no
obligation arises for the mutual bank, with respect to the sums disbursed.
6. OBLIGATIONS OF THE MUTUAL
The obligations of the borrower are constituted by the payment of the agreed
remuneration and the restitution of the mutual sum.
6.1. PAY THE INTEREST
If we accept, as a general principle, that the commercial mutual is remunerated,

we must conclude that, in most countries, the simple execution of the contract
gives rise to the obligation of the debtor to pay the remuneration. In these
countries and in the face of the silence of the parties to the contract, the law
establishes by default the possibility of determining the amount of such interest
by one of two systems: indicating a specific rate that we could call "legal rate of
interest" or referring at a market rate that we could call "current interest rate" and
whose proof can be done by different means depending on the systems. By
certification, for example, from the monetary authorities themselves, or the
judge's decision taking into account the rates that may correspond to the notion of
"current", that is, usually applicable to certain types of loans. Which means, then,
that to impose on the debtor an interest rate other than the legal or current one,
depending on the system, it must have been agreed upon in the contract.
There are countries in which supplementary provisions do not apply in this

regard and, therefore, for the debtor to be forced to pay interest, it must have
been expressly agreed upon. 10
Another principle of general application is that, even when the loan has been
concluded on assets other than money, the remuneration of the contract is always
expressed in interest.
6.1.1. Limitations to the interest agreement
We conceive them from two points of view: regarding the rate and regarding the
possibility of capitalizing them.
6.1.1.1. Rate
The problem of limiting interest rates is part of the most complex problem of
monetary sovereignty and means, ultimately, the possibility that the State
reserves and translates into legislative provisions, of regulating the interests that
individuals can agree on in their contractual relationships. In other words, if the
currency is a creation of the State, operations on it and, specifically, its placement
in the form of a loan, can be regulated by limiting the interest rate and even
imposing sanctions for those who exceed it.
The interest rate can be conceived with respect to two moments in the life of the
contract, or better, the fulfillment of the derived obligations. One is that which is
charged during the term of the contract, which corresponds to the price of money
or, if you will, the remuneration for the sacrifice that the creditor makes by
depriving himself of the availability of resources for a certain time. But it is
possible to conceive that, by virtue of non-payment of interest or repayment of
capital, the debtor receives a sanction that consists, precisely, of the possibility of
charging a higher interest rate called a moratorium.
Also in this case, the higher rate may be enshrined in the law by supplementary
means, authorizing the settlement of a certain percentage more than the original
rate or may be agreed upon in the contract as a penal moratorium clause or
penalty for delay, which does not exempt the debtor of the need to fulfill other
obligations
contracted.ll
The importance of the legal limitation is that it is not possible to stipulate rates
for the term or late payment higher than those established by law. In this order of
ideas it can happen, and we present it in general terms since it is a peculiarity of
each system, that the law enshrines the power for the debtor to request a judicial
reduction of the interests, when they exceed the maximum limit established. by
law and even that the creditor is condemned to lose, not only the excess, but all
the interest.
Civil sanction for usury, or excessive charging of interest for the loan of capital,
which touches both on the problem of monetary sovereignty and on principles of
morality, because it is considered that in the mutual relationship the debtor is the
most vulnerable party. weak and the possibility cannot be left open for the
creditor to set at his discretion and excessively an interest rate that, due to its high
amount, could result in an inequitable burden for the creditor. Of course, the
quantum of this rate is a problem for each country, which is related to the internal
situation, since it is axiomatic, as it results from a simple economic variable,
which in countries of monetary stability, from reduced increases in the price level
, interest rates are low; while in countries in inflationary periods, the interest rate
is usually much higher, since the price of money is a function, first of all, of the
devaluation of the currency, as a consequence of the internal level of inflation,
whose recognition as a component only restores the purchasing power of capital.
To this is added the so-called basic remuneration or "pure rate" which
constitutes, then, the remuneration itself, as well as some points that cover the
risks of the operation and that result from various considerations, starting with
the debtor's payment capacity, the economic sector, the situation of the country,
the currency of the contract, etc.12
Therefore, a reasonable control criterion can take as a reference point the interest
rate charged by financial intermediaries, which, taking into account state
surveillance and its sensitivity to market trends, can acceptably reflect an
adequate level of remuneration. for the money borrowed. When this happens, the
limits for the rate during the term and the default can be established without
difficulty. 13
Finally, there may be countries with liberal economies in which the interest rate
is left to market forces and the result of supply and demand and, consequently, no
limits are established for the agreed rate during the term or for the one that can
run during the default.14
In other countries it can be conceived without difficulty that, in addition to civil

sanctions, consisting of the possible reduction and even loss of interest, criminal
sanctions are established as soon as usury is classified as criminal conduct.
When interest is charged by credit institutions, there are also monetary reasons
that lead the respective authorities to regulate the interest rate, either generally or
differentially for certain types of operations, always using the instruments with
which they usually apply. count on the central bank for the adequate regulation of
active banking operations. 15
In summary and summarizing, it could be argued that banks find potential limits
to their freedom to set interest in the following hypotheses: a) as a consequence
of the civil and commercial laws that are generally applicable to them; b) by
application of the limits that, as monetary authority, the central bank may
establish, which are naturally inapplicable to other types of mutual entities; c) for
the granting of development credits, because given the nature of this type of
credit, the bank or development entity that administers it indicates the maximum
rates that can be charged, if it intends, of course, to access the rediscount, and e)
for the existence of maximum tolerable limits without incurring the crime of
usury, when such conduct is criminalized.16
Finally, it is worth noting that the so-called financial operations, by some sector
of the doctrine, would not be subject to the credit limits that banks must support,
in their capacity as such. They would be those that involve the supply of
resources, but that do not strictly entail direct credit operations towards the
debtor or have the legal appearance of firm operations, where there is no
restitutionary burden, and worse still, where the lender is not a financial
intermediary, which which would imply the provision of funds with its own
resources. Among the examples cited are leasing, repo and factoring.
The possibility of capitalizing interest so that it is added to the mutual sum and
produces new revenues (anatocism) is also frequently limited. It is estimated that
if allowed, interests would be charged much higher than those established as a
maximum by law.
However, for the sake of an equitable solution in commercial matters that also
sanctions the defaulting debtor, some legislation establishes the possibility of
carrying out said accumulation, not automatically and successively, but once a
certain time has elapsed or in the face of certain hypotheses, such as the novation
of the debt, enshrined in a new document, the presentation of a judicial claim
straightening the collection of capital and interest, etc.17
6.1.2. Presumptions arising from receipt
A common provision is to establish a presumption, at least legal, that is,

rebuttable by the creditor, according to which the issuance of a receipt produces
certain legal consequences. There are several possibilities: that a receipt is issued
for the payment of the capital without making any reservation regarding the
interest, in which case the presumption will consist of assuming that these have
been duly paid. Likewise, the issuance of a receipt for one or more specific
periods, without reservation in relation to the previous ones, leads to the
presumption that these were duly paid at the time. Which is logical because it is
not reasonable to assume that the creditor receives the interest corresponding to
the seventh and eighth monthly payments, for example, if he has not previously
and in a timely manner received those corresponding to the first six months.18
All of the above linked to the problem of imputation for payment that we have
already had the opportunity to study and that, in the specific case of mutual,
implies that the sums received by the creditor are attributed first to the interest
and then to the capital and in relation with those, first to the oldest ones rather
than the most recent ones.19 Therefore, if a credit has been verified, the creditor
applies it to the capital and issues the corresponding receipt, being authorized to
charge interest, it is logical to conclude that these have been canceled with
anteriority.
6.2. RESTITUTE THE GOOD OR THE SUM RECEIVED
The mutual can refer to any fungible asset. Only due to its importance in the
banking world we have made the exhibition based on the delivery of a sum of
money, a very common hypothesis in the active operations of banks. This does
not prevent the existence, for example, of a loan made in securities, in which case
the obligation to return will refer to securities of the same type and quality.
6.2.1. Time of restitution
The mutual sum must be reimbursed by the debtor on the date provided for by
the contract, if a term has been agreed or upon the advent of the condition, if it is
a future and uncertain event that defines the return of the money. It may,
however, happen that the loan is made without establishing a date or condition
for its repayment. In this hypothesis, there are several solutions established by
law: a deadline is established by alternative means, counted from the date of
conclusion of the contract or the request made to the debtor, or it is left in the
hands of the judge to establish the date on which the debtor must The sum must
be returned, taking into consideration the circumstances of the contract, the
capacity of the parties, the will they apparently had when contracting, etc. 2°
From the establishment of a return date, the notions of term and delay arise for all
purposes and, especially, for the payment of interest.
6.2.2. Payment for installations
It may happen that the debtor is obliged to repay in installments. In this case
there will be as many periods or expiration dates as there are facilities or
installments that have been agreed upon. However, it is interesting to note how,
unless otherwise legally prohibited, there is the possibility for the mutual funder
to agree in the contract on the so-called "acceleration clause", in accordance with
which, in the event of the debtor's failure to pay the interest or of any of the
capital installments, it is possible for the creditor to demand in advance the entire
amount
deupa. Possibility that seems to consult equity, since it is not reasonable to co-.
locate the creditor pending the expiration of each of the installments to demand
payment, if in relation to any or his interests the debtor has defaulted.21
6.2.3. Payment currency
It is necessary to take into account another principle derived from monetary

sovereignty, which is that, as a general rule, all monetary obligations, even those
agreed in foreign currencies, can be satisfied by delivering their equivalent in
national currency. This is what is known as the "liberating power of the national
currency" and reiterates the primacy of the currency issued by the State or with
its authorization, with respect to any agreement signed between individuals
whose purpose is the payment of a sum of money. . Now, even admitting this
principle, two hypotheses can be conceived regarding obligations in foreign
currencies: that they can be contracted freely or that they are subject to
limitations, very frequent in countries that have exchange controls, although
these have disappeared or have been significantly reduced due to globalization
and only reappear periodically in countries in crisis, which turn to them to protect
their reserves.
In the first case, the agreement in a foreign currency produces one of two
consequences: either the debtor pays in the stipulated currency, think of Canadian
dollars, to give an example, a hypothesis in which the loss of value or the
increase is the same as that occur in the interregnum will harm or benefit the
creditor, since by application of general principles the debtor is validly released
by delivering an equal amount of Canadian dollars to those received or, second
possibility, the debtor, invoking the principle of liberating power, if it is
enshrined in your country, pay in national currency; logically, in our opinion, at
the exchange rate in force at the time of making the payment.
When such freedom does not exist, and the exchange provisions impose on
individuals the obligation to sell the foreign currencies that they own or part of
them, if parallel markets exist, restrictions are also imposed on agreeing
obligations in foreign currency. Thus, the option would disappear, and the debtor
would have to pay in national currency and obtain authorization from
government entities to do so in foreign currency, but only, surely, if it involves
making a transfer abroad and corresponds to an operation that legitimizes your
request.22
Even paying in national currency there remains the problem of the exchange rate.
If the restriction is total and the so-called "value clauses" are prohibited by means
of which the monetary obligation is linked to an exogenous standard, such as a
currency, a precious metal, etc., payment will be made in national currency at the
rate exchange rate in force at the time the obligation was contracted. If there is an
exception, such as foreign trade operations, payment will be made in national
currency but at the exchange rate in effect at the time of payment.23
6.2.4. Adjustment clauses
On the other hand, and despite the above, it should be noted that in a fairly
generalized process, although incoherent and debated, the need to apply
adjustment criteria to monetary obligations has been recognized, for reasons of
justice and equity, when sustained inflationary phenomena They deteriorate the
purchasing power of the currency and lead to generating serious imbalances if the
principle of "nominalism" and the exegetical interpretation of many norms
inspired by it are rigorously applied.
The issue goes far beyond the mutual contract, although it is vital for its
development, and has as much to do with contractual obligations, strictly
speaking, as with restitutionary obligations and with the various hypotheses of
compensation for damages, against which the legislative and Jurisprudence
records numerous advances towards the substitute application of the "valoristic"
or "realistic" principle to determine the amount of monetary obligations.24
Fundamentally, it is based on the assumption that if the passage of time erodes
the purchasing power of the debt currency, it is necessary to return it to fulfill the
compensatory purpose or so that the creditor does not receive less and the
purpose of reparation is frustrated. the emergent damage that it suffered, to
foresee two different scenarios, but frequent occurrence.25
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1.V. Supra, Chap. V, 3.4, where some principles of securities are mentioned.
2. Costa Rica, arl. 495 C. Co. MARTlNS, Fran. Op. cyl. p. 305.
3. Colombia. The term in commercial obligations does not automatically generate
the recognition of interests, that is, they are not presumed. In order for them to be
required, they must result from a contractual provision or a legal provision that
establishes it. This happens, for the last event, with sales to credit, current
account, mutual and current bank account (CSJ. Civil Chamber. Senl. Nov./89,
M. Q. Rafael Romero Sierra). In effect, "unless otherwise agreed, the mutual
beneficiary must pay the mutual legal commercial interest on the sums of money
or the value of things received mutually" (art. 1,163 C. AC.).
4.V. Infra, Chap. X, 4.3.
5. V, Supra, Chap. IX, 2.3.
6.V. Supra, Chap. IX.
7.V. Supra, Chap. 1, 5.4.
8. MESSINEO, Francesco. "General Doctrine of the contract." Legal Editions
Europe-America. Buenos Aires, 1952, TI, p. 105. Colombia. The Supreme Court
of Justice has reiterated that the mutual contract is real (Civil Cassation Chamber.
Sentences of Mar./98 M. Q. José Fernando Ramírez Gómez and Mar./2000 M. Q.
Carlos Ignacio Jaramillo J.).
9. Colombia, establishes that "whoever promises to give in mutual can refrain
from fulfilling his promise, if the property conditions of the other contracting
party have altered in such a way that they make restitution notoriously difficult,
unless the mutual promisee offers him sufficient guarantee" (art. 1169 C. Co.).
10. Naturally remunerated mutual is understood, among others, in Colombia, art.
1163 C. AC.; Venezuela, art. 529 Co. Ca.; Chile, art. 798 C. AC.; Ecuador, art.
557 C. AC.; Bolivia, art. 335 C. AC.; Costa Rica, art. 496 C. AC.; Panama, art.
796 C. AC.; in Peru, art 309 C. Ca., should not be expressly agreed upon, remu is
understood. nerada unless otherwise agreed.
11.V. Supra, Chap. 1, 4.4. It should be noted that in the system of civil law
countries, default interest is nothing more than a presumption of law, in favor of
the creditor, regarding the amount of damage suffered due to the debtor's non-
compliance or non-payment of a sum of money. . Therefore, the debtor cannot
oppose its recognition alleging that the damage suffered was minor. Now, if the
creditor considers that the damage was greater, he may request that the
compensation be extended to the corresponding amount, but he will have to
prove it following the general rules for compensation for damages. In Anglo-
Saxon law, late payment interest follows the "penalties" regime, so that even
when they have been agreed upon, they will not be payable unless it is proven
that the anticipated amount represents a genuine attempt by the parties, at the
time of contracting. , to quantify the probable damage that would result from
non-compliance (Dunlop Pneumatic Tire v, New Garage, 1915. AC 79 (87-88),
(i.914-1.915) AII E Rep 739). In financial matters, a modest default rate is
accepted, applied in the period in which it occurs under the understanding that,
with the debtor in default, the credit risk is greater. In practice, an interest of one
point on the agreed term interest is allowed. CRANSTON. Op. cyl. p. 337.
12 Colombia. Regarding the precautions that the banker must take regarding the
risk of the credit operation, the Banking Superintendency has issued a statement
in both the accounting and legal Circulars (Circulars 100/95 and 007/96).
13. Colombia, with a criticized wording - despite the modification introduced to
the original text - establishes that "when in commercial businesses capital returns
have to be paid, without the interest being specified by agreement, this will be the
current banking interest; If the parties have not stipulated the default interest, it
will be equivalent to one and a half times the current bank interest and as soon as
any of these amounts exceeds the creditor will lose all interest. The current bank
interest will be proven with a certificate issued by the Banking Superintendence"
(art. 884, C. Co.). The doctrine has maintained that such power refers exclusively
to the interests corresponding to obligations agreed in national currency and that
it could not be extended to operations in foreign currency. See in front of the
topic SUESCUN MELO, Jorge. Private right. Contemporary civil and
commercial law studies. Volume 11. Chamber of Commerce of Bogotá. Bogota,
1996.
14. Apparently it would be the case of Peru, art. 310 C. Co. 15. v. Supra, Chap.
11, 2.2.2.2.
16. Colombia. Recent pronouncement of the Council of State has established that
the only authority endowed with the competence to set maximum interest or
discount rates for credit establishments is the Bank of the Republic, by virtue of
the power granted to it by article 16 of the L. . 31/92 (Consultation and Civil
Service Room. Ju1./2000. M. Q. Caesar HQYos).
17. Colombia, art. 886 C. Co. Before the financial reform of 1990, the
capitalization of interest was admitted through an ingenious restrictive
interpretation of the rules on anatocism, which allowed the Council of State to
declare Decree 1454 of 1989 valid (Sent. First Section. Mar.l92. M. Q. Miguel
González Rodríguez) who considered that the expression "pending or arrears
interest" referred exclusively to interest that was payable, which opened the door
to capitalize interest or use compound interest systems. Later, the legislator
allowed capitalization for long-term operations (EOSF, art. 121).
The common law system has reservations against default (penalty) but allows
capitalization of interest (National Bank of Greece SA vS. Pinios Shipping Co.
1990. 1 AC 637 (HL)).
18. Colombia, art. 1163 C.
19. CO. v. Supra, Chap. 1, 4.5.1.7.
20. Some solutions: 10 days after granting Costa Rica, art. 503 C. Co.; Chile, art.
795 C. Co.; Panama, art. 804 C. Co. 30 days after the notarial requirement; Peru,
art. 1656 C. c. When the judge points it out: Colombia, art. 1164 C. Co.; Mexico,
art. 360 C. Co. 30 days after notice: Venezuela, art. 528 C. Co.
21. Colombia establishes that "when commercial obligations stipulate payment
through periodic installments, the simple default of the debtor in canceling them
will not give the creditor the right to demand the return of the credit in its
entirety, unless otherwise agreed. . In any case, when in carrying out the
provisions of this article the creditor demands the return of the entire amount
owed, he will not be able to restore the period again, unless the default interest is
charged on the periodic installments due, even if they include only interests" (L.
45/90, art, 69). The Banking Superintendency, for its part, has stated that, in the
event that an installment is overdue, default interest may only be charged on it
and not on the rest of the facilities, unless an acceleration clause has been agreed,
01. IF 0235/87.
22. Colombia, "". Obligations contracted in foreign currencies or currencies will
be covered in the stipulated currency or currency, if legally possible; Otherwise,
they will be covered in Colombian national currency, in accordance with the
legal requirements in force at the time of making the payment" (Art. 874 C. Co.).
23. Colombia, art. 79 Exchange Statute. Obligations in foreign currency other
than exchange operations are payable in Colombian legal currency, at the rate in
effect at the time they were contracted, unless otherwise agreed by the parties.
Exchange operations, for their part, will be paid in the stipulated currency, and if
for judicial purposes their correspondence in Colombian legal currency is
required, the exchange rate in force at the time of payment will be applied.
Finally, it should be noted that operations of entities supervised by the
Superbancaria cannot be stipulated in foreign currency, except in the case of
authorized exchange operations, import leasing, life insurance and some
insurance contracts determined by the National Government.
24.V. "Monetary obligations" 111. National Forum of Commercial Law. Library
of the Bogotá Chamber of Commerce, No. 22, 1987.
25. Supreme Court of Justice Judgment, November 18, 1991.
7. MODALITIES OR CLASSES
From the point of view of banking technique, credits from specialized

establishments have numerous modalities that, however, all correspond
conceptually to the structural scheme of the mutual contract that we have just
presented. We will try, however, to systematize them, in order to have a clearer
vision of the different developments of the contract.
7.1. FOR ITS INSTRUMENTATION
Under this section we want to study the way in which the loan is implemented or
carried out without specific documentary support.
7.1.1. Foreign exchange loan
The most widespread modality is the one that results in the subscription, by the
debtor, of a security in favor of the bank, usually a promissory note that turns out
to be, for this reason, of daily use in the balance, since it serves to incorporate the
most of the loans entered into.
We have classified the loan as an exchange loan to indicate how, by its use, the
entity enjoys the privileges and prerogatives of securities that guarantee to the
maximum its position as a creditor and greatly facilitate the transfer of the
incorporated rights. Intrinsic requirements that are accompanied by the
evidentiary advantages that the promissory note usually has, among others, the
presumptions regarding the authenticity of the signatures, certain date, etc.,
which lead, together with the incorporated right, to the existence of a title that It
usually involves execution.
Because it corresponds to its structure, the promissory note allows the main
obligation to be established to pay a certain sum of money, over a certain period
of time. due to the recognition of a precise interest rate. It is also possible to
agree on other accessory obligations borne by the debtor and include additional
signatures of guarantors, note down payments and extensions, etc.
Finally, the incorporation of credit in securities has the advantage for the bank of
its easy mobilization through discounts at the central bank or by obtaining credits
or advances with their guarantee.
It is, therefore, a credit operation implemented in a document that specifically
represents it.
7.1.2. Account credit
Credit can be granted without developing a specific debt instrument in each case.
Taking advantage of the existence of a bank checking account or entering into
the contract, the bank grants credit to be managed through it by writing checks
payable by the institution, in which case there is no specific document that
represents the credit.
It is possible that the debtor signs a document obligating himself to respond to

the bank for up to a certain amount, but, even in that event, the determination of
the balance in his charge will no longer arise from a document in which the
payments made appear, but from the cut of the account that will have been
affected, ordinarily, by successive deposits and withdrawals. If the certification
of the bank or an authority is not expected to be sufficient, it will be necessary to
resort to ordinary means of proof to establish the amount of the obligation.
It is also not ruled out that the debtor signs blank guarantees with instructions to
be filled out for the amount that is in his/her responsibility at any given time, to
provide the institution with a suitable and agile instrument to attempt judicial
collection of the debt, in case that it is not satisfied in a timely manner.
But except for this accessory possibility unrelated to the contract itself, it is
evident that account credit implies some disadvantages for the bank as a creditor
and limits the mobilization of the credits thus granted with third parties.
7.1.3. Overdraft or overdraft

Although related to the previous modality, it differs in that, while the account
credit arises from a prior agreement between the bank and its client, whose
product is managed by the aforementioned mechanism, the overdraft or overdraft
implies a granting of credit that is not formally demanded, but resulting from an
agreement concomitant with the presentation of the check. And we speak of
agreement because when a bank client, without authorization, issues a check for
an amount greater than the available balance, he is making a contract proposal,
that is, inviting him to grant him a credit for the difference. or the entirety, if
there is no balance. The client does not have the right, as we know, to issue
checks without funds and the bank, consequently, is not obliged to pay them, but,
if it does so, there is no doubt that the agreement is perfected by the delivery
made on account to meet the missing.26
The overdrafts granted in this way are payable immediately, as a general rule,
although some legislation seems to lean towards the payability of the sums at the
time of the periodic cut-off of the account, by application of the most general
rules on the commercial current account contract. The normal thing is, on the
other hand, like any form of credit, that they give rise to the collection of interest
as soon as they are due, taking into account the observations made in this chapter
on the matter.
From what it says with its implementation, they are framed within the rules of the
bank current account contract signed with the client, empowering in some
countries the control entity, for example, the Banking Superintendency, to certify
the existence of the balance to charge of the debtor. Outside of this possibility or
the signing of a document to be filled out for the balance, it is a blank credit
without specific support or incorporation in a title, as in the previous case.
7.2. FOR ITS TERM
The existence of different terms in bank loans allows us to remember that

traditionally there has been a direct relationship between the type of bank and the
term at which it usually carries out its operations, both active and passive. The
role that each one plays in the financial concert explains why some banks grant
short-term loans while others grant them in the medium or long term. Terms that
play, in turn, with the specific requirements of their debtors since granting credit
for working capital needs is not the same as for investments in machinery and
equipment, whose amortization, by necessity, must be made over a considerably
longer term. . 27 All this without forgetting that, as we have repeated throughout
the work, there is a sustained tendency to expand the field of action of banks,
allowing them to operate with much greater scope than in the past in terms of
terms and destinations of the credits they grant, which is why those that were
previously practically axiomatic differences have progressively disappeared.
7.2.1. Short term
Short-term or consumer credit has been peculiar to deposit banks, which raise
part of their resources by receiving deposits in current accounts, even if they also
receive savings and term deposits and these have an increasingly greater
percentage participation. important, compared to all the deposits.
As the former are payable on demand, it is logical that the bank should not
commit its resources to investments or placements in the medium and long term,
- as it could find itself in a situation of illiquidity due to the eventual demand for
reimbursement made by its clients, above all. of historical percentages. That is
why short-term resources are used, in principle, in loans of the same nature,
generally in favor of merchants who mobilize and liquidate their inventories
quickly or privately, for consumption expenses, which usually cover them with
their current capital income. or work.
7.2.2. Medium and long term
When it is necessary to meet the requirements of sectors that need financial

resources for long-term operations such as investments in fixed assets, banks
must have resources of similar duration. That is why there is, as in the previous
case, a logical correlation between the source and mechanisms for raising
resources, on the one hand, and the instruments and placement deadlines, on the
other. This is the case of banks or financial companies that raise their resources
through term deposits or issuance of medium-term obligations with which they
finance their clientele's programs.
Medium or long-term loans force banks to carry out more detailed studies,
especially because they must take into account both the current ability to pay the
debtor, as well as the business conditions themselves, and projections for a longer
or longer period. less long, coinciding with that of the credit operation. That is,
more than a static and retrospective analysis, the bank must carry out a dynamic
analysis of the investment projects and market conditions that allows it to
conclude that the current solvency of its presumed debtor will be maintained in
the future, allowing it to meet the obligations under your responsibility. And
since the future is uncertain, the placement of resources in the medium and long
term requires the creation of solid guarantees, to cover the risk of eventual and
unpredictable disruptions in the course of the business.
7.2.3. Rotary
Credit may be granted without regard to term through revolving credit systems.
We will see them more precisely when we talk about signature credits in this
chapter and later, when we study the opening of credit.28
7.3. FOR YOUR GUARANTEES
A classification widely used when studying the various types of credit granted by
banks is that which is related to the guarantees constituted in their favor. For this
reason, and for a better understanding, we will review the general principles that
inform the issue of guarantees.
7.3.1. General principles
The guarantees constitute an accessory contract, linked to a main one and tend to
ensure compliance with the obligations derived from the latter.29
If in principle the debtors are responsible for the obligations contracted with all
their assets, a common or general pledge in favor of the creditors, in practice this
may be reduced or compromised in such terms that it is not possible to fulfill the
contracted obligations or that they can only be met partially. For this reason, and
to also cover non-compliance due to bad faith, incompetence or other reasons
that affect the payment capacity of their debtors, creditors may require them to
provide guarantees.
All loans, whatever their type or term, can benefit from the same coverage,
because in all of them the creditor transfers his money as property to the debtor,
trusting in future repayment, which will seem more certain and secure if a
guarantee has been established.
The guarantees may refer to future obligations and be for an indefinite term, even
though in these cases, legislation usually establishes rules to deduct the
maximum time in relation to which it is understood that the lien subsists.
7.3.1.1. Types of guarantees
Traditional doctrine has classified guarantees into two large groups: personal and
real. The classification results from the nature of the rights that arise from its
constitution, depending on whether they are credit rights or rights against certain
people or rights over the goods that are the subject of the contract. 3o A typical
example of a personal guarantee is the bond and real guarantees. , the pledge and
the mortgage. Antichresis, included by some authors and legislations as real, has
been the subject of numerous discussions from a doctrinal point of view. All of
them constitute additional security to the debtor's solvency.
a) Bail
The surety is an accessory obligation through which one or more people respond
to the creditor for the fulfillment of another's obligation in favor of the latter. By
means of the bond, the fulfillment of any type of obligation, pure, simple,
conditional or term, can be guaranteed; Future obligations can be guaranteed or
cover only a part of one or the other. In general, it includes not only the
fulfillment of the main obligation but also the accessory obligations that, in
accordance with the contract or the law, derive from it.
In Civil Law, bail is usually distinguished by the existence of two prerogatives in

favor of the guarantor, known as the benefit of excussion and division. In
accordance with the first, the guarantor occupies a subsidiary position in that he
is empowered to require the creditor to first proceed against the assets of the
main debtor and only in the event of insolvency or if direct collection efforts are
negative, do they proceed, then yes, against him. This means, ultimately, that
only in the event of the debtor's insolvency is the guarantor called to respond for
compliance with the guaranteed obligation. According to the second, the
existence of a plural number of guarantors allows any of them, sued for payment,
to request the division of the debt between the co-guarantors so that they are only
obligated to pay the proportional part.
Both benefits are susceptible to waiver and disappear by mandate of the law, in
the first case when the surety is joint and several, since, as in all obligations that
involve this modality, the creditor can demand payment of the entire amount
from any of the debtors. Debt. And as for division, the very object of the
guaranteed obligation may impose on the guarantor the need to fulfill it in
integrum because it is not susceptible to division, without prejudice to repeating
it later against the other guarantors, for their share, and against the main debtor,
for the entirety. In commercial matters, however, the trend is for guarantors of
commercial obligations to be jointly and severally obligated so that none of them
enjoys the aforementioned benefits.31
The most general form of suretyship involves the execution of a contract through
which a person undertakes to respond for the fulfillment of another's obligations.
If the main obligation is contained in a document, the terms of the guarantee may
be stated therein. There are, however, two modalities both linked to securities,
which should be highlighted, if only briefly.
On the one hand, we have the figure of the guarantee, a typical modality through
which the payment of a security is guaranteed in whole or in part, which, as a
general rule, must appear in the same instrument, by application of the principle
of literality, even when there is legislation that allows, by exception, it to be
granted in a separate document. In principle, it must be noted by whom it is
guaranteed, that is, who is guaranteed, otherwise it will be understood that the
party that releases a greater number of obligors is guaranteed. In any case, the
guarantor is not doing anything other than personally guaranteeing compliance
with a main obligation, in relation to which he is strange because he has not
intervened in the exchange process, typical of the respective security.32
Furthermore, in matters of securities and by virtue of its business structure, there

is a modality in accordance with which it can be argued that both the creator of
the title, when it is a payment order and any of the parties involved in the
circulation of the instrument, they are responsible for the solvency of the debtor
and, in this order of ideas, they guarantee compliance with the main obligation.
This happens when a person draws a bill of exchange in charge of a third party,
in which case he guarantees that the bill will be accepted or paid and that, if not,
he will be responsible to the beneficiary for payment of the instrument. The same
occurs when that beneficiary transfers it through endorsement, since in this case
and unlike what normally happens with the transfer of credits, the endorser
guarantees his endorsee that the title will be paid upon its timely presentation and
if this does not happen , he will be responsible for the incorporated obligation.
Possibility that translates from the procedural point of view into the power of the
holder to exercise restitutionary actions against the endorsers who preceded him,
aimed at obtaining payment when it has not been made by the main debtor. 33
Phenomenon that should not be confused with solidarity itself, which assumes
the existence of the same obligation and occurs when there is a plural party -
such as when the title has been issued in favor of two people and they are forced
to endorse it jointly - assumption in which the last holder can be directed
indistinctly against any of them for the entirety, by virtue of the fact that they are
jointly and severally liable.34
For this reason, the manifestation that we previously reviewed is known by the
doctrine as improper solidarity since, by virtue of the principle of autonomy
applicable to securities, each of the purchasers of the instrument receives it in its
original form, this. is, detached from the vices or vicissitudes that could affect the
previous relationship. So, even when the incorporated obligation is only one,
think of the payment of a certain sum of money, each of the parties acquires the
right to collect it, but with peculiarities that may be different from those
predicable of the right of those who preceded or are going to follow them. We
cannot speak, then, of the same obligation with respect to which they are joint
and several debtors because, by virtue of autonomy, we could say that there are
as many obligations as there are intervening parties and that, consequently,
although from a practical point of view the result is identical for the holder, it is
not strictly speaking solidarity. In any case, and this is what is important to
highlight, in the case of improper solidarity there is a main obligation in favor of
the holder and against the principal obligor, which, in practice, is guaranteed
personally by all those who do so. They preceded in the domain of the title.
b) Garment
It is a contract in which a movable thing is delivered to the creditor to ensure his
credit. It is a real contract and can be entered into by the debtor himself or by a
third party capable of alienating the property, who delivers it as collateral for the
principal debtor's obligation.35
The pledgee is a simple holder of the movable property received as collateral
and, therefore, cannot use or dispose of it, unless express authorization is granted
by the person who provided the collateral. To recover possession of the property,
the debtor must pay the main debt and its guaranteed accessories, as well as the
expenses incurred by the creditor for adequate conservation of the thing received
as pledge.
The creditor has a set of rights with respect to the asset given as collateral: the
first to retain it as long as the obligation, accessories and expenses mentioned are
not satisfied and, then, in the event of non-compliance with the main obligation,
proceed through judicial means to that the property is auctioned and the proceeds
are used to pay said sums or be awarded in payment of its debt.
At this point it is interesting to remember the more or less unanimous rejection of
the so-called "commissionary agreement" by which the debtor authorizes the
creditor to, in the event of non-compliance, appropriate the property given as
collateral in payment. The reasons for the rejection are moral and economic and
seek to preserve the balance that must prevail in contracts, to protect those who,
in the position considered weakest, had to deliver as collateral an asset of value
much higher than that of their debt. . State protection is then preferred so that,
through the system of auction or public auction, with an open invitation to
interested third parties and after an appraisal, the best conditions can be obtained
in the liquidation of the property.36
This does not prevent the fact that, in the field of banking law, some credit
establishments or auxiliary organizations, such as general warehouses, have been
granted the possibility of auctioning the assets in their possession, which
guarantee their rights or those of third parties through systems without judicial
intervention and that do not always imply the holding of a public auction, but
rather fluctuate between direct sale or what we could call private auction. The
legislator assumes that due to the seriousness of the institutions and their
professional organization they will obtain advantageous conditions within
procedures that are more agile and faster than judicial ones.37
Another power that the pledgee frequently enjoys is to request the
replacement of the pledge if there are deteriorations in it, not attributable to poor
conservation, to maintain the economic balance existing at the time the guarantee
was established.
The pledge on movable property, in general, is constituted by the delivery of the

same; that of credits, through notification to the debtor and that of securities
through the system of delivery and restrictive endorsement, as a pledge or
guarantee, which does not confer on the endorsee the full rights of the owner but
only those of collecting, protesting and endorse the instrument with the same
restriction and, of course, the general rights of a pledgee.
Here a very interesting phenomenon is presented regarding the power for the
creditor to directly appropriate the asset that is the subject of the guarantee, in the
event of non-compliance with the main obligation. Indeed, if a bank receives as
collateral securities accepted in favor of its client, debtor, and proceeds to collect
them, one might wonder what happens to the money collected. Is it necessary for
the bank to request a judicial auction so that the obligation and accessories are
satisfied with the proceeds? It seems illogical, since the auction of the assets is
intended to be converted, precisely, into cash and in our hypothesis the creditor
has the money in his possession, so that the judicial procedure would add nothing
in this aspect. Therefore, unless otherwise provided, the sum resulting from the
collection can be applied directly to the unfulfilled obligation, not because there
is a forfeiture agreement, but by virtue of compensation, which presupposes the
existence of liquid, homogeneous and reciprocal obligations. It will then be by
this way of extinguishing the obligations, and not by a commissioner agreement,
that the proceeds from the collection of the securities will be applied to the
debt.38
The pledge, as a real right, confers on the pledgee the rights of pursuit and
preference, that is, to pursue the property in the hands of whoever it is in and be
paid with the proceeds of the auction with preference to other creditors.
In commercial matters, it should be highlighted the existence of a type of pledge
that does not imply the delivery of the property, as would be logical, in
accordance with the real nature of the contract. It is kept in the hands of the
debtor, who holds it in the name and on behalf of his creditor. This is the so-
called pledge without possession where, and especially for certain types of assets
linked to an economic, agricultural, industrial or commercial exploitation, its
withdrawal and delivery to the creditor would cause severe disruption to the
debtor, to the point of complete disruption. their economic activity and
compromise their ability to pay.39
In these cases and if the requirements provided by law are met, the asset is kept
in the possession of the debtor, giving the contract a publicity that indicates to
third parties that it bears a lien, if the debtor in bad faith intends to dispose of it.
Advertising is essential because, in the case of movable property, the possession
of which presumes ownership, third parties in good faith could inadvertently
acquire the machinery or equipment without knowing its legal status. In some
systems, the imposition of distinctive seals or plates on the assets stating the
existence of the lien is also required. Lastly, it is common for criminal sanctions
to be established for debtors who abusively dispose of the pledge that has
remained in their possession.4O
c)
Mortgage
The mortgage is another form of real guarantee that, unlike the pledge, is
constituted over real estate or ships that remain in the possession of the debtor.
For mortgages and in systems where real estate is subject to a special registration
regime, it is necessary not only to grant them in writing and with certain
formalities, but also that the document must be registered before the same official
who maintains the registration. real estate so that when issuing the respective
certificates, third parties can verify the existence of a mortgage lien.
Unlike the pledge, the property given as a mortgage can be alienated by its
owner, unless prohibited by law or contract, with the burden on the purchaser of
bearing the same encumbrance in favor of the creditor. In other words, once the
mortgage is established and as long as the main obligation is not extinguished,
the
. lien follows the property in the hands of whoever it is in.
d) Antichresis
Through this contract, which is often accompanied by a mortgage, a property is
delivered into administration so that with its proceeds a main obligation to which
it is linked is paid. It is debatable whether it confers real or personal rights.
Against the thesis of real right, it is argued that the antichresis contract does not
confer rights of persecution and preference and that, consequently, there is no
right over the thing that is universally enforceable against third parties. Against
the thesis of a simple personal right, it is noted that the proceeds are directly and
entirely linked to the fulfillment of the obligation. Therefore, those who have
supported the intermediate thesis seem to be in a fair position in maintaining that
these are personal rights against the owner of the property, who can therefore
validly dispose of it, without the purchaser bearing any property encumbrance on
the property; But there is a real right over the fruits, which can be enforced
against third parties and specifically the eventual purchaser, who will have to
deprive himself of said product until the main obligation is cancelled.
and)
Guarantee trust
Under this contract it is possible for the debtor to transfer movable or immovable
property to a fiduciary entity, with precise and irrevocable instructions to sell
them and pay a pre-existing obligation with the proceeds. Conceived in this way,
the guarantee trust usually constitutes simultaneously an excellent source of
payment and even though it has deserved doctrinal and jurisprudential censures
for assuming that, in this way, the right of defense could be violated or a
mechanism established by virtue of which the creditor has , by itself and before
itself, of the property that is the object of the pledge, the truth is that
contemporary doctrine vigorously supports it, as a substitute or complementary
guarantee mechanism for the traditional pledge and mortgage and greater agility,
as required by the activities commercial entities and, specifically, financial
institutions whose volume of guaranteed loans is significant.41
F)
First demand guarantees
It should be noted that a clear contemporary trend is to have guarantees called
"first demand" by virtue of which the creditor can demand payment without any
exceptions being proposed by the guarantor. This has led to them functioning as
true abstract guarantees, understanding that their exercise does not require or
allow reference to the cause of the guarantee business, in itself considered, nor to
the main business to which they refer.
As a consequence and for several years, international financial practice has been
making use of guarantees on first demand, either in the form of bank guarantees
or through the issuance of letters of credit called stand-by. The former have been
associated mainly with non-monetary obligations within the framework of
construction contracts, mainly if there are international elements.42 The latter
have had a greater scope of application.
The main problem associated with this type of guarantee is the eventual lack of
protection in which the debtor (and the guarantor if he does not have a
counterguarantee) is left in the face of malicious collection by the creditor.
Since the late 1970s the International Chamber of Commerce of Paris has been
interested in the subject in various ways. This is how in 1978 Publication No.
325 ("Uniform Rules for Guarantee Contracts") referred to the subject for the
first time. Due to the aforementioned risk, the Rules established the need, to
make the guarantee effective, to present a judgment or arbitration award against
the debtor or, failing that, a written communication from the debtor accepting the
amount and cause of the claim. For this reason, Publication 325 was not widely
received.
In 1992, the ICC released the URDG (Uniform Rules for Demand Guarantees) as
Publication W 458, in which the original conception was substantially modified,
allowing the guarantee to be easily enforced. In the same sense, the Uniform
Rules and Practices on Documentary Credit, from pamphlet 400, introduced the
notion of stand-by letters of credit, which fulfill a similar purpose, although
without establishing a regulation. This has been maintained until today in the
current 500 brochure.
In 1995, Uncitral,43 collecting the work of the ICC, concluded a Convention on
Independent Guarantees and Stand-by Letters of Credit. This Convention is of
great importance to the extent that the URDG in principle only has application by
contractual incorporation, that is, its binding force depends on the will of the
parties and does not refer -because it cannot do so- to the powers they have.
judges to prevent the collection of an abstract guarantee and the applicable
procedure. The Convention, on the contrary, to the extent that once it is ratified
by various countries it acquires a coercive character at the domestic level, it
establishes grounds to prevent the payment of a guarantee.
Recently, the ICC published the document ISP98 (International Standby
Practices), which includes international practice related to stand-by letters of
credit.
In general, first demand guarantees follow the principles and rules applicable to
documentary credit, in particular, regarding the abstract nature of the bank's
obligation, the doctrine of strict compliance and its documentary nature. They
have been called "in the sense that the guarantor must, in principle, pay as soon
as the beneficiary requires it without being able to invoke any exception. The
unenforceability of the exception that makes payment automatic is the key to the
guarantee."44
;:
Normally, courts will prevent payment of an abstract guarantee only in cases of
bad faith, abuse of right or fraud of the beneficiary, that is, of the creditor, in a
similar way to what happens with a letter of credit as a payment mechanism for a
international purchase and sale operation. In the latter case, the bank issuing the
letter (or the confirming party) cannot refrain from paying if the documents
presented are in accordance with the terms of the credit, under the pretext that the
underlying purchase and sale contract has been breached by the seller
(beneficiary). of the letter).
In general, French courts have prevented the collection of abstract guarantees
when there is fraud or abuse of the right proven by the debtor. On some special
occasions, jurisprudence has prevented the execution of this type of guarantees
with a different basis. Thus, for example, the Court of Paris considered a
guarantee unenforceable because, "having agreed between the parties to resolve
the disputes by arbitration, it was not called to give an opinion on the existing
conflicts."45 It is then considered that the creditor who demands payment of the
guarantee when a contractually provided arbitration decision is pending. On other
occasions the courts have not agreed to the possibility of payment when the
debtor's possibility of recovering the sum recognized by the guarantor to the
creditor is in question for political reasons (V. gr. Iran).
In Italian law "jurisprudence has also admitted the revocation of the order given
to the banker, through the use of a precautionary measure, provided for in article
700 of the C.Pr.Civ. (Italian) and intended to avoid imminent and irreparable
damage".46 The foundations have been essentially the same as explained before.
In England, the important case of Edward Owen Engineering Ltd v Barclays

Bank International Ltd47 is well illustrative. Although it was proven that the
underlying contract (a sale) had been breached by the secured creditor, the Court
considered that the guarantor bank was obliged to pay, since its obligation did not
depend on the performance or breach of the underlying contract and, in the
absence of fraud, the debtor (applicant for the precautionary measure) was not
empowered to prevent it.48
7.3.1.2.
Credit classes
From everything stated in relation to guarantees we could find the following
credits from a technical point of view:
a) Personal credit
That's what we call it and not a signature, to distinguish it from the modality that
we will see a little later. In this case, its inclusion is paradoxical and is only
explained to maintain that it is, precisely, an unsecured credit, that is, a credit
that, documented or not, is granted in consideration of the simple solvency of the
debtor.
b) Co-debtor credit
In all cases where one or more third parties guarantee, expressly or because they
are linked to a security, compliance with the main obligation.
c) Pledge credit
When it is granted based on the transfer of personal property in support of the
debt or without such delivery, by exception, in the so-called pledge without
possession. It is necessary to mention that if, in our opinion, the loan granted on
securities is a simple type of mutual contract with guarantee, for some authors
and legislators it is a contract classified under the name of "advance". Since, to
respect that position, we have dedicated chapter XIII to making a quick review of
it, we refrain, for the moment, from making additional comments.
d) Mortgage credit
Of enormous importance in mortgage banks because based on the existence of
this guarantee, banks carry out active operations and can issue bonds or
certificates to be placed among third parties, thus mobilizing previously frozen
resources.49 The importance of mortgage credit in the The housing financing
process is indisputable because the allocation of resources to the acquisition of
assets that, as a general rule, retain their value, allows them to serve as collateral
for the granting of credit.
e) Anticretic credit
Does not require additional mentions; We just remember that it finds a favorable
field of action operating simultaneously with the mortgage loan, no longer to
guarantee that the main obligation will be paid, in the event of default by the
debtor, which is what the mortgage is for, but to have a cash flow intended for
the progressive amortization of the debt.
f) Trust credit
Under this name or under the name of fiduguaranteed credit, the active operation
backed by a guarantee trust could be known in the future, to technically
distinguish it from the previous hypotheses, making reference to the particular
surety mechanism.
7.4. FOR YOUR DESTINY
It is, in a certain way, a repetition of concepts already seen that we do for a better
systematization of the subject. The most significant contribution in terms of
comparative law results from the recommendations of the Basel Committee, in
accordance with which the portfolio should be classified into three groups:
commercial, mortgage and consumer.
In accordance with its behavior, the portfolio is classified, in turn, by the same
recommendation as: a) normal, b) subnormal, c) deficient, d) difficult to collect
and e) unrecoverable. This qualification is of transcendental importance since it
determines the particular regime of provisions and the treatment of interest, not
only stopping them from accruing, from a certain moment, but also reversing
them later. 50
7.4.1.
Consumer credit
We said that short-term credit is intended to meet the treasury needs of merchants
and the consumption needs of individuals, although in a smaller volume, within a
healthy banking orthodoxy. We maintain the above because the logical tendency
of financial intermediaries is to allocate their resources towards productive
activities. However, the needs of individuals cannot be ignored, especially in
societies in which the distribution of income and the composition of economic
classes by capital levels show a significant volume of the population with little or
very small marginal savings capacity. . So, in order to meet certain types of
needs, those that contribute to creating some better living conditions for the
. individuals, commercial banks allocate part of their resources to serve this type
of credit. A frequent use may be the acquisition of certain so-called durable
consumer goods that are not exhausted by their use but rather have a more or less
long life, such as some so-called "white line" products such as refrigerators,
blenders, etc., and , in general, household appliances, of enormous popularity
within the current living conditions of the consumer society.
But, whatever the income level, the truth is that short-term credit is required as a
fundamental support mechanism to meet part of the current payments or some
exceptional ones that need to be made and that, in a certain way, are deferred
when they can be made. attend in cash and pay them during the period agreed
with the financial institution
7.4.2.
Production credit
It constitutes, without a doubt, the most important volume of resources provided.
The notion is still somewhat vague, but it can be argued that it is credit intended
for the creation of wealth through the extraction, processing, transformation or
commercialization of goods and services. Unlike a certain type of consumer
credit that is dedicated to expenses, those that leave no trace in the debtor's
assets, production credits are reflected in balance sheet movements, increasing
assets, a general guarantee for creditors.
In deposit banks, production credit is preferably allocated to commercial
activities, since in most cases industrial or agro-industrial activities, mining, etc.,
require medium and long-term resources. 52
7.4.3.
Qualification or equipment and spare parts credits
Strictly speaking, these are production loans, which could have been classified as
loan types due to their guarantee, since they combine characteristics and
requirements related to the destination of the resources and the automatic
guarantees in favor of the bank. Although its regulations are not universal in
Latin America, they seem to be important in Mexico and Central America. They
can take the form of the mutual contract, that is, the disbursement as an essential
element for its perfection or be replaced or combined with the opening of credit,
where the client enjoys availability and the bank makes disbursements to the
extent of the requirements of the interested party.
7.4.3.1. Habilitation or avio credit
This is a credit intended for the acquisition of raw materials and materials and the
payment of wages, salaries and, in general, direct operating expenses of a
business activity. We could say, accounting speaking, that these are resources
destined to finance current assets, that is, resources that allow the company to
achieve its normal production in accordance with its installed capacity. 53
Their most interesting characteristic is that they are guaranteed, first of all, with
the goods acquired and the fruits, products or artifacts obtained as a result of the
investment of the resources obtained. This does not prevent the debtor from
granting additional guarantees in favor of the bank, nor does it exclude each of
the disbursements from being recorded in promissory notes that can be
negotiated with third parties, with the peculiarity that they confer the same rights
and guarantees on the latter. that the bank has in relation to the goods and final
products.
The credit can be obtained by whoever commercially or industrially exploits the
company, even if they do not own it. Once the guarantee has been established as
a result of the conclusion of the contract, it confers on the creditor bank the right
of preference over retrofit and mortgage credits that are registered subsequently.
7.4.3.2. spare parts credit
It is characterized because the resources must be allocated to the acquisition of
machinery and the carrying out of works necessary for the production of the
company, such as the acquisition of implements, instruments, farming tools,
creation of plantations or cyclical crops, opening of land, purchase and
installation of machinery, construction of material works for the development of
the company, etc.54
As in the previous case, there are natural guarantees in favor of the creditor,
constituted by the real estate where the investments have been made and by all
the assets acquired through the use of said resources.
There is also a preferential right for the secured creditor, which allows him to pay
himself with the proceeds of the encumbered assets in preference to all other
creditors of the debtor, except in the case of previously registered mortgage loans
and so-called domain creditors.55
Note, finally, that in both types of credit the assets given as collateral remain in
the possession of the debtor, even when they are movable assets, so there would
be a form of so-called pledge without possession.
7.5.
FOR ITS OBJECT
They are classified into credits or money loans and title loans. We have
repeatedly stated that the former constitute the highest volume of active
operations and that the latter play only a secondary role. No note can be added
regarding money loans.
7.5.1.
Of titles
A first distinction that has been the subject of recurring studies by scholars refers
to the loan for use or commodatum and the consumer loan, properly mutual. In
the first case, there is only the possibility for the bailor debtor to use the titles
without having them, and as a consequence, his fundamental obligation is to
return the same ones he received. It is, therefore, an obligation of a certain
species or body. Such would be the case that a bank client requires shares, titles
that are part of the institution's assets and that he can use to be present at a
shareholders' meeting.
However, in the case of the mutual chapter, we are interested in the hypothesis in
which the loan contract entered into is transferable and, consequently, the
borrower, a client of the bank, acquires ownership of the securities and is obliged
to return as many others of the same type and quality. For this to be possible, it is
necessary that the titles in question be fungible goods, substitutable one for
another, so that, in the event of any disposition made by the debtor thereof, he is
in a position to acquire the same amount on the market. . They are usually serial
securities that are issued to the bearer and that can be obtained in large quantities
of the same amount, interest rate and maturity period or shares of companies that
are listed on the stock exchange and that allow the debtor to acquire them without
difficulty.
Here, and in other cases in which we refer to company titles or bonds or others of
a similar nature, there is always the problem that these are limited types, that is,
that even when in practice they are supposed to be obtained without difficulty in
the market, they may be depleted so that the debtor has no way of fulfilling his
obligation. In this case, in accordance with general principles, the original
obligation will translate into paying a sum of money, which will probably be the
result of the quote on the day on which the return of the same was to occur or at
the time of payment. payment, at the discretion of the creditor.
The use of this contract, although remote, can be explained in certain cases when
the bank is not in a position to make a disbursement in money, but mobilizes in
this way part of its investments so that its client, the securities holder, use as
support to obtain credit with a third party or negotiate them in the market.
-------------------------------------------------------------------------------
26.V. Supra, Chap. V, 5.1.2.
27.V. Supra, Chap. 11, 2.2.3.2.
28.V. Infra. Chap. XI, 5.2.2.
29.V. Supra. Chap. 1. 5.4.4.
30.V. supra, Chap. 1, 2.2.4. Colombia. For the purposes of the so-called
"individual credit quota", the traditional division has been replaced by a broader
concept of "admissible guarantees" that seeks, in some way, to give greater
relevance to its intrinsic security than to the nature of the rights granted to the
secured creditor.
31. Colombia, arts. 632 and 825, C. AC.; Intal, art. 14.
32. Colombia, arts. 633 and SS., C. AC.; Intal, arts. 15 and SS. 33. Colombia, art
785 C. AC.; Intal, art 235.
34. Colombia, art 632 C, Ca.; Intal, art 14.
35.V. Supra, Chap. 1, 5.4.6.
36. Colombia establishes that "any stipulation that, directly or indirectly, in an
ostensible or hidden manner, tends to allow the creditor to dispose of the pledge
or appropriate it by means other than those provided for by law, will not produce
any effect." (Art. 1203 C. Co.)
37. Colombia, art. 797 Commercial Code, which establishes: "the holder of the
bond duly noted or protested may, within eight days following the notation or
protest, demand that the warehouse proceed to the auction of the deposited
goods."
38.V. Supra, Chap. 1, 4.4.4.
39. Colombia, arts. 1207 et seq., C. AC.
40. Colombia, art. 255 L. 599/00 (New C. P).: "The debtor who, to the detriment
of the creditor, abandons, hides, transforms, disposes of or by any other means
disposes of property that he has encumbered with a pledge and whose possession
he retains, will incur a prison sentence of one (1) to four (4 ") years and a fine of
ten (10) to one hundred (100) current legal monthly minimum wages."
41.V. Infra, Chapter XXII.
42. In English terminology, they are called "demand guarantee", "bank
guarantee" or "performance bond",
43. United Nations Commission on International Trade Law.
44. MAZEAUD, Henri et Leon; MAZEAUD, Jean; CHABAS, Francois. "Lecons
de Droit Civil", Tome 111, Premier Volume "Securities and real estate
advertising" 1st edition par PICOD, Ed. Montehrestien, Paris, 1999, p. 109 (Free
Version of the author).
45. WALD, Amoldo. Some aspects of the guarantee at first demand in
comparative law. In: Commercial Law Magazine. Depalma Editorial. 1990, p.
565. 46. Ibid. Q. 659.
47. [1978] QS 159.
48. GOODE, Roy. Commercial Law. Penguin. 1995. London, p. 1038.
49.V. Supra, Chap. 11,2.2.3.2 And Chap. VIII, 43.
50. Colombia. External circulars 100/95 and 50/01 SS.
51. Colombia. There is no proper notion of consumer credit. It results from a list
of events, such as that granted through credit card systems and a quantitative
criterion, according to which any active credit operation, other than housing
mortgage loans, whose amount does not exceed , at the time of granting 300
monthly legal minimum wages. -About $93,000,000, that is, approximately U.8.$
42,000 (R. 1980/94, 8.B.).
52. Colombia. The same Resolution 1980/94 conceives commercial credits as
residual, that is, those that cannot be classified as mortgage or consumer.
53. Mexico, art. 321 LGTOC; Honduras, art. 916 C. Co. In this the list is a little
broader and includes, for example, fruit harvesting, acquisition of livestock for
fattening, processing, processing, transportation and conservation of national
agricultural, livestock and industrial products and other similar activities, El
Salvador, art. 1143 C. Co.; Costa Rica, art. 98 L. 1644 (LOSBN).
54. Mexico, art. 323 LGTOC; Honduras, art. 918 C. Co.; El Salvador, art. 1143
no. II C. Co., mentions the spare parts, furniture and real estate, Costa Rica, art.
98 L. 1644 (LOSBN).
55. Mexico, art. 333 LGTOC; Honduras, art. 928 C. Co.; El Salvador, art. 1145
C. Co.
8. SIGNATURE CREDIT
8.1. CONCEPT
The signature credit covers all those operations that banks carry out in favor of
their clients, which do not involve an effective and immediate disbursement of
money and allow them to obtain it from third parties or obtain an economic
advantage equivalent to that which they would have obtained if they had received
the money. In other words, experience shows how frequently, for various
reasons, most of the time attributable to the client and their needs, the money is
not required immediately but it is necessary, instead, to be certain that the bank
will provide it. will grant when required. And, consequently, what the client
needs to prove, what will allow him to continue with the negotiations and even
close the agreements, is the bank's compliance, expressed "by his signature" in
the ideal document to satisfy the needs of his client. . It could also happen that it
was a cause attributable to the bank, such as when, for example, the credits were
closed at that time. but be convinced that you will reopen them in the short term,
so you can offer your client some of the "signature credit" modalities, if they are
acceptable based on the needs you intend to meet.
The natural development of the operation leads to the bank subsequently making,
and as a consequence of the signature credit granted, a disbursement in favor of
the client or a third party, which makes it a creditor of its client. We can
distinguish, then, two stages in the logical process of the so-called signature
credits: one in which the bank undertakes in various ways to lend to its client or
to respond for it or for the obligations it contracts, linking the bank that allows
the interested party to obtain credit or achieve an equivalent result, and a second
where the eventual default on the part of its client and the lack of provision lead
the bank to make an effective disbursement of money or to grant another
signature credit.
The disbursement by the bank will depend, then, on whether its contingent
obligation becomes a real liability under its responsibility, as happens in the case
of guarantees or guarantees, or having a certain obligation under its responsibility
from the beginning, as In the case of acceptances, there is no provision made by
the client at the time they become payable. Consequently, contrary to sensu, in
the case of guarantees, if the client pays the main obligation, the one assumed by
the bank through the signature credit will never have ceased to be contingent, nor
will it have affected its liabilities. In the case of acceptances, although there will
be a liability with the counterpart of a possible credit borne by the client, a
disbursement will not occur if there is a provision established by the latter.
In general, we can say that commercial banks are authorized to carry out
operations of this nature, although the same provisions frequently limit their
amount in relation to the capital and reserve of the institutions and the maximum
term for which they can be bound. There are also limitations, from the exchange
point of view, regarding obligations in foreign currency and their growth may be
limited, as in those established in national currency, as a monetary control
measure.
Another fundamental aspect that highlights the extent to which signature credit
has all the predictable connotations of a form of financing is that, normally, the
figures, despite their contingency, affect and are computed to determine the
client's individual maximum credit limit. , either because the current provisions
establish it as a criterion of elementary prudence for the banker.56
As we said in the introduction to the chapter, we think that credit opening and
documentary credit contracts can be subsumed in the notion and therefore
constitute the most representative examples. Given their importance, extension
and complexity, they will be treated independently, as they were in previous
editions of the work. In this section we will limit ourselves, therefore, to
mentioning the modalities that have traditionally been studied as typical
, manifestations of signature credit, that is, endorsements and guarantees,
acceptances and the so-called letters of credit orders, without the enumeration
exhausting the possibilities, since the notion would fit any negotiating modality
that meets the characteristics stated above.
8.2.
A VOUCHER and GUARANTEES
In this same chapter we study the general principles of guarantees, accessory
contracts aimed at supporting the obligation contracted by a person. Well, we
saw the guarantees offered in favor of the credit institution by its debtors; Now it
is about analyzing the bank's intervention as guarantor for its clients and in favor
of the latter's creditors.
The two best-known modalities are guarantees, that is, the intervention of the
bank in a security that is foreign to it, from the exchange point of view, but with
respect to which it participates to guarantee the total or partial obligation of one
or several interveners and the guarantees that are given in numerous hypotheses,
through which the bank responds to third parties for the fulfillment of some
obligation contracted by its client.
Guarantees are usually requested so that the client obtains credit in the market
with a value that is much more attractive to the interested parties, by virtue of the
intervention of the bank or to replace some forms of surety that have been
required of the client, such as the constitution of a pledge or a mortgage, against
whose demand it is more advantageous to offer a bank guarantee, which in
practice is usually equally safe for the creditor.
As for guarantees, the possibilities are unlimited. Among the most frequent
hypotheses we can mention the guarantees provided to the captaincy of a port, to
remove merchandise for which the recipients have not yet received the
documents to do so. In this event, the bank guarantees the timely presentation of
the required documents, failing which it will be liable for any damages that may
arise. Another scenario may arise in the case of discrepancies between the
documents required for a documentary credit and those presented by the
beneficiary. The latter can obtain the guarantee of his bank in favor of the payer
so that he delivers the money or accepts a bill of exchange, as planned, knowing
that, if the documents are rejected by the issuer or the payer, the beneficiary's
bank will reimburse the amount corresponding to the paying bank. A similar
solution can be adopted when a person needs to pay certain taxes or present some
documents to the authorities within a certain period, an obligation against which
it is also possible to offer the guarantee of a credit institution.
In general, it can be said that in all cases where your client is constrained to
support the seriousness of an offer, the fulfillment of a contract, the presentation
of documents, the verification of reimbursements, the fulfillment of
requirements, etc., it is possible to possibility of granting a guarantee.
In both cases, endorsements or guarantees, and in the case of contingent
obligations, the bank does not charge an interest rate for its services, by
subtraction of matter, but rather a simple commission to which interest will be
added from the moment in which that you have to make a disbursement from
your resources, if that situation occurs. 57
8.3. ACCEPTANCES
Credit by acceptances is when the bank accepts bills of exchange drawn by its
client to its own order or to that of a third party or bills drawn by a third party at
the bank's expense, but in development of the agreement entered into between the
bank and its client. In the first case, when the bill is accepted in favor of the
drawer himself, he uses it to obtain resources in the banking market or in parallel
money markets. And it uses this expedient because, for example, the bank lacks
cash resources at a given time and prefers to give up the interest that a cash
placement would bring, to instead enable its client through acceptance and allow
him to obtain those resources elsewhere. That is why it charges a commission
and not an interest rate in this first stage of the business. In the other case, that is,
when it is drawn in favor of a third party or the bill drawn by a third party is
accepted, the modality usually corresponds to the satisfaction of an obligation
previously contracted by the client towards that creditor, which has required to
satisfy him through the intervention of the bank in the corresponding security, as
acceptor thereof. 58
With some frequency, in the case of acceptances, the credit or revolving quota
modality is used so that the client, having a maximum availability of acceptances,
proceeds to issue against the bank with the possibility that as they are cancelled,
prior to their provision, may issue new ones in their replacement. 59
8.4. LETTERS ORDERS OF CREDIT
8.4.1. Notion
This is a topic on which some warnings must be made to avoid

misunderstandings.
First of all, the credit order letter, qualified as an "order" to avoid such a thing,
should not be confused with the letter of credit that arises from the documentary
credit contract, which we will see in Chapter XII of this work.
Likewise, there is a need to recognize that the letter of credit order, whose use, on
the other hand, seems to be in decline, - and which we only mention because it is
still part of the powers assigned to banks in certain countries - does not always
imply a form of credit. In effect, as soon as the borrower has established a
provision of funds that makes him a creditor of the bank, the payment made will
not be anything different from a transfer; intervention in the payments that we
will see between the contracts that precede the execution of the main neutral
operations.6o For true signature credit to exist, it is necessary that the credit order
letter is issued without the provision existing so that if at the time of demand its
reimbursement by the person who paid, does not exist or a provision is not
constituted, the bank has to make a disbursement that makes it a creditor of its
client within the two moments that signature credits usually last.
Finally, as soon as the bank is obliged to pay up to a certain sum of money, rather
than a signature credit, we would find ourselves facing a method of opening
credit that can be used by presenting the letter and before a correspondent or
recipient.
From all these observations we can deduce the careful treatment of the issue,
necessary to keep it within the notion of signature credit.
The credit order letter can be understood as the contract by which the giver, that
is, the bank in our case, undertakes to issue an invitation to a recipient so that he
or she can pay the taker or beneficiary up to a certain amount of money and
within a precise and determined period.61 We speak of invitation to distinguish it
from titles that incorporate payment orders since the bank is not obliged that
upon presentation of the letter, the recipient makes a delivery of money nor does
it assume any responsibility, in principle, in the event of their eventual refusal.
From the above, it is concluded that credit order letters are issued in favor of a
specific person, that is, they are not made to order, nor transferable by
endorsement and are issued in writing indicating a maximum amount of use. If
this is not indicated, it is considered a simple cover letter or introduction. They
are not securities because they do not meet the predictable requirements of this
type of document, nor do they confer any rights on the beneficiary against the
recipient or against the giver. Consequently, in most countries they are not the
object of protest because the institute in the face of these budgets would be
meaningless.62 Three parties intervene in them, whose rights and obligations we
will see immediately.
8.4.2.
Interveners
8.4.2.1.
Giver
The giver or creator of the letter, bank in our study, is the entity that issues the
document at the request and in agreement with its client and directs it to a
specific recipient, which may be one of its offices or one or more specifically
designated correspondents. in the letter for this purpose.
In principle, the giver does not acquire any responsibility towards the taker or
beneficiary, his client, unless he expressly undertakes in the document to do so.
invitation will be attended or that it has received funds from the beneficiary,
cases in which it will be liable for any damages that may have been caused to the
beneficiary. In this last hypothesis, as we said, it will not be a signature credit but
rather the obligation to pay resulting from the creation of funds by the
beneficiary.
As a general rule, and as a consequence of the way in which the bank intervenes
in the creation of the document, it can at any time revoke the order contained in
the letter and will only be responsible to the beneficiary in the same cases of
having guaranteed payment or having received sufficient funds to cover uses.
This does not happen, however, in all countries and in those that embrace the
theory of conditional change, the impossibility of revoking the order is
established, unless some event has occurred that impairs the credit of the
policyholder. Untimely revocation, then, makes the giver responsible for any
damages caused to the taker. 63
8.4.2.2.
Taker
It is the bank's client, beneficiary of the QOrder and who must present it to the
recipient or recipients indicated therein, within the period expressly agreed upon
or otherwise indicated by law. As we said, there is no action against the recipient
or even against the giver, unless the latter had guaranteed attention to the order or
had sufficient funds to attend to the uses. He cannot endorse it and is obliged to
immediately reimburse the bank for the sum that it would have had to pay to the
recipient as a result of using the letter.
Usually, and as a security measure, the borrower may be asked to sign his or her
signature on the credit order letter issued by the bank, so that the recipients have
a point of reference. This is a foresight that makes the credit order letter a clear
antecedent of traveler's checks which, by the way, seem to have dislodged it in
practice, just as plastic money has dislodged them. Of course, it is understood
that the beneficiary is obliged to identify himself to any of the recipients who
request it.
8.4.2.3. Addressee
They can be one or several. In the latter case, if someone pays, they must record
the amount delivered in the document so that the next ones to whom it is
presented have notice of the available balance in relation to the maximum
indicated. Once you pay, you acquire the right to be reimbursed immediately by
the giving bank, unless you have entered into an agreement with it to grant you a
period of time in this case or unless there is a commercial current account
relationship. You can ask the beneficiary to issue receipts for the amounts used
and, in addition, to record the same in the text of the letter itself.
-------------------------------------------------------------------------------
56. Colombia. d. 415/67, 01. OJ 315-84 SB d. 2360/93, art. 6°.
57. Colombia. The granting of guarantees and guarantees, particularly the former,
is severely and restrictively regulated, limited to the specific events that the law
authorizes and excluding, in any case, the possibility of supporting obligations
"...that arise from mutual contracts. or money loans and provided that they do not
ensure the payment of securities with credit content (D. 1516/98, art 10, lit. and).
58. ALDRIGHETTI, op. cit., pp. 58 AND 85. Colombia, EOSF, art. ]D, f.; c.
AND. OJ DAB 051-86 SB Acceptances will have a maturity period of no more
than 6 months (R. 29/86, JM, art. 2~ and "...they may only be granted upon
presentation of documents that reflect a certain transaction of sale of goods, with
full identification of the beneficiary of the same" (art. 30).
59. At the time we highlighted the so-called Latin American bank acceptances
(ABLAS) that we will see again when studying documentary credit (v. Infra,
Chap. XII, 7.3.2.1) Because these are letters accepted in development of an open
documentary loan to be paid in a country linked to the agreement and by banks
authorized for it. Suffice it to say, for now, that these are bills drawn by the
exporter in charge of a bank authorized by his own country, generally the
confirmer of the documentary credit opened in his favor, expressed in dollars of
the United States of America. They have an indirect guarantee from the Central
Bank of each country and can be negotiated in the New York acceptance market
as an instrument to speed up and facilitate interzonal exchange, without having to
resort to external sources of financing. Its development, however, appears to have
been precarious.
60. V, Infra, Chap. XIX, 9.1.2.
61. This is the definition that broadly corresponds to all countries. Mexico, art
311 LGTOC; Peru, arts. 557 and 558 C. Co.; Honduras, art. 946 C. CO. Some,
however, further define it by saying that its purpose is to "make a conditional
exchange contract." Such is the case of Venezuela, art. 495 C. Co.; Ecuador, art.
526 C. Co. and Chile, art. 782 C. Co., which implies some differences in
legislative regulation.
62. In some countries, however, protest is possible, for example: Venezuela, art.
501 C. Co.; Ecuador, art. 532 C. Co., two of the countries that enshrine the
theory of "conditional change." Chile, which also does so, separates itself on this
point and establishes that it cannot be protested, art. 788 C. Co. In the same
sense, Mexico, art. 312 C. Co.; Argentina, art. 487 C. Co., and Honduras, art. 947
C. Co.; Guatemala, art. 751 C. Co.; El Salvador, art. 1178 C. Co.; Costa Rica, art.
842 C. Co.; Panama, art. 953 C. Co.; Bolivia, art. 1340 C. Co.
63. Venezuela, art. 498 C. Co.; Ecuador, art. 529 C. Co.; Chile, art. 786 C. Co.;
Bolivia, art. 478 C. Co.; Argentina, art. 488 C. Co.
Chapter XI
CREDIT OPENING
1. NOTION
1.1. DOUBLE ACCEPTION
We have stated that the concept of credit opening has a double meaning: in the
first it simply translates the legal phenomenon called "accreditation" and as such
it serves as conceptual support for almost all active operations carried out by
banks.! According to the second, it is a typical contract whose principles can be
applied to others but no longer by the general means that we have just mentioned.
Accreditation is defined as the "possibility given to the borrower of accessing the
assets of the lender up to the concurrence of a certain sum." 2 It consists,
therefore, of the power or faculty enjoyed by the borrower to use, at his
discretion, the sum placed at his disposal, within certain conditions that we will
see later. Within this position, any contract that implies the existence of an
availability in favor of a person, that is, the power to demand the delivery of a
sum of money, corresponds to the general structure of the opening of credit and
is a form of it. . From this point of view, it would correspond to the notion of
signature credit that we have just studied. 3
Saving, of course, the legislative regulations in this sense, we believe that the
thesis cannot be predicated with such generality because in the systems that
establish for certain credit operations the form of real business, the contract only
exists as soon as the sum is delivered. of money. Unless, then, the theory of the
preliminary contract, which has been subjected to severe criticism, is accepted
for the opening of credit, it could not be said that simple availability is sufficient
to explain real credit contracts.
For this reason, the opening of credit must be studied as an independent contract,
which participates in the notion of signature credit, of which some others can be
considered as modalities, such as documentary credit, but different, in any case,
from mutual and of all the contractual forms that derive from it, such as the
advance payment or the discount, which we will see later.
1.2.
DEFINITION AND PURPOSE
First of all, note that, despite the legal differences that naturally exist, credit
contracts - both passive and active - have profound similarities as they all start
from the notion of "credit operation", with such rich conceptual scope in the
world of banking law. When it can be recognized it is because there has been a
transfer of ownership of a fungible good with the responsibility for whoever
receives it to return it later. For this reason, the first difference that is usually
highlighted in the study of the various contracts is the economic function they
fulfill, since in it and in the satisfaction of community needs, which explain their
birth, a good part of the specificities of each one are usually found. . This being
the case, it should be noted that the credit opening contract constitutes the
response of banking law to the future needs of its clients. That is, while mutuality
attends to present needs, openness ensures needs that must be satisfied later.
We understand a credit opening contract as the agreement according to which the
bank (lender) undertakes with its client (lender) to grant money or signature
credit, directly to him or to a third party indicated, within certain quantitative
limits and through the payment by the borrower of a remuneration.4
From the definition formulated we can conclude that the objective of the
contract, its reason for being for both parties, but specifically for the client, is to
have availability, that is, with the possibility of obtaining money or signature
credit within of a certain period of time, if the contract has been concluded for a
term, or indefinitely, if this is the modality adopted in the agreement.
Characteristic that allows differentiation from mutual and that has enormous
importance in practice, since it tends to satisfy eventual and future needs, not
current ones.
In the business world, it is common for a bank client to know that, in the more or
less near future, they will need to have a certain sum of money. In this case, it is
not convenient for you to enter into a mutual contract, since you would have to
pay interest from that moment and keep the amount received idle until the
expected future circumstances arise. But, on the other hand, it cannot run the risk
of limiting itself to waiting and requesting credit at the moment when it is
actually required, since it may happen that then the bank faces cash flow
difficulties or is subject to monetary restrictions, if in which an important
commercial operation can be frustrated for the client due to not having the
necessary resources at the right time.
To satisfy the expectation, not the current need, the credit opening contract
provides a perfect solution because, without having to bear the financial costs
that would result from an immediate disbursement, the client is certain "of having
the money in the moment when circumstances so indicate. This is the reason why
the doctrine has constantly emphasized the characteristic of availability as
distinctive of the contract and its reason for being. Some authors have criticized
this concept because they consider that once the contract has been perfected,
availability is nothing more than the ability of the client to enforce the obligation
contracted by the bank and that, in that sense, it does not distinguish anything or
add anything to the consequences of any validly contracted personal obligation.5
However, if the legal observation is reasonable, this does not detract from the
merits of the doctrinal evolution that has seen in availability the distinctive and
peculiar element of the contract due to its economic purpose, since it faithfully
reflects the phenomenon according to which what they seek the parties and,
specifically, the client, is not the immediate delivery of a sum of money, which
would be satisfied by the conclusion of a mutual contract, but rather having
future security of being able to dispose of it, at a certain time and by decision
unilaterally of the required resources. It is with this technical-economic content
that availability must be understood for a more adequate understanding of the
contract and its purposes.
The contract is also known, from an operational point of view, as the
establishment of a line of credit, that is, a maximum up to which, and within the
contractual conditions, the client of the institution can draw. Below we will see
the elements of the line of credit, as a representative archetype of opening credit.
1.3.
CONTRACT MOMENTS
Even though we will return to them when studying their legal nature and the
obligations of the parties, for now we want to highlight the existence of two
logical and normal moments within the contracting process.
The first concerns the perfection of the contract itself, when the bank is obliged
to have up to certain sums of money available to the client, or better, to grant
money or signature credit up to a certain amount.
The second says with the use made by the client of the resources made available
to him, which leads to a new stage in the study of the contract in which the legal
position of the parties will be different, depending on the modalities. If the use is
partial and in money, the client becomes the bank's debtor for the amount
received but continues to be a creditor for the rest. If it is done, no longer through
money credit but through signature credit, in favor of the client himself or a third
party, through the endorsement of a bill of exchange, its acceptance, etc., a
situation will arise. variable: the client is a potential debtor until, by virtue of
previous commitments, the bank has to make a disbursement, at which time the
obligation to reimburse will arise. It is possible, of course, that this does not
happen and that the operation is settled without the bank having to make a
disbursement or, if it does, it will be with resources provided by its client. In this
hypothesis, the obligation will no longer have ceased to be contingent.
We will see all these modalities later. It is enough for us to highlight, for now,
that at first the bank is obliged to the client, an obligation to give or do as the
case may be and that, later, by complying with these, the client, if he has not
made a provision, becomes debtor of the bank and must reimburse him for the
funds used.
2.
ITEMS
The opening of credit or its most representative form, line of credit, usually
includes, in practice, provisions in relation to the points that we list below.
2.1.
AMOUNT
The contract specifies a maximum amount up to which the bank is willing to be
bound, which, ordinarily, includes disbursements for capital ~ interest, and the
commissions and expenses that must be incurred for the due fulfillment of its
obligations. Some systems enshrine specific provisions when it has not been set,
empowering the creditor to point it out at any time, Mexican solution, or
considering said omission as a fault attributable to the creditor, in which case it
must be responsible for any damages that may eventually arise for its client.
Honduran solution.6 It is common for restrictions to be established within the
global amount, such as when it is said that it will be disbursed in installments,
each of which cannot be greater than a certain sum or percentage of the first.
Banking use that is explained by the natural reservation that the credit institution
has due to the need to make a disbursement at the moment least expected and for
amounts that can be very important, which is why it finds that the establishment
of maximum partial amounts, to disburse each time, reduces and rationalizes the
impact of the expected use. The logical thing, in any case, is to set an amount,
although by exception lines could be established for an indeterminate amount,
specifying the form of reimbursement and conditioning new deliveries, without a
doubt, on the use made having been paid in a timely manner.
2.2.
TERM
We deliberately omit this element in the definition because it does not seem to be
part of the essence of the contract, or even its nature, that there is a term of
duration for the agreement and, on the contrary, in almost all systems it is
possible to celebrate it at any time. indefinite term.
When there is a term, this refers, as a general rule, to the duration of the contract
or term during which the bank is obliged to maintain availability in favor of its
client and the latter can issue the corresponding payment orders. However, in In
practice, there are several deadlines, coincident or not, that refer to different
situations.
There is, as we have just explained, the term of the contract, think of a line of
credit that is granted for a period of one year from its conclusion. If at the same
time it is established that each use must be reimbursed within the following
ninety days, a second period is presented which in practice means that during the
term of the contract there will be as many reimbursement periods as there are
partial uses made by the client. Of course, if nothing has been foreseen in the
contract or in the deliveries or if the law does not establish anything different, it
must be assumed that the term of reimbursement of the uses corresponds to the
same of the contract, since nothing would allow us to infer anything different.7
Other deadlines may coexist, such as those established by the bank in the case of
partial uses, by saying that the client will not be able to make them for more than
a certain percentage of the total, a quantitative limitation, and that, in addition,
there must be a time between each of the uses. a period of not less than a certain
number of days. Terms and quantitative limitation that are explained when the
bank that has granted a line of credit for an appreciable amount does not want to
be surprised with its use in its entirety and opts for it to be divided up and spread
over time.
2.3.
METHOD OF USE
The contract must provide for how the line of credit can be used, as we will see
in due course. Let us say for now that, in summary, the possibilities consist of its
direct use by the borrower or by third parties who act following their instructions.
Both can demand monetary credit or signature credit.
The use of credit by third parties must be agreed upon, in our opinion, although it
is possible that its admission by the bank may incur a charge.
- to the line, without having agreed on such modality. However, it may happen
that there is a valid rejection by the bank, which, for example, for commercial
reasons, does not want to appear as guarantor for a third party whose client
requests to guarantee a bill of exchange.
2.4. REMUNERATION
Another ordinary clause in the contract is the one that establishes the form of
remuneration, which consists of a mixed system composed of commissions for
simple availability, plus commissions in the granting of signature credit and
interest on the disbursements actually made, when they represent a financing.
2.5. GUARANTEE
If, in order to respond to any obligations under its responsibility, it is agreed that
the client provides certain guarantees or is obliged to sign a promissory note,
these circumstances must be recorded in the contract, as a general rule.
2.6.
CAUSES OF UNILATERAL TERMINATION
If the law does not establish them, they must be agreed in the respective contract.
The most convenient thing, if there is no deadline, seems to be to provide
advance notice for termination.
3.
LEGAL NATURE
3.1.
MUTUAL THEORY
The first theory that attempted to explain the credit opening contract indicated
that it was a form of the mutual contract. This theory was abandoned when the
doctrine found that availability was the distinctive peculiar element of the
contract. Indeed, starting from this point of reference, we find several differences
that can be noted: the mutual agreement is a real contract while the opening of
credit is consensual; In that case, the delivery of the sum of money is an essential
requirement for the birth of the contract, while in this case it is born by the
agreement of wills and the deliveries that are made are not aimed at perfecting
the contract but rather at fulfilling a previously contracted obligation; and,
furthermore, in the opening of signature credit there is no disbursement of money
nor can there be talk of delivery of any fungible goods.
It was said by some authors that it was a mutual consensual agreement that could
be perfected by the simple agreement of wills and not by the delivery of the
thing. Within the contemporary tendency to reject real contracts, admitting
instead the consensual form, the thesis would be acceptable, in general terms, for
what it says with the opening of money credit, but it is obvious that, in the
systems that regulate it such as In reality, the theory does not constitute anything
other than a denaturalization of the mutual. To which is added, as in the previous
case, it would not operate in the case of the opening of signature credit.
There has also been talk of the theory of mutual deposit according to which the
bank grants a loan and delivers it, constituting an irregular deposit in favor of its
client in the same bank, which can be used from that moment on. The theory has
been criticized not only for being artificial, in that it does not seem to translate
the will of the parties and would imply the conclusion of a double mutual
contract, one in favor of the client and another in favor of the bank, constituted
by it, if it is assimilated. the irregular deposit of money to a mutual, but because
it could not explain the phenomenon of the opening of signature credit either. 8
3.2.
PRELIMINARY CONTRACT THEORY
The other major theory that has been exposed is that of the preliminary contract
preparatory to other definitive contracts that must be concluded between the
parties. Also subject to criticism, it has, however, obtained greater support than
the previous one. It is maintained that the preliminary contract is characterized
because the definitive contract that is carried out is a simple structural
development and corresponds entirely to the nature of the first. If this is so, it can
be stated that in the opening of credit there is no preliminary contract since the
acts or contracts that the bank celebrates in its development are of the most
varied type without there being an identity with the legal nature of the first.
Furthermore, it is noted that many of the behaviors that the bank can adopt in
practice do not correspond to contractual forms, but to unilateral acts such as the
payment of a certain sum to a third party, the cancellation of a promissory note,
etc. Finally, in countries in which failure to comply with the mutual promise only
generates the obligation to pay damages, the theory is not acceptable either
because the credit opening contract is
- translates into the obligation to carry out the planned conduct, which may even
be coercively required.9
3.3. DEFINITIVE CONTRACT THEORY
It can be said that the most widely accepted theory today is that according to
which it is a definitive contract that is perfected by the simple agreement of the
parties, from which an availability arises in favor of the borrower and that
translates into a series of remedial acts, arising from the unilateral decision of the
latter and corresponding to the obligation contracted by the creditor. 10
In conclusion of all the above and focusing only on the characteristics that are of
particular importance or are debatable, we can affirm that the credit opening
contract is main, onerous, commutative, of successive execution, at least
potentially speaking, since the obligations of the parts are designed to be fulfilled
over a more or less long period of time and not all at once, much less
simultaneously with their celebration. We can also say that it is a bilateral
contract because, at least in the vast majority of systems, at the time of its
conclusion, obligations arise for both parties: the bank will grant money or
signature credit based on availability. , and the client paid for that service.
Finally, we can affirm that in general terms the contract is consensual, although
some laws and for certain events indicate that it must be concluded in writing. In
any case it is not real, that is, the delivery of anything is not required for its
execution. improvement.
5.
OPENING CLASSES
We will see the most interesting modalities in practice.
5.1.
FOR THE OBJECT
It can be money or a signature. This is not an exclusive option; In practice, the
same line of credit can be used through different mechanisms that involve
receiving both forms of credit.
5.1.1. Of money
There is an opening of money credit when the use is made through cash
disbursements in favor of the borrower himself or a third party. That is, it may be
the opening of a money credit ab initio because the contract has been limited to
that modality or because within the possibilities granted to the client, the client
chooses to demand physical deliveries of money.
5.1.2. Signature
There is opening of signature credit, however, when what is used is not money
itself, but the credit capacity of the bank that arises from its intervention as
subscriber of a document and enables the borrower or a third party to obtain
resources. This happens in all cases in which the bank becomes guarantor of any
obligation or guarantor or acceptor of a security. In all these cases, what the bank
grants in the first instance is the support that its signature means, which not only
enables faster and more convenient negotiation of the securities, when it is a
guarantee or guarantee, but also the execution of contracts with third parties that
Thanks to the presence of the bank, they carry them out without difficulty.
One might ask what difference there is, then, between the opening of signature
credit, which we talk about here, and the signature credit that we deal with in
Chapter X. The same as between the opening of money credit and mutual credit.
In the so-called signature credit, the bank, as an immediate and automatic result
of the contract, grants its guarantee, guarantee, acceptance, etc., while in the case
of opening the bank is obliged, pro-future, to guarantee, guarantee, accept , etc. If
you like, the difference is linked to the chronological development of the
operation, because while in the signature credit the objective of the contract is,
precisely, to obtain it immediately, the client requests and obtains from the bank
the guarantee of a bill of exchange, When opening credit, the purpose of the
contract is the security that in the future the guarantee of one or more securities
can be obtained.
5.2.
BY THE FORM OF DISPOSITION
For this concept, the opening of credit can be simple or rotating.
5.2.1. Simple
There is a simple opening or line of credit when the use of the funds made
available exhausts the borrower's right and, consequently, satisfies the bank's
obligation. If there is an availability of up to 10,000 in favor of the client, the use
of 5,000 reduces his right to request the balance, even if before reaching that
moment he has already reimbursed the sum object of the first use. If you
withdraw the 10,000 and refund them, with several months left in the contract, it
would not be possible, however, to demand new deliveries because the line is
completely exhausted. In sound logic it must be assumed that, if nothing has been
agreed on the matter, the opening that is established will be simple. 12
5.2.2. Rotary
The rotating opening, also called a current account, gives the borrower the right
to make reimbursements during the term of the contract, replenishing with them
the balance or the sums available in his favor. Therefore, if you use all of the
credit but repay it, while the contract is still in force, you will be able to use all or
part of the sum made available to you again. There is an accounting current
account system in the sense that there is a credit in favor of the client that is
reduced by the withdrawals made and reconstituted by the credits.13 The
difference between both modalities lies, then, in the effects of the remittances.
made by the debtor. If it is a simple credit opening, the remittances are paid upon
the cancellation of all or part of the balance in your charge, while in the second
case there is no balance against you until the expiration of the term, so that the
remittances They reconstitute the funds available in their favor. 14
6.1. AVAILABILITY
We have stated that availability is a legal concept whose importance derives from
the economic possibility it suggests and consists of the general obligation
assumed by the bank to grant money or signature credit to its client. The credit
can be granted directly to the latter or to a third party, following the instructions
given by the borrower. We will see, immediately, some ways to pay, that is, to
fulfill the obligation assumed by the bank.
6.1.1.
For delivery of money
The simplest and most logical way for the bank to fulfill its obligation is to
deliver sums of money to its client or a third party, against the issuance of a
receipt by them.
6.1.2.
By credit into bank current account
N 0- should be confused with the modality of opening revolving credit or current
account. It consists of the possibility of crediting the client's current bank
account, at the request of the latter. It is also known as an advance or advance on
a current account.
6.1.3. Over drafts or overdrafts
In this case, unlike the previous one, there is no credit or advance for a global
amount in the current account that can be used totally or partially through the
issuance of checks, but rather each one of those drawn without sufficient funds
will be paid with charge to the existing line of credit. The difference is not only
conceptual but practical and consists of the fact that, if a certain amount is paid
into the account, the corresponding interest will begin to run on it even if it is not
used immediately or only partially. On the other hand, when the overdraft
mechanism is used, the client does not pay interest except on the credit actually
used. 15
6.1.4.
By acceptances
One of the most interesting ways of using the opening of credit is to ask the bank
to accept exchange instruments drawn by the drawer himself to his order or to
that of a third party or drawn by a third party under the same conditions and in
accordance with the instructions. of the accredited. Now, if the bank accepts a
security, it grants a signature credit and assumes a specific and term obligation
that must be satisfied at the time of maturity of the instrument. Two hypotheses
can then be presented: that there is a sufficient provision made by the client, in
which case the obligation arising from the opening of credit will have been
satisfied by the simple granting of a signature credit, or that there is no such
provision, assuming in the which the bank will be forced to pay and grant a
money credit, becoming a creditor for a certain and demandable sum payable by
its client. Some laws, however, require that, unless otherwise agreed in this case
and in other cases of contingent obligations in favor of third parties, the client
must constitute a provision of funds no later than the day before the day on which
the obligation becomes payable.16 On the other hand, it is convenient to note that
the acceptance of the title or, as we will see below, the granting of a guarantee,
reduces the amount of availability until the obligation contracted on a term or
contingent basis occurs.
6.1.5.
For guarantees
It is also possible for the bank to fulfill its obligation by granting a guarantee,
with respect to any obligation or one incorporated in a security, through the use
of the guarantee, in this case, as a typical file for these securities. Unlike
acceptances, this is not a matter of assuming a term obligation but of contracting
contingent obligations, in that it will only be necessary to make the disbursement
if the principal obligor does not satisfy the debts derived from the guaranteed
contract. It is the granting of a signature credit that can be followed by a
disbursement of money, no longer upon expiration of the term, as in the previous
case, but in the event of default. There is also room for the hypothesis that there
is sufficient provision, in which case the bank will pay but there will not be,
properly speaking, a granting of credit but rather intermediation in payments or
provision of a service, or that it does not exist, in which case the signature credit
granted, a credit of money actually granted is added.
In the case of a bond or guarantee granted at the request of a third party, at the
request of the client, the bank will enjoy the causal actions derived from the
credit opening contract against its client, but in addition to those derived from the
(guarantee agreement against the guaranteed party and the persons who must
respond to it,
when it concerns a security.
6.2.
THIRD PARTY EARNESTS
It is asked whether the bank must attend to the embargoes decreed in favor of
third parties with respect to the sums that constitute the availability in favor of its
client. It cannot be denied that it is an economic right that, consequently, would
be susceptible to alienation and, in the same vein, could be the subject of a
judicial seizure order. However, since this is a potential situation that only
materializes through the unilateral expression of the borrower's will, most authors
are inclined to maintain that it is not possible to seize the right, or better yet, that
even if it could maintain that the right is susceptible to seizure, in practice the
results of the same would be nugatory since the expression of will of the
borrower would be lacking for the sum of money to truly enter his assets or the
bank to be obligated towards third parties, in accordance with what is provided
for by the contract.17
For this same reason, the doctrine has tended to deny the possibility of offsetting
the obligation owed by the bank derived from the execution of the contract with
any other obligations of the borrower. Think of a promissory note that expires at
the opening date and has not yet been used. Compensation would only be
possible if the borrower demanded the delivery of money because, in that case,
the potential right would become a current and concrete right. A possibility that
would be even clearer when, using the bank current account as a common
support for the different relationships with the client, the bank would pay the
value of the use at the request of the borrower, at the same time debiting the
account for the obligation under its charge, case in which automatically and by
virtue of the account's own mechanics, the sums would be offset until the lowest
amount is met.
7.
CUSTOMER OBLIGATIONS
7.1.
PAY THE FEE(S) AND INTEREST
The existence of two defined moments in the development of the contract
explains the establishment of a double remuneration borne by the client: one
fixed and resulting from its conclusion and another eventual and variable
depending on whether the line is used and, in this event, it is obtained. signature
or money credit.
The first is the price for the freezing of resources or willingness to intervene by
the firm, which arises from the existence of availability, that is, the primary
obligation of the Bank. The second, intended to satisfy the price of the uses to the
extent that they occur. Consequently, the sole circumstance of opening the line of
credit implies the recognition by the client of a commission that - similar to
interest - can be settled in consideration of the time in which the opening remains
in force. Consider, for example, that a certain amount per thousand and per
month is paid as a commission on the available unused sums. But once the credit
is used, two possibilities arise: that there is a signature credit, in which case there
will be a payment of a second commission corresponding to the issuance of the
letter of credit, the acceptance, the guarantee, the granting of the guarantee, etc.,
or if it is a money credit, to the payment of an interest rate on the amount and for
the agreed term.
The payment of the commission for the simple opening is not only logical from
an economic point of view and legally admissible, but it allows solving a
problem raised by some authors consisting of knowing whether the borrower has
the obligation to use the line of credit. . To resolve this, a distinction was usually
made between opening free credit, in which case it was not mandatory, or
onerous credit, that is, remunerated in favor of the bank with an interest rate on
the uses, a case in which it was understood that there was a need to use the line
so that the white man could profit, since that was the purpose that had led him to
hire. But if it is maintained, as a general thesis, that a commission must always be
paid for the simple fact of opening, even if it is not used, and that uses have their
own form of remuneration, that is, the interest rate or the additional commission ,
the problem is resolved and it is understood with perfect logic and harmony that
the client has no obligation to use the line. If you want, the commission in a
certain way is not only the recognition for the freezing of resources that the bank
makes, but also the price paid for not having to use the corresponding credit.18
7.2.
REFUND THE AMOUNTS USED
If the client exercises the power derived from the contract to receive money or
signature credit and as soon as the bank has to make disbursements with its own
funds, the obligation inherent to any credit operation for the debtor arises, that is,
reimburse the sums received. We already saw when talking about the term how
the reimbursement of the uses can be made within the particular term that
corresponds to them or at the expiration of the contract, when nothing has been
said regarding the uses or at a later date, if a financing that exceeds the term of
the agreement itself. And we also saw how there are laws in which, due to the
silence of the parties, the reimbursement must be made at a certain time
coinciding with the termination or a short time later.19
We will see the general principle that applies in relation to the term and other
forms of termination of the contract that are of some interest.
8.1. GENERAL PRINCIPLE REGARDING THE TERM

We have already said that the contract can be fixed-term or indefinite. In the first
case, the termination of the contract will occur due to the expiration of the fixed
term; in the second, by unilateral manifestation, with or without prior notice, as
established by the contract or legislation.2O
8.2.
SOME FORMS OF TERMINATION
We are referring to those causes frequently indicated by law or contract and by
virtue of which it can be terminated unilaterally or even by simple legal ministry.
(
8.2.1.
Because the credit was used
When the opening of the credit is simple, the total use of the credit ends the
contract, the bank's obligation ends and only the reimbursement by the client in
the aforementioned manner remains.
8.2.2.
By unilateral decision in fixed-term contracts
In the case of indefinite-term contracts, it is normal that they can be terminated
by unilateral declaration. We are referring, however, to fixed-term contracts that
can be terminated early. This hypothesis may result from a legal authorization or
from powers reserved to both or one of the parties in the respective contract.21
However, if unilateral withdrawal is not authorized by law but results from the
contract, especially when it is dedicated to favor of only one of the parties, surely
the bank, since in the first moment it is the only one interested in doing so, the
termination can give rise to possible liability actions since it is not clear that if
there is a term and an obligation, the debtor it can be relieved of its compliance
without any consequence. Consequently, we believe that the most convenient
practical solution when unilateral withdrawal is to be established, particularly
when it is in favor of the bank, consists of establishing just causes to which
reference can be made and which can support the entity's decision. Such could
be, for example, missing or reducing the agreed guarantees, which is otherwise
specifically enshrined as a justifying cause in some legislation.22 The debtor
finding himself in a bad business situation that is reflected, for example, in the
existence of against them executive demands, seizures, etc., so that
can reasonably be feared in a possible cessation of payments and thus in other
similar hypotheses.
8.2.3.
Because any of the parties are in a state of bankruptcy, administrative or judicial
liquidation, or bankruptcy
of creditors
Here we are no longer dealing with a termination by unilateral decision but rather
a termination by express mandate of the law, as a general rule, which does not
prevent it from being included at a given time as a specific cause in the contract
itself.23 In this way The accrediting bank is protected from continuing to make
disbursements and the amount of the obligations borne by the client is established
and in relation to which the bank will participate within the respective universal
judgment.
8.2.4. Due to the death of the borrower or the dissolution of the respective
company
Like any credit contract, the opening implies an intuitu personae relationship so
that it cannot be stated, in principle, that the bank's obligations in its charge and
in favor of the heirs subsist. In our opinion, this is the reason that justifies in the
contract or the law that these hypotheses give rise to the termination of the
contract.24
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1. RODRIGUEZ, J. "Commercial Law", T. 11, pp. 87/8. This author maintains
this with the sole exception of the repo, the letter of credit and the current
account.
2. MESSINEO, op. cit., p. 299.
3 V. Supra. Chap. X, 8.
4. LABANCA NOACCO define it by saying that it is "that contract by virtue of
which the bank (lender) undertakes, up to a certain amount and for a certain time,
to satisfy the payment orders sent to it by the other party (lender), and also -
although not necessarily - to assume monetary obligations towards third parties
in compliance with the orders issued by the borrower; the latter undertakes to pay
a commission and to repay the money that the bank should have provided, plus
the interest accrued since the moment of the effective disposition of the sums"
(Op. cit., p. 18). GOVEA, in turn, maintains that "it is an unnamed contract (in
Venezuela), by which the Bank, through a commission it receives from the client,
undertakes to make available to the client, within the agreed limit, according to
their requirements and for a fixed or indefinite period, sums of money or to
perform other services that allow the client to obtain it" (Op, cit., p. 117).
Colombia, art. 14. 00 C. Co.; Mexico, art. 291. LGroc; Honduras, art. 875 C. Co.;
Bolivia, art. 1309 C. Co.; Paraguay, art. 1412 C. c.
5. LABANCA-NOACCO, op. cit., pp. 34. And ss.
6. Mexico, art. 293 LGTOC. Honduras, art. 878 C. Co.; Guatemala, art. 720 C.
Co. and El Salvador, art. 1107, C. Co. in the same sense. The amount does not
include expenses, interests or commissions: Guatemala, art. 719 C. Co.; El
Salvador, art. 1106, C. Co; Bolivia, art 1312. c. Co. It is understood that it
includes: Honduras, art. 877 C. Co. and Mexico, art. 292 LGTOC.
7. Mexico establishes that restitution must be made "upon the expiration of the
term indicated for the use of the credit, or failing that within the month following
the expiration of the latter", art. 300 LGTOC. Honduras, more fortunately, in our
opinion, establishes that it must be done "within the month following the
expiration of the period set for the use of the credit", art. 888 C. Co. El Salvador,
establishes that the restitution will be made within three months following the
expiration of the period set for the use of the credit, art. 1116 C. Co. In the same
sense Guatemala, art. 726 C. Co. Bolivia, establishes that the borrower must
make the restitution within "fifteen days following the date of notification by the
bank", art. 1310 No. 2. c. Co.
8. CERVANTES, op. cit., pp. 246 And ff.
9. MESSINEO, op. cit., pp. 307 And ss.; LABANGA-NOACCO, op. cit., p. 43.
10. MESSINEO, op. cit., p. 321; GOVEA, op. cit., pp. 123/4.
11. Colombia requires that the contract be in writing (art. 1402 C. Co.). In the
same sense, Bolivia, art. 1310 C. Co.
12. Colombia, art 1402 C. AC.; Bolivia, art. 1311. c. AC.
13. Colombia, art. 14.01. c. Co.; Mexico, art. 296. LGTOC; Honduras, art. 882.
c. Co.; El Salvador, art. 1111. c. Co.; Guatemala, art 723. c. Co; Bolivia, art.
1311. c. CO. 14. ROORíGUEZ, J., says in this regard: "If nothing else has been
agreed upon, the borrower has the right to use the credit on demand; but if there
is a special agreement, the credit may be used through successive provisions,
with the borrower entitled to make reimbursements that restore the credit to its
original amount. In the first case, we are talking about the opening of simple
credit, referred to in article 295, which provides that 'unless otherwise agreed, the
borrower may draw on sight the sum object of the contract' (D. Mercantile T. 11,
p. 89). BAUCHE, op. cit., p. 244. We do not agree with the support used by these
distinguished writers to found the distinction. It does not lie, in our opinion, in
the fact that opening a current account can be used through successive
provisions. The simple one can also be used partially. Nor should the simple be
identified with the power to use demand credit. Both forms can be serious or both
can be subject to deadlines or prior notice for their use, in whole or in part. The
real difference is that in the case of simple utilization, the uses extinguish the
Bank's obligation until the amount thereof is met, while in the case of revolving
reimbursements, they will again be usable by the client during the term of the
contract.
15. In Colombia, provisional overdrafts authorized by the bank at the request of
its client, although they result from the establishment of a line of credit, since
they grant availability, are governed by the rules of the bank current account
contract and do not require a written form ( art. 1404 C. Co.).
16. Mexico, art. 297 LGTOC; Honduras, art. 883 C. AC.; El Salvador, art. 1112
C. AC.; Guatemala, art. 724 C. AC.; Bolivia, art. 1313 C. AC.
17. MESSINEO, op. cit., p. 327.
18. Honduras, for example, provides that the borrower must pay the commission,
even if he does not have the credit, unless otherwise agreed, art. 880 C. Co.;
Same in El Salvador, art. 1109 C. Co.; Guatemala, art. 722 C. Co; and Bolivia,
art. 1310 N" 5. c. Co.
19.V. supra, note 299.
20. Honduras establishes that it will allow the borrower to use the credit within
15 days following the prior notice, if another period has not been set for this
purpose, art. 890 C. Co. Colombia, in the indefinite-term contract any of the
parties
may terminate it with the agreed notice or, failing that, with 15 days' notice, art.
1406 e. ea. In the same sense, Bolivia, art. 1315 e. ea. Guatemala, if there is no
deadline, unilateral termination is possible by means of a complaint through a
notary, art. 728 e. ea. El Salvador, the same as the previous one, but with 15 days
for the borrower to have the credit, art. 1118 e. ea.
21. Mexico: Despite the existence of a deadline, the agreement of the parties
authorizes any or one of them to terminate the contract by giving notice to the
other, art. 294 LGTOe. Ecuador: Only the bank can denounce the contract.
Guatemala: Only the bank may terminate it with prior written notice, art. 727 e.
Co.
22. Honduras, art. 887 C. Co.; El Salvador, art. 1115 C. Co.; Bolivia, art. 1317
N" 3. c. Co.
23. Honduras, art. 889 IV C. Co.; El Salvador, art. 1117 C. Co.; Mexico, art. 301,
V, LGTOC. Colombia provides that the bank will refrain from making deliveries
due to said credit, if the client is declared bankrupt or forced liquidation under
the new developments of this figure. If it is handled through a bank checking
account, it will be debited until the unused balance is reached. If it has been
granted in the form of overdrafts, it will refrain from paying new checks, art.
1405 C. Co.
24. Mexico, art. 301, VI, LGTOC; Honduras, art. 889, VI AND VII C. Co.; El
Salvador, art. 1117, VI AND VII C. Co.; Bolivia, art. 1317.6 AND 7 C. AC.
9. CREDIT CARDS
9.1. YOUR MENTION IN THIS CHAPTER
One of the instruments that modern consumer society has developed most
dynamically is the so-called credit card. Its extraordinary diffusion in many
countries has allowed consumers to quickly acquire a countless number of goods
and services, with advantages, not the least of which are the elimination of the
risks of physically holding money and the cumbersome handling of transactions.
checkbooks to the extent, at least, that for security reasons, acceptance of the
check has not been as universal as the card is today. Among other things, since
receiving the check implies assuming a credit risk with respect to the issuer,
while the sale of goods or services with the card implies direct support from the
issuing entity. We have considered it appropriate to make a quick reference to the
subject in this chapter, since credit cards have been assumed by the banking
system or by the banks of numerous countries, which issue and support them and
from the analysis of their legal structure it can be deduced, without difficulty,
that the relations between the bank and the client correspond, fundamentally, to
the conclusion of a credit opening contract.25
Now, it cannot be forgotten that the issuance of the card is carried out within a
complex legal transaction. In effect, it constitutes just one of many relationships
that link different intervening parties, independently, but that all end up linked,
by virtue of the purpose pursued. And which, currently, is part of the broader
issue of the so-called "plastic money", whose dizzying development is linked, in
turn, to the technological possibilities that financial systems have today, whose
first approximation we have made in the study of "Electronic Banking",26 where
we have presented a more complete overview of the different relationships that
frame the topic.
Therefore, knowing the existence of other collateral relationships or those linked

to the complex business, we limit ourselves to the study of the one that arises
between the bank issuing the card and its client, because only with respect to it is
it possible to find the availability in favor of the latter, characteristic of the
opening of credit.
9.1.1. Contract Description
By virtue of the conclusion of the contract, the bank undertakes with its client to
grant credit on a rotating basis and up to a certain amount or for
indeterminate amount, through payment to third parties who present their signed
invoices. Of course, there are some peculiar notes of the contract, which in no
way denature its structure as a credit opening, but which should be highlighted
from now on. Firstly, the third parties to whom the bank undertakes to pay are
determined by the client when they use its services, but within a universe
previously established by the bank. Secondly, the opening of credit that is
granted, that is, the availability in favor of the client, can only be used through
the acquisition of goods and services offered by that universe of third parties and
not by others. Given, however, the enormous extension of the network of
affiliated establishments, from which it is possible to demand goods and services
by presenting the card, it can be said that, in practice, the accredited customer
enjoys a great breadth of choice. of their co-contractors.
Corpo is known the mechanics of using bank credit cards, allows their holders to
go to any of the establishments affiliated to the system, to purchase goods and
services from them that will be paid in cash, by signing a sales receipt or use of
services,
. within the quotas previously assigned to the establishment that allow it to
receive it without specific consultation or validated by telephone - in the so-
called "first generation" systems, which tend to disappear - proof that, in turn, the
affiliated establishments will present to the issuing bank of the card so that it
reimburses them the corresponding sums. In more advanced systems, "second" or
"third generation", the card is used by passing it through an electronic terminal,
independent or integrated into the establishment's cashier, so payment
authorization is obtained automatically and directly from a common central
office. , when they are entities of the same network or, through it, the network
headquarters to which the card issuer belongs. As the volume dictates, this
presentation has generated the design and implementation of clearing houses or
systems, by virtue of which the banks where the establishments have their
accounts, receive the vouchers in deposit, acting as "acquiring" banks, 27 of them
and present them through the system, to be collected from the issuing banks,
physically or in magnetic files that compile and total the daily movement.
The system, then, which has also incorporated the electronic authorization
records produced during the day, carries out the respective compensation and
proceeds to collect from those who are debtors and pay or credit creditors.
Basically, and if the system does not manage checking accounts or has cash
backup balances that allow an automatic charge to be made, a credit risk is
assumed for the amount of uses made by the cardholders of each bank, until the
payment of the same or, more likely, of the negative balance that results from his
charge, after the compensation has been made, that is, after the amounts
corresponding to the "acquired" vouchers that he sent have been credited to his
account.
(
The relationships between the affiliated establishments and the bank or banks
issuing the card are governed by contractual rules whose study completely
escapes the discussion of the topic within this chapter. Suffice it to highlight that
the affiliated establishments do not grant credit at any time to the cardholders but
to the issuing bank, if this means the sale without payment in cash against a
receipt that they are certain will be reimbursed, immediately or in the short term,
by the recipient bank and which involves a cash payment when operating in real
time (on Zine). Whoever does grant credit to the holders, it is the latter who pays
the account, thus fulfilling his fundamental obligation, granting his client various
deadlines for reimbursement, according to possibilities that we will study later.
9.2. ELEMENTS OF THE CONTRACT
To make a parallel with the opening of credit in general, let's see how there is a
coincidence between the fundamental elements that are part of the contractual
stipulations.
9.2.1. Amount
The establishment of the credit line or quota implies the establishment of an

amount, at least in most of the well-known bank cards. This does not prevent a
card from establishing an unlimited quota at any given time since, ultimately, it is
a problem of credit risk and adequate knowledge and selection of the clientele.
However, we assume that, in general, the existence of the line and the delivery of
the card presuppose the establishment of a quota that may be variable, depending
on the different economic capacity in which the card users are classified. .
9.2.2. Term
There are also various deadlines here that run parallel in the development of a
party's contract, the general term that can be extended indefinitely if the bank
accepts it, a decision that will take into account the way in which the client has
made use of the credit granted. There are also deadlines to reimburse the different
uses, which, in summary, can be two: the first, immediate reimbursement,
understood as being carried out within a short period of time, think, for example,
15 days, a month, after to receive the statement of the account, which records the
uses within the period of time indicated for its cut-off and the required balance.
The other possibility is that, taking advantage of the credit facilities provided by
the same bank, the client chooses to use a deferred payment system, according to
which they can cancel the amount of their uses within a certain period, by
recognizing, of course , of the corresponding interest rate.
9.2.3. How to use credit
The form of payment, that is, the possibilities through which the bank meets its
fundamental obligation, are reduced, in practice, to two: disbursement to the
client in cash, by presenting the card at the cash desk of one of the offices. of the
bank or group of banks linked to the system, and through payments to third
parties upon presentation of invoices or receipts, either physical or electronic,
duly signed by the accredited client. We have already said, in the case of the
latter, that these are third parties predetermined by the banking system, but that
due to their number they allow the borrower to make a wide choice according to
their needs.
9.2.4. The remuneration

Also in the case of credit cards, a mixed remuneration system is presented,
although with some characteristic notes.
9.2.4.1. The Commission
The commission, in the case of cards, has a double origin. On the one hand, it
arises from the contract between the bank or the franchise administration system
and the affiliated establishments and is constituted by a percentage discount
made by that or the latter to the latter, on the total price of the invoices presented.
It constitutes, if you will, the direct remuneration charged to the group of
affiliated entities for the payment service that allows them to mobilize their
portfolio in cash, with the issuing bank assuming the risks of recovery, similar to
what happens in the case of factoring, which we will see later.28
The other commission, which interests us greatly as it corresponds to the credit

opening contract, is paid by the borrower (card user) and is known as a
membership or maintenance fee, which is nothing different from a commission
for the availability for a certain time, which must be paid in any case, whether the
card is used or not. As we had already said at the time, this is not an essential
element of the contract, but it constitutes a logical consideration for the
availability that the bank constitutes in favor of the client.
9.2.4.2.
The interests
Here there is also a modality that must be taken into account, because although
the general principle is applied that the credit granted generates interest, there
may be a type of grace period, so that interest is not accrued if a prompt payment
is made, That is, a refund within a short period after receiving the collection
account from the banking entity. If the payment is not verified within this period
and if the client is in default or using the credit facilities offered by the system,
the client must pay, obviously, an interest rate for the term, in the latter case, or
for default in the first or in the event that the financing is not attended to in the
agreed manner and opportunity.
As can be seen, we have made a summary of credit cards; but sufficient, we

believe, to highlight that the relations between the bank and the client are
structured on the basis of the celebration of a credit opening contract, whose most
outstanding notes we have collated. With the exception, of course, that in each
country there will be modalities that differentiate the regimes, but we believe, in
general, within the lines that have just been outlined.
The topic can be complemented with advantage, in some technical aspects and in
the better understanding of the different relationships that surround it, by
reviewing the presentation that we have made in the third chapter of the book on
"electronic banking", within which we have reserved an aside to "plastic money."
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25. SARMIENTO RICAURTE, Hernando. "The credit card". Ed. Temis, Bogotá,
1973. MARTINS, Fran. Op. cit., pp. 507 And ff.
26.V. Supra. Chap. 111, 3.4.
27. In some countries this expression is also used to refer to banks that,
authorized by the owner of the franchise, or using it, proceed to affiliate
establishments.
28. CERVANTES, op. cit., p. 246 And ff.
Chapter XII
LETTER OF CREDIT
1. NOTION
1.1. BACKGROUND
Although documentary credit can be conceived as a contract to carry out

operations within a country, using the so-called internal letters of credit, its
enormous contemporary development and importance are linked to the
implementation and perfection of foreign trade operations and, in particular ,
international sales.
This natural field of action is very important if it is noted that foreign trade credit
is a function of a series of factors such as market situations and the exchange
regimes of each country and presupposes, consequently, knowledge of various
laws and provisions. , complex and contradictory, at times. Therefore, in this
field, more than in any other, the trends towards uniformity have been welcomed
and generally accepted by banks in much of the world. For this reason and thanks
to the progress made, documentary credit is widely used.
Abandoned by the negative experience of advance payment systems, highly risky

for the buyer, and payment against receipt, dangerous, in turn, for the seller,
international trade found itself for many years, especially with the development
of commercial exchange at the end of the first half of the last century, an agile,
relatively safe and widely used instrument by individuals and financial entities,
consisting of acceptance or negotiation credit. In both cases, credits that operate
on the basis of documented bills, that is, securities accompanied by documents
representing the merchandise whose delivery is only made against the acceptance
or payment of such instruments. Specifically, from what it says with the first
modality, it consists of the shipment by the exporter of a merchandise in charge
of the importer's bank along with the documents representing the merchandise;
bill of exchange, with the inserted clauses d/aod/p. Once the bill is accepted by
the importer's bank, it is returned to the exporter's bank, keeping the documents
in its possession as a guarantee of provision by its client, the importer.
With this system, widely used and in relation to which there are some modalities
such as the so-called negotiation credit - where the exporter draws a bill of
exchange against the importer and negotiates it, even without accepting, with his
bank, to which he delivers the documents so that it in turn collects them -
international trade obtained an instrument that provides relative security to both
parties, as soon as the buyer knows for sure that he will receive the documents
representing the merchandise and, the seller, the payment for the same .
There were still empty spaces left unfilled. The seller knows that the buyer will
not receive the documents nor will he be able to collect the merchandise,
therefore, without payment or acceptance of the bill. But he ignores and can do
nothing to avoid it, if the buyer changes his mind at the last minute, for which he
simply refrains from paying. And this is because they suddenly find the business
unattractive due to a decline in the international market, or having received an
advantageous offer for a substitute product or other similar products.
To overcome this difficulty and structure an absolutely secure system, in

principle, documentary credit appears in which it is no longer the exporter's bank
that sends a bill for acceptance or collection, but rather the importer who directly
or through A correspondent undertakes to pay the sum of money upon
presentation of the respective documents, within the period and under the
conditions established by the credit.
In this way, an inversion of the process occurs. It is no longer a question of the

exporter shipping the goods with the costs inherent to such shipment and with the
risk that eventually the importer will not pick them up or pay, in which case he is
forced to make additional expenses to reimport them to his country of origin.
origin or attempt under precarious conditions to place it on the market of the
importing country. Now the process is straightened in a way that protects the
weaker party by forcing the importer's bank to pay. The risk of non-payment by
the buyer is replaced by the risk of non-dispatch by the exporter which, in any
case, is less burdensome for the importer who, in the worst case, will have to
assume some financial costs when not, barely . A commission. With the
additional advantage of the intervention of a bank, which responds directly and
immediately to the seller. Reversal of the process and change in the recipient of
the presentation of the documents - since these are delivered, no longer to the
importer but to a bank designated by him in the same country as the exporter -
which, added to the direct intervention of the credit institution that is responsible
for payment, make documentary credit the most agile and operational instrument
known to date, to stimulate international trade.
But perhaps the most profound legal consideration that can explain the success of
this mechanism results from the following reflection. In the contract for the sale
of movable property, consensual and perfectable by simple agreement of the will
of the parties, a classic problem arises when compliance with the obligations
derived from its conclusion is deferred. In effect, when the contract is
instantaneous execution and the delivery of the price and the thing occurs
simultaneously with the agreement, there are no services left to be satisfied nor is
there, for this reason, any risk that must be considered, with the exception, of
course , of those derived from redhibitory vices. But something else happens
when either of the benefits is postponed, in which case the contractor who
performs first assumes the risk or when both are deferred, in which case.
introduces disruption for whoever first satisfies theirs. And if this is the case in
business between presents or between merchants who are in the same country,
the panorama becomes more complex when it comes to international sales,
because, then, to the natural risks that have just been mentioned, the risks
themselves will be added. of this circumstance linked to the countless differences
that must be considered in terms of language, legislation, physical movement of
goods, means of transport, insurance contracts, customs regulations, exchange
differences, etc.
Well, what this mechanism allows us to obtain, and in this lies its exceptional
contribution, is that its structure implicitly carries security, from the point of
legal view, that the deferred benefits payable by both contracting parties end up
being fulfilled simultaneously. In effect, the bank will pay upon receipt of the
documents, especially the bill of lading, the representative title of the
merchandise, with which disbursement and delivery will be made at the same
time.
1.2. UNIFORM RULES AND USES
This happy realization has been possible thanks to the existence of a movement
promoted by the International Chamber of Commerce, aimed at compiling the
rules and practices currently used in the matter of documentary credit, to the
point of configuring a complete regulation on the subject that, for the way of
incorporation into contracts entered into by banks in numerous countries,
_has come to become in practice, at least in the Western world,
_a supranational custom, using the expression to indicate that, by virtue
From the above, its provisions are applied almost uniformly in a large number of
countries.
These uniform rules and practices were compiled for the first time in 1933 and
substantial modifications were made to improve them in 1951 and 1962. In 1974,
a third revision was made, on the one hand, to restrict as much as possible the
discretionary power that some articles granted to banks and, on the other, to
improve the wording and clarity in the presentation of the provisions. Starting in
1983, a new version published in brochure No. 400 was in force and in 1994 the
version published in brochure 500 of the cc! began to govern. The extension of
these rules is almost universal and we can affirm that in Latin America most of
the banks in the countries of the area have adhered to them and incorporate them,
consequently, in the contracts they enter into with their clientele.l
The validity of the norms contained in the uniform rules and uses as formal
sources of Law has been discussed. Some have maintained that these are mere
interpretative uses that cannot, in any case, be equated with the law by virtue,
among other things and first of all, that they have not been accepted in any
country as an international treaty and therefore lack of legislative force.2 We
respectfully depart from this opinion, at least for contracts concluded by adhering
banks in countries in which there are, as general principles, that commercial
custom has the same authority as the law or that the stipulations of the Validly
concluded contracts have the force of law for the contracting parties. In either of
the two cases and, of course, in both cases, it is evident that the uniform rules and
practices will have a predominant application as a formal source of law because
they have been expressly incorporated into the contracts entered into by the
banks with their clientele, in whose case is law for the parties or insofar as the
public, reiterated and general form
as applied to all documentary credit contracts in a country or by banks in a sector,
leads to the conclusion that it is a custom, with all the effects granted to it by
law.3 Of course, If they are non-adherent banks or if they are not invoked or
incorporated into contracts, they will only have value as international custom or
interpretative uses, if they are not part of the formal sources of law.
It is worth remembering that given the professional duty of information and the
legislative trends in matters of consumer protection, which we saw at the time,
the bank must ensure that the client receives a copy of the Rules and Uses that
are understood to be incorporated in the contract.
1.3.
DEFINITION
In Latin America, there are few countries that have directly incorporated
regulations on documented credit into their legislation, perhaps because in the
presence of the Uniform Rules and Practices compiled by the International
Chamber of Commerce, it has seemed unnecessary to do so.4 The current
compilation of the RUU in the part of General Provisions and Definitions, article
2, stable
'ce: "For the purposes of these articles, the expressions 'Documentary Credit/s'
and 'Standby Letter/s of Credit' (hereinafter, Credits') refer to any agreement,
whatever its name or description, whereby a bank ('Issuing Bank'), acting at the
request and in accordance with the instructions of a customer ('Order') or on its
own behalf: 1 Obliges to make a payment to a third party ('Beneficiary') or to its
order, or to accept and pay bills of exchange (draft instruments drawn by the
beneficiary, or, II Authorizes another bank to make payment, or to accept and
pay such draft instruments, or, III Authorizes another bank to negotiate, against
the delivery of the required document(s), as long as the terms and conditions of
the Credit are met". As it says with the legislative definitions, we consider it
interesting to reproduce below the one brought by article 1408 of the Colombian
Commercial Code according to which: "Documentary credit is understood as the
agreement by which, at the request and in accordance with the instructions of the
client, The bank undertakes directly or through a correspondent bank to pay a
beneficiary up to a specified sum of money, or to pay, accept or negotiate bills of
exchange drawn by the beneficiary, upon presentation of the stipulated
documents and in accordance with the established terms and conditions".
From reading the two definitions, closely related, the structure of the contract can
be easily deduced, according to which there is a client (orderer of the letter), who
has gone to his bank (issuer of the letter) and obtained that he grants money or
signature credit, in favor of a third party, within a certain time, up to a certain
amount and by completing the requirements provided for in the same credit,
which include, first of all, the presentation of a certain number of documents. We
will see in the next point a little more detail about the parties involved in this
contract.
1.4.
CLASSIFICATION AS AN ACTIVE OPERATION
When talking about banking obligations we explained our preliminary position
regarding the so-called documentary credit and its classification as a contract that
precedes the execution of an active operation. 5 For many authors it is a neutral
operation, of simple intermediation in payments, where what counts is the
collaboration or fundamental cooperation that the bank provides for the
conclusion of an international purchase and sale business and it is secondary to
know how they are provided. the funds for the operation. And it is even added
that if it is normal for the bank to grant financing to the importer, this is not an
absolute rule, since there are cases in which there is sufficient provision without
thereby distorting the contract.6
Even though hesitant at first, we have been inclined to study documentary credit
within the contracts that precede the execution of active offers because, as we
will see later, 'we consider that it is a form of opening credit (so refers to the
relationship between the bank and its client and remember that we are talking
about banking contracts) in which the credit rating arises from the constitution of
an availability in favor of the client, which is made by concession, through
payment to a third party, money credit or signature. Furthermore, because just as
effective financing, that is, disbursement without provision, is not invariably
presented in all documentary credits and therefore the contract is not distorted,
neither is the existence of a provision, especially at the time of The conclusion is
an essential element whose participation is required for the birth of this contract.
In other words, the argumentative technique used serves both to prove that
financing is not an essential element of the contract, and to prove that the
provision is not either.
On the other hand, if the concept of "credit" is not limited to the actual
disbursement of money, that is, to its direct and immediate transfer, but it is also
understood in a potential form as in the case of the credit opening contract , seen
in the previous chapter, then it is not difficult to understand that the documentary
credit precedes the execution of an active operation, which consists of the
constitution of an availability and which would imply effective financing.
tive or disbursement, as soon as there is not sufficient provision at the time of
making the payment. If there is, the bank at that time and as a complement to the
initial credit opening, will provide a payment service. Otherwise, the availability
will be followed by the granting of a money credit.?
2. PARTIES INVOLVED
In its simplest form, documentary credit implies the existence of a tripartite

relationship in which two people linked to each other by a fundamental contract
intervene, in the development of which the person obliged to pay a sum of money
requests the opening of a credit to their bank to that, as a result of the availability
that it grants, you can verify the payment to your creditor. In practice, and as
soon as the intervening bank does not have its own branch in the place where the
payment must be made, it will use a correspondent or colleague for the purposes
of notifying the credit, confirmed, if applicable, paid or negotiating the bills in its
moment, etc.
2.1.
ORDER
The payer, who demands the opening of the credit, is the party that, bound by a
fundamental contract, is obliged to pay a sum of money through that modality, or
chooses it as considered most effective for the purposes of the contract entered
into. . That is, the opening of credit is not always specifically enshrined in the
fundamental contract as a means of making payment, but rather at a given
moment it can be chosen by the debtor, in which case the creditor will see his
position as such reinforced.
'On the other hand, it must be noted that although the great development of
documentary credit has linked it to international sales, this does not mean that its
opening cannot be due to the fulfillment of an obligation derived from a different
contract, any imaginable in terms of the provision by one of the parties consists
of the payment of a sum of money. A borrower may be forced by his creditor to
open a letter of credit to satisfy the debt. And you can add that said credit be
confirmed by a bank in your country, since, having full confidence in the
honorability of the debtor and his solvency, you may fear that certain decisions
will be adopted regarding exchange control that make transfers abroad difficult.
To guard against this eventuality, he prefers to have the security of a confirmed
open credit, even on a term basis, because his problem is not one of immediate
need for resources but rather security over the payment of the corresponding
sum.8
When it comes to an international sale, however, the most frequent hypothesis,

the ordering party, a client of the bank, will be the buyer-importer who uses this
instrument by unilateral decision or provision of the contract to satisfy the
obligation to pay the sum. of money to the seller.
It should be noted at this point that it is up to the ordering party to indicate the
terms and modalities of the open credit, certainly in accordance with the
provisions of the fundamental contract but, in any case, as a result of his initiative
and in the terms that he indicates. In other words, the bank must limit itself to
opening credit under the precise terms indicated by its client. without it being his
responsibility, in principle, to discuss them, except for two exceptions, one of
which we will see again later.' The first obeys the provisions of the general
provisions and definitions of the RUU. which establish in article 5 that
instructions and credits must be complete and precise and to achieve this "the
banks will advise against any attempt to: 1 include excessive details in the Credit
or in any modification thereof; 11 give instructions regarding the issuance, notice
or confirmation of a Credit with reference to another Credit issued previously
(Similar Credit) when such previous Credit has been subject to modification/s
accepted and/or modification/s rejected". That is, it is not up to the bank to
intervene in relation to the fundamental aspects of the credit such as amount,
term, nature of the goods, method of shipping, risks assumed by the exporter, etc.
But it must ensure that a series of unnecessary details do not contribute to
creating confusion regarding the content and scope of the credit and that it is
issued in the clearest and most precise manner.
The other exception is related to insurance documents, since the negligence of

the issuing banks in this regard can be highly detrimental to themselves, in the
event that the documents must be accepted in the form in which they are
presented to the paying bank.9
2.2. ISSUING BANK
It is the bank that proceeds in accordance and according to the instructions of its
client to open the credit, assuming a commitment to give timely notice to the
beneficiary, by itself or through a correspondent bank. The payment that the
issuing bank makes constitutes compliance with the fundamental obligation
derived from the credit opening contract entered into with its client.
We will see how, among the obligations assumed, the main place is the
examination of the documents and the verification of compliance with the
requirements indicated in the credit, where the principle of formalism prevails.
that is, non-responsibility for the real content of documents and contracts. etc.. in
exchange for which he is responsible for their formal or apparent conformity and
regularity. In any case, it must be remembered that in accordance with the
provisions of Article 3 of the same general provisions and definitions mentioned,
credits are operations different from the contracts that originate them and "the
banks are not affected or bound by such /is contract/s...". Therefore, if it is up to
the ordering party to take the initiative to indicate the terms and conditions of the
contract without the issuing bank being able to intervene in the substantive
aspects, in return, once the modalities of the contract have been indicated and
incorporated into a letter of credit, the bank issuer and the other intervening
banks only respond in accordance with the literal wording of this document,
without being able to propose rights or exceptions derived from the fundamental
contract that gave rise to the issue. 10
2.3. NOTIFYING BANK and CONFIRMING BANK
Given the lack of a branch of the issuing bank in the place where the payment
must be made, it usually uses a correspondent to notify the beneficiary of the
opening of the credit, providing him with a copy of the respective document,
with the aim of imposing the terms and conditions of the letter of credit, the
period within which it can be used and the documents that must be presented, the
date on which the dispatch must be made, etc., and know that, as a consequence
of the exhibition of said document, the which is not essential, and the
presentation of those required by the credit, can exercise the right to payment,
acceptance or negotiation, according to the form that has been provided. The
simple notification or notice of the opening of the credit does not in any way bind
the respective bank, which acts as a simple agent of the issuing bank for the sole
purpose of communicating the_opening. The previous version, however,
provided for a charge of conduct, to which we will return later, apparently due to
the increase in manifestations of bad faith in recent years. To this end, it is said
that "if you agree to notify the Credit, you will take reasonable care to verify the
apparent authenticity of the credit that you notify." 11
Now, what is usual, what is of interest and importance in practice, is not that
there is a notifying or advising bank, but that the same or another local bank
proceed to confirm the credit, since, as we will see, In this position, the notifying
bank assumes an autonomous and direct obligation towards the beneficiary,
which improves the position of the latter, by having two potential obligors - the
issuing bank and the confirming bank, as it relates to the documentary credit -
and It saves a series of potential inconveniences by having one of the debtors in
its own place, subject to its legislation, its judges and its exchange provisions.
We will see in detail the obligations of the issuing bank, the possibility of
fulfilling them through a correspondent, what are the procedures provided for by
the RUU, to request notice or confirmation and what are the consequences
foreseen for both cases.
2.4. PAYING BANK
This bank, usually the same one that has notified and/or confirmed the credit, is
the bank that pays for having met the requirements established by the credit. In
this case, in principle, it is not a question of a different bank, but of a function
carried out by the same bank which, however, may, by exception, be carried out
by a third party, when, for example, it has been foreseen that The bills must be
discounted or drawn by a bank other than the issuer and the confirmer. 12
2.5. NEGOTIATING BANK.
A bank is said to be a negotiator when it discounts a bill drawn on another bank,

issuer or confirmer, or when, against the documents provided in the letter of
credit, it proceeds to pay without having been specifically designated to fulfill
such an order. . This position is usually facilitated to the extent that some banks,
especially North American ones, open letters of credit without designating the
paying bank, so that the beneficiary of the Credit is presented with the copy of
the letter plus the documents required in it before any bank. , yours as an
insurance, which, taking into account the seriousness of the issuing bank and the
knowledge and solvency of its client, can negotiate the letter, making progress in
relation to it and running the contingency of subsequent verification by the
transmitter. They are called commercial letters of credit in some banks, with
some impropriety, of course, because they all are, and they indicate that these are
negotiable credits with any bank and not with a specific one. The difference,
then, between the paying bank and the negotiating bank lies, according to
distinguished authors whose opinion we share, in that in the first case the bank
acts as the agent of the issuer, fulfilling an order it has received for this purpose,
while the The negotiating bank does so at its own risk and expense, either
because there is no paying bank indicated in the letter, or because it exists and in
an unorthodox manner, it nevertheless proceeds to make the payment. 13
In Latin America it has been observed that this inappropriate behavior is
frequently incurred, with the serious consequences that can ensue for the parties
involved but, especially, for the beneficiary of the credit. In effect, the payment
that the negotiating bank makes is a simple documentary discount, where the
documents received and the bill of exchange drawn against the issuer, if it exists,
are received "pro-sol vendo" and if the former are not satisfactory For the
drawee, the negotiating bank proceeds to turn against its client, either by
exercising causal action, or by exercising the exchange action. But in the
interregnum other parties have been freed from their responsibilities. Such is the
case of the bank that was designated to pay and to which the documents were not
presented within the period provided for the credit. In the same sense, the issuing
bank could maintain that its commitment was to pay by presenting the documents
to a certain bank and that the circumstance of having presented them to a
different bank entails a breach of the credit conditions that entitles it to reject
payment. This rejection may lead the seller to demand the termination of the
purchase and sale contract due to a fact that is totally unrelated to the conduct of
the buyer-orderer, who opportunely requested and obtained the opening of the
credit and in relation to which the issuing bank indicated a certain correspondent
for payment. Add to that the problems that may arise due to having pointed out
unfounded discrepancies to a third-party bank that the issuer does not know, or,
on the contrary, having omitted to do so.
These and other difficulties arise when, in a daring manner, a bank proceeds to
negotiate the documents in a market, knowing, because the credit so establishes,
that there is another bank specifically commissioned for payment, which must
comply on behalf of the issuer with the corresponding obligations, such as, first
of all, studying the documents and verifying compliance with the requirements
established in the credit.14
Perhaps to avoid these confusions, the RUU establish that the credit authorized
for negotiation must be expressly designated, although they provide that "in the
case of freely negotiable Credit, any bank will be considered the Designated
Bank."15 But said dación. It would indicate, even more clearly, the
disadvantages of a bank's unfailing and instantaneous ability to negotiate, when it
has not been designated for this purpose, it has been provided, generically, that
the credit is freely negotiable.
2.6. REIMBURSEMENT BANK
This is the way in which the issuing bank undertakes to reimburse the payer for
the sums that the payer has disbursed in its name and for servicing the credit. To
the extent that banks maintain accounts in different currencies or a current
account in a certain currency, it will be possible to settle the operation by
reciprocal charges and credits. However, this is not usual and on the contrary, the
reserve situation of Latin American countries makes it frequent to use foreign
banks, located in places such as New York or London, which are designated for
the purposes of reimbursement. In this case, it is indicated in the opening
document through which bank it must be made, for which it will be enough for
the paying correspondent to inform you that the payment has been made so that it
can immediately be carried out. 16 It may also happen that the issuing bank
transfers the funds to a bank located in the seller's location, in which case; This is
limited to fulfilling the order of paying or reimbursing the paying bank, if the
latter has already fulfilled the fundamental obligation. 17
2.7.
BENEFICIARY
The beneficiary is the person who, in accordance with the credit, has the right to
demand payment, through compliance with the obligations provided for therein.
It corresponds to the creditor of a sum of money that is owed by the person
issuing the letter. Its position is autonomous, that is, although exceptions arising
from the relationships between the other parties cannot be proposed by the two
groups, especially those arising from the fundamental contract, in turn, the
beneficiary cannot prevail. , in no case, of the contractual relations existing
between the banks or between the originator of the credit and the issuing bank.
18
2.8.
RELATIONSHIPS BETWEEN THE PARTIES
We will return to the point when talking about the legal nature of the contract and
the way in which the interrelationships are explained within the theory of the
complex legal business. We will also be able to appreciate these relationships
through the study of the obligations of the issuing bank, the payer and the
beneficiary, which will be the subject of special treatment in this chapter.
2.8.1.
Relations between debtor and creditor
Let us take the most common case of an inter-national purchase and sale, of
which
-celebration arises for the buyer the obligation to pay a sum of money. This
proceeds to request a bank in its area to open a documentary credit, under the
terms and conditions provided for from the beginning for the credit or the
contract, according to what is said with the opportunity of dispatch, the form of
payment, etc. . Well, if this is agreed upon, the ordering buyer fulfills his
obligation by requesting and obtaining the opening of the corresponding credit
and series notified of this to the beneficiary seller.
No difficulty arises when the fundamental business precisely specifies the terms
on which the letter is to be opened. However, it is common to find sales
transactions with few references to documentary credit, so it is necessary to
define what type of credit should be obtained. Given the silence of the parties,
their conduct has been decisive in comparative jurisprudence. If the beneficiary-
seller does not object to the terms of the letter issued, it is very likely that the
Courts will consider that he has accepted the credit, so that its terms are
understood to be incorporated into the underlying contract or that he has waived
his right to object to it. 19 If it is not established whether the credit must be
revocable or irrevocable, the prevailing position will lean toward understanding
that it must. be opened irrevocably because in this way the minimum security
expected by the seller is obtained.
In turn, if the fundamental contract does not specify anything on the matter, it is
necessary to determine the moment in which the credit must be opened and its
validity. If there is no specified shipping period, credit must be opened within a
reasonable time after conclusion of the contract. When it is foreseen, particularly
in POB and CIP contracts, the credit must be open, at least, by the time the
shipping period begins, although it has been argued that the buyer would even be
obliged to establish it with some reasonable anticipation of said shipment.
date.20
On the other hand, it is worth asking whether the circumstance of opening the
credit is sufficient to extinguish the obligation arising from the fundamental
contract, that is, the obligation to pay. The answer in principle is negative. On the
one hand, most of the doctrine considers that it is an opening of credit "prosol
vendo", to pay or satisfy the main obligation and not "pro-solutum", in direct
payment of said obligation. In fact, it can be said that it is a means of payment
and not the payment itself. If this is so, satisfaction of the fundamental obligation
is conditional on the beneficiary actually being paid by the bank at the time of
presenting his documents. On the other hand, because according to one of the
legal theories that best explains the relationships between originator, issuer and
beneficiary, it is a passive cumulative delegation where there is no release of the
original debtor but rather the creditor-beneficiary has two debtors. whom it can
attack at its discretion, as if it were a form of passive solidarity.
Consequently, and if either of the two theses is accepted, it is evident that the
extinction of the obligation arising from the sale only occurs upon the effective
payment made to the beneficiary and, in this same order of ideas, all the
vicissitudes that due to fault of the payer or his bank make the possibility of
receiving payment null and void, such as non-opening, opening under terms other
than those provided for in the original contract, revocation, if possible,
unjustified rejection of the documents by the bank, etc., empower the beneficiary
to attempt to collect the sums owed through ordinary means based on the original
contract.
Now, what happens when the payment is not made, no longer due to facts or
circumstances attributable to the payer or its bank but due to circumstances
attributable to the beneficiary? There are two possibilities there. That the
aforementioned circumstances reflect a fundamental non-compliance on the part
of the selling beneficiary, because it presents documents that refer to the dispatch
of goods other than those provided for in the contract or that the dispatch is made
untimely, in which case non-payment entails, Contrary to the previous
hypothesis, a breach by the seller and it is the buyer-orderer who has the actions
derived from the contract to demand resolution or compliance, in both cases, with
compensation for damages.
But it can also happen, and this is the problem that seems most complex to us,
that the seller-beneficiary fulfills all his underlying obligations as soon as he
dispatches the merchandise, the qualities and conditions required by the credit,
etc., but that he does not, uses the credit on time and, as a consequence, payment
does not occur due to an event attributable to him, but which does not properly
entail a breach of his fundamental obligation.
Here it is also necessary to distinguish because non-timely use can cause damage
to the buyer, since upon receiving the documents late he finds that the
merchandise has suffered damage or deterioration or its use no longer has an
economic interest, as would happen if it is waited for a fair. or exhibition and
cannot be withdrawn in time, since the use of the credit and the presentation of
the documents were untimely. However, it may happen that this is not the case
and that even if some damage is caused by the delay, the buyer finally receives
his goods, in a condition to be able to use them for their economic purpose. In
this case, a categorical answer cannot be given because the legal problem has to
be posed in relation to the legislative provisions of each country on the effects of
the extinction of the action derived from the documentary credit with respect to
the action derived from the fundamental legal transaction.
But if there is no particular provision in another sense, it is clear that if the seller
finally fulfilled the obligation to deliver and the good enters the buyer's assets, so
that he obtains the expected economic benefit, he will be responsible for paying
the price. , with the only difference that it corresponds to the real damages that he
could have suffered due to the delay, which will be as much as saying that he in
fact opted for compliance and that he is claiming damages.
Something similar can happen in matters of securities, when in the sale and
purchase a person issues a check and the beneficiary, through his fault, does not
present it within the legal terms, in which case he may be sanctioned with the
expiration of his action or when, Having presented it without finding funds, it
does not exercise the exchange action in time, and it expires. In these cases, the
legislation contains diverse solutions; Some consecrate the extinction of the
causal action as a consequence of the extinction of the exchange rate, others
consider that it is possible to exercise, in any case, the causal action, as a feature
of independence between the two actions.
Add to the above that the credit has been used untimely, if the buyer receives the
goods shipped and profits from them, the possibility of exercising an action
through ordinary channels against the buyer must be granted in favor of the
seller-beneficiary. and for payment, since otherwise unjust enrichment would
occur in favor of the latter.
2.8.2. Relations between the issuing bank and its correspondents
The issuing bank can use correspondents for several purposes: the simplest, to
notify the beneficiary of the opening of the credit; a little more complex, in
charge of making the payment, accepting the bills or negotiating at the right time;
and, finally, as a last resort, ask for confirmation so that it is directly obligated to
the beneficiary. Both in the case of the paying bank and the one that has also
confirmed the credit, it can be stated that there is a relationship of mandate
between the issuer and its correspondent, where the former is the principal and
the latter is the agent who acts in the name and on behalf of the bank. of the first
and, consequently, binds it with its actions, with the only difference that, in the
case of confirmation and by virtue of a conduct that is added or superimposed on
the normal one that corresponds to the agent, the correspondent bank assumes a
autonomous and direct obligation, in addition to that arising for the issuing bank.
In the case of the bank that limits itself to warning, the doctrine qualifies its
intervention as that of a simple nuncio who exercises "subordinate collaboration
or assistance without any power of disposition in the business."21
A complex situation arises when the confirming bank has proceeded to pay the
letter to the beneficiary and the issuing bank has insurmountable difficulties in
honoring its commitment, such as when it has the provision of funds to
reimburse, but, before it can do so, enters in a situation of insolvency. Can the
confirmer request the exclusion from the issuer's liquidation estate of the monies
received by the issuer from the payer? Because, although it is accepted that the
relationship between the issuer and its correspondent responds to the general
principles of the mandate, it cannot be forgotten that the confirmer acquires a
direct and proper obligation towards the beneficiary. Consequently, the
beneficiary can turn against one or the other, or against both, and the confirming
bank that cannot refuse to pay the letter on the pretext that the issuer has not
fulfilled its obligation or will not be able to do so, will have a personal credit
against the issuer in its liquidation, without being able to pursue the payer
directly or demand treatment as a creditor excluded from the estate. It is precisely
this structure that provides security to the international payment scheme through
letters of credit.22
If the issuing bank cannot, in the event of the insolvency of the payer, invoke this
as an excuse to stop reimbursing the confirming bank,23 the latter may not take
action against the issuer or the payer, as it sees fit. Ultimately, it is about the
assumption of risks in the chain of participants, by the person who has the closest
relationship with the insolvent person,24 as corresponds to the autonomy of the
relationships established by the RUU, with the exception of that, under the theory
of passive cumulative delegation that we find very attractive to explain the
relationships between the payer, the issuer and the confirmer, and provided that
local legislation is applicable, a different interpretation could be reached that
would allow us to maintain that the collection made by the issuer of its client,
would correspond to a management in the interest of the confirmer-payer. In that
event, the thesis of the exclusion of assets from the estate, such as resources
collected on behalf of third parties, could be supported.25
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1. According to the list of adherents as of January 15, 2002 (URL:
http://www.iccwbo.org), banks from all Latin American countries appeared, with
the exception of Honduras and El Salvador. In Brazil, Chile, the Dominican
Republic, Panama and Uruguay, adherence is collective. In Argentina, Bolivia,
Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Nicaragua, Paraguay, Peru
and Venezuela, adhesions are individual.
2. CANCINO, Fernando. "Technical and Legal Elements of Documentary
Credit." Ed. Superintendence. Bogotá, 1968, p. 6.
3. Colombia, arts. 30, 50, 60, 70 and 80, C. Co,
4. Honduras, arts. 898 et seq. c. Co.; Mexico, art. 71/LlC and 317 and ss.
LGTOC; Colom. bia, arts. 1408 et seq. c. Co. CE 007/96. Banking
Superintendence. T. 11, Chap. First, 6; El Salvador, arts. 1125 et seq. c. Co.;
Guatemala, art. 758 et seq. c. Co; Bolivia, art. 1394 C. Co, We have used the
official translation of brochure 500, made by the Spanish Committee of the
Chamber of International Trade (CCI) for references to RUU
5.V. Chap. 11, 3.
6. OLARRA, Rafael. "Documentary Credit Manual". Ed. Abeledo-Perrot,
Buenos Aires, 1966, pp. 18 and 19.
7. Mexico brings a provision that obliges the payer to "make a provision of funds
to the institution that assumes the payment, well in advance", art. 71/LIC. This
does not mean, in our opinion, that the parties cannot agree otherwise but, above
all, it would be an obligation to comply before the payment date but not an
essential requirement for the conclusion of the contract. Furthermore, the same
article adds that "failure to comply with this obligation will not prejudice the
rights of the beneficiary in the case of irrevocable credit."
8. Since the previous version, the modality of "stand-by letters of credit" was
established, which, in our opinion, as we have said since then, is fundamentally
related to the causal relationship. v. infra., Chap. XII, 6.3.8.
9.V. infra, Chap. XII, 5.3.6.3.
10. "The Beneficiary may not, in any case, make use of the existing contractual
relationships between the banks or between the Originator and the Issuing Bank."
RUU, 3,b.
11. RUU art. 7.
12. RUU art. 10, b.
13. OLARRA, op. cit., pp. 27 and 28.
Consult on this subject the book "Documentary Credit in Latin America",
published by 14. FELABAN, Ed. Kelly, Bogotá, 1970 and specifically the
studies included there by Raúl Guillermo STOCKER, pp. 10 And ff. And Julio
César NOACCO, pp. 29 And ff. GOODE, Roy. Op. cyl. p. 1006.- In European
Asian Bank AG v Punjab and Sind Ban~ ~No 2) [1983] 1 WLR 642, [1983] 1
Lloyd's Rep 611 it was held that the bank that negotiated the letter without
authorization had no right of reimbursement before the issuer's refusal when
beneficiary fraud was discovered.
15. Art. 10, b.
16. Precisely in the Uniform Rules and Practices, the current article 19 seeks to
overcome the difficulties and delays created by the frequent requests of the bank
designated in this regard to confirm satisfactory attention to the credit. Therefore,
the obligation is established to reimburse at the simple demand of the payer;
without the need for the issuing bank to certify that the credit was duly attended
to, and under its responsibility for the amount of interest if the reimbursement
does not occur at the first request of the paying, accepting or negotiating bank.
17. OLARRA, op.., c}t.,pp. 27 and 28.
18. v. Supra, note 328.
19. Soproma SpA v Marine and Animal By-Products Corp. [1966] 1 Lloyd's rep
367, Ficom SA v Sociedad Cadex Ltda. [1980] 2 Lloyd's Rep 118. A brief
description of the cases can be found in JACK, Raymond et al. Document:
Credits. 3'd edition. Ed. Buttersworth. London, 2001. p. 43.
20. Glencore Grain Rotterdam BV v Lebanese Organization lor International
Commercl [1997J 1 Lloyd's Rp 386.
22. Bank of Baroda v. Vyssya Bank Ud [1994] 2 Lloyd's Rep 87. GOODE, op.
cit., p. 989.
23. RUU, art. 19, cd They impose, for example, the obligation on the issuing
bank to pay interest to the confirmer if the refunding bank does not pay
immediately.
24. In comparative law, non-payment by the confirmer of a letter has been
admitted, in absolutely exceptional circumstances, in the proposed hypothesis.
Thus, for example, on one occasion when the issuer was an Iranian bank, the
American courts exempted the American confirming bank from payment of the
letter, when the fall of the Shah of Iran occurred, the seizure of power by
Ayatollah Khomeini and the severing of diplomatic and commercial relations
between the United States and Iran, on the grounds that it would be impossible
for the confirmer to obtain reimbursement from the issuing bank. Obviously this
is a decision with a high political content, since, at first hand, it would be
contrary to the law and to the fundamental function of the confirmer whose
intervention stands out, precisely, among other reasons, because in this way the
political risks that affect the to the country of the issuing bank.
25. Colombian civil legislation regarding mandates would allow for a different
solution, if applicable analogically, with preference to the principle of autonomy
of the RUU, which we mention for its obvious academic interest. Indeed, article
2163 of the Civil Code states: "When the delegation to a certain person has been
expressly authorized by the principal, a new mandate is constituted between the
principal and the delegate that can only be revoked by the principal, and is not
extinguished. due to the death or other accident that occurs to the previous
president". This solution, which seems to be more legal, has not been accepted by
the RUU-500. The complexity of the operation would allow us to think about the
existence of a mandate between the originator of the letter and the issuer and a
stipulation in favor of a third party (the beneficiary) by virtue of which the bank
is obliged to pay him upon presentation of the documents. . As the base contract
would be a mandate, the issuer, the agent, could delegate to the correspondent
and both would be obligated to the ordering party, on the one hand, and to the
beneficiary by accepting in time, presenting the documents, the stipulation in
their favor. Applying the principle contained in the transcribed Colombian
provision, the conclusion would be reached that the payment made by the
confirming bank would be on behalf of the originator of the letter, and the
resources collected by the issuer for reimbursement to the agent would be on
behalf of the correspondent bank..
3. LEGAL NATURE
Some authors complain, and they are right, about the scarce discussions in
contemporary doctrine on the legal nature of institutions, as a result of the
pragmatic orientation that is usually given to investigative works.26
Unfortunately and given the orientation of the work, such is our case. To which is
added the circumstance that the topic has been extensively and completely
presented by distinguished authors, with respect to whom we limit ourselves to
taking the most outstanding notes of their presentations, in order to affirm a
series of characteristics typical of the legal nature. of the contract.27
Note, on the other hand, that when talking about documented credit, as a banking
contract, we must emphasize the relationship between the ordering client and his
bank.
3.1. MANDATE THEORY
Some authors have argued that the various consequences derived from this
contract, including those that affect the relationship between the payer and the
issuer, can be explained through the execution of a mandate contract, where the
bank would receive the order to proceed to pay. a sum of money in favor of a
third party through compliance with certain requirements and with the provision
received from the client, in the event that the resources have been delivered to
him or with the obligation of the orderer to reimburse them later, as the principal
must do
when the agent has had to incur expenses to fulfill the order. 11
Although it is admitted that in some relationships arising from the contract the
obligations and rights of the parties can be explained as the development of a
mandate contract, it is also observed that it alone is not sufficient to explain the
totality of the relationships or the integrated set that they originate. Two main
criticisms are leveled at mandate theory. First of all, the mandate is naturally
revocable and the documentary credit, at least in its most used form, is not. And
then, this theory does not explain the relationships between the bank, who would
be the agent, and the beneficiary, since in the mandate with representation, the
obligations are always placed on the head of the principal and not the agent, as
would happen in this contract, in which the bank is directly obliged to the client.
It could be thought, then, that it is a commission, a form of commercial mandate,
where the commission agent acts on behalf of his principal, but in his own name,
so that he is obligated to the beneficiary directly and only subsequently transfers
the rights that arise. of his actions to the client. Although it could overcome some
inconveniences, it does not, however, explain the true intervention of the issuer
because, although he is directly obligated, he acts in the name and representation
of his client and as a consequence his actions also bind him.
3.2. THEORY OF ASSIGNMENT OF CREDIT
It has also been stated that the contract is explained by an assignment of credit
made by the ordering party in favor of the beneficiary. In other words, it is
assumed that the conclusion of the contract generates a credit right in favor of the
ordering party and allows him to immediately assign it to the beneficiary so that,
as assignee
of the same, demand payment from the issuing bank. .
There are numerous criticisms of this theory. In the assignment, the debtor is
obliged to the assignee by virtue of the notification given to him, while in the
documentary credit the obligation of the bank, the assigned debtor, arises by his
simple expression of will, without the intended party appearing anywhere.
assignor. On the other hand, the assigned debtor can propose to the assignee any
exceptions that it may have against the assignor, without the bank being able to
propose any exception to the beneficiary based on its relations with the ordering
party in the contract we are studying. Let us say, finally, that in the assignment
the assignor is not responsible, in principle, for the solvency of the assigned
debtor, while in the documentary credit the originator remains linked to the
satisfaction of the obligation, until it has been effectively discharged by payment
to the beneficiary.
3.3.
THEORY OF STIPULATION IN FAVOR OF A THIRD PARTY
This theory fits much better with the previous complaints to the negotiating
structure of the credit opening contract, since, in this as in that, the agreement of
two parties arises obligations for one of them in favor of a third party, the
beneficiary, in our case. case. There is a first difference in that the stipulation in
favor of the third party is perfected by the acceptance of the beneficiary while the
documentary credit is perfect by the sole fact of the sending of the corresponding
letter by the issuer. 28 We do not believe, however, that the difference lies there
since it can be assumed that the beneficiary's acceptance is given in advance, by
agreeing and accepting that payment is made by opening the corresponding
documentary credit. Where a clear difference does arise is in the circumstance
that the bank is not obliged to the third party as a consequence of its agreement
with the ordering party, but rather the sending of the letter of credit is necessary
so that, as a consequence of its manifestation, it is linked to the third party. But,
in addition, the bank cannot raise against the beneficiary, as we said in the
previous point, the exceptions that could arise from the non-compliance of the
payer's commitments, but rather remains irrevocably and definitively linked to
the beneficiary, whatever the behavior. adopted by his client.
3.4.
THEORY OF IMPERFECT OR CUMULATIVE PASSIVE DELEGATION
Delegation can be defined as substitution or aggregation of creditors, active, or of
debtors, passive, which is what interests us in the study of this point. In this case,
a tripartite relationship is conceived where the debtor (delegator, ordering party)
appoints a third party (delegate, bank) to make the payment to his creditor
(delegator, beneficiary). The delegation, binding between delegator and delegate,
can be perfect or novice, when by virtue of its acceptance by the creditor, a
novation occurs that extinguishes the obligation of the delegator (original debtor)
to be replaced by that of the delegate (his substitute in the debt) or imperfect,
when the delegator and delegate are obligated to the delegator with the same
practical effects predicable of the hypothesis of passive solidarity, so that the
creditor can direct his choice against one or the other. That is why we speak of
passive cumulative delegation to express that there is an aggregation or
concurrence of debtors (delegator and delegate).
This theory constitutes one of the most widespread and one of those that best and
most logically explains the documentary credit contract. Apparently the most
severe criticism that has been formulated is that the obligation of the delegate is
only irrevocable when it has been accepted by the delegate, while in the letter of
credit this arises for the bank from the simple issuance of the title. . However, as
we said in the previous point, nothing prevents the acceptance as a form of tacit
acceptance by the beneficiary of the same circumstance of enshrining in the
fundamental contract the possibility of his debt being paid through the opening of
credit and that it can even be said that there is a prior acceptance. "Although the
banker does not know or may not know the terms of the purchase and sale
contract, the order made by the buyer presupposes that an agreement has been
made between buyer and seller to obtain documented credit, an assumption that
is later confirmed by the silence that the beneficiary keeps when receiving the
letter of credit, and for the other acts he performs. The declaration or expression
of will does not necessarily require its communication, and it is sufficient for it to
be externalized, generally." 29 Whatever position is finally adopted, it cannot be
denied that it is one of the most suggestive theories on such a complex issue.
3.5.
TITLE VALUE THEORY
In recent comparative law studies on documentary credit, the thesis has been
supported that, ultimately, it is a formal and abstract business that, like all of its
kind, facilitates the circulation of goods and services, showing great similarities
with the economic function of money, as happens, in general, with securities with
credit content. In this order of ideas, before continuing the analytical effort to
frame documentary credit within the general theory and the various modalities of
contracts, it would be more convenient to study it within the peculiar principles
that govern securities. Thus it could be defined as "a formal and certain promise
that contains an abstract obligation to accept a bill of exchange or a draft as soon
as its terms have been literally fulfilled." 30
The interesting contribution that results from the presentation of this theory
cannot be ignored, which furthermore recognizes deep concerns of the doctrine
about whether or not the letter of credit is a security. Although it does not seem
evident that this document meets all the requirements demanded by the doctrine,
to have it as such, at least in the current state of things, it cannot but be admitted
that an express legislative consecration in this sense could provide a whole set of
answers to the questions about the relationships of the parties, where the client
would be the giver of an exchange order in charge of the accepting issuing bank,
who would be obligated autonomously and abstractly towards the beneficiary,
being able to bind in the process to other parties as its guarantors, as in the case
of the confirming bank or sending the title for presentation through a
correspondent who, as a simple adviser, would not be exchange-relatedly linked
to the title.
3.6. COMPLEX LEGAL BUSINESS THEORY
Close in popularity to the theory of cumulative-passive delegation, it maintains

the impossibility of framing the documentary credit contract within any of the
aforementioned forms and considers, instead, that it is a complex legal
transaction, that is, a business in which several different contracts are presented,
if considered individually, but linked together by an identical economic purpose.
In other words, as the most enthusiastic defenders maintain, it is a succession of
contracts or moments of the process in which the different stages show different
obligations borne by the parties, depending on whether they participate directly
or indirectly in each of them. as incidentally related third parties. There seems to
be no discussion about the existence of an independent contract between buyer
and seller, if the fundamental legal transaction is a sale. There is debate,
however, about the relationship between the originator and the issuing bank,
because while for some it is a commission, for others, among whom we count
ourselves, in most cases there is an opening of credit with the sole exception that
a fund had been pre-constituted or available resources had been placed before the
contract itself was concluded, which does not seem to correspond to the practice
or the needs of the business. For the former, in the next stage the relations
between issuer and beneficiary and in general between the three parties would be
explained by a passive cumulative delegation in the terms that we already
studied, while for the latter the link between the issuer and the beneficiary would
be nothing. distinct from the direct consequence or compliance by the bank of the
fundamental obligation that arises from the execution of the credit opening
contract AND
As can be seen, the problem of the legal nature of documented credit is one of the
most complex without there being a definitive doctrinal position, since, as we
saw, the most defined positions distribute their sympathies between the theory of
cumulative delegation. passive and that of the complex legal business.
To the extent that the primary relationship from the point of view of banking
contracts, that is, the existence between the credit establishment and its client, is
explained by the existence of an opening of credit, we will have to affirm that the
legal characters are those of that contract and that, consequently...the
documentary credit is a main, onerous and commutative contract, of successive
execution (insofar as the obligations arising under the bank's responsibility may
not be satisfied at a single moment but rather projected over time ); bilateral,
because, as we will see, the economic consideration that arises for the payer is
the payment of a commission where the similarity can be verified even from the
technical point of view with the opening of credit. Finally, it is a consensual
contract, which is perfected by the simple agreement between the parties, without
requiring any delivery as in the case of real property or subjecting itself to special
solemnities.32
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26. KOZOLCHYK, op, cit., p. 695.
27. The problem of the legal nature of documentary credit can be consulted with
advantage, among others, in LABANCA-NOACCO-VERA BARROS, "El
Crédito Documentario". Ed. Depalma, Buenos Aires, 1965, pp. 357 And ss.;
CANCINO, op. cit., pp. 118 And ss.; OLARRA, op. cit., pp. 232 And ss AND
KOZOLCHYK, op, cit., p. 695.
28. OLARRA, op. cyl. p. 233.
29. LABANCA-NOACCO-VERA BARROS, op. cit., p. 383. Also consult, in
previous and subsequent pages, a very interesting and complete defense of the
theory of Passive Cumulative Delegation.
30. KOZOLCHYK, op. cit., p. 728. See neighboring pages for the novel
presentation of the theory.
31. In our opinion, both in Mexico (ar!. 317 et seq. LGTOC) as in Honduras
(arts. 898 et seq.) documented credit is disciplined within the general principles
of credit opening. Likewise, in El Salvador (ar!. 1125 et seq.). In Anglo-Saxon
law, the peculiar and sui..generis character of documentary credit has been
recognized. v. gr. Supreme Court of Canada. Bank 01 Nava Scotia v. Angelica
Whitewear Lid [1987] 1 SCR 59 82.3. United States Court of Appeals for the
Second District. Alaska Testile Co v. Chase Manhattan Bank 982 F 2d 813
(1992).
32. Mexico establishes that the confirmed credit must be in writing (art. 317
LGTOC).
5. THE LETTER OF CREDIT
5.1. TYPICAL DOCUMENT
The letter of credit is the peculiar document born from the execution of the
documentary credit contract that reflects the terms and conditions derived from it.
33 Of course, it corresponds to the instructions of the payer that are supposed to
reflect his obligations derived from the fundamental relationship that binds him
to the beneficiary. It should not be confused, as we already warned, with the so-
called credit order letter, which we study as a form of signature credit. 34
5.2. CHARACTERISTICS
It has been discussed by some authors and even proposed as an interesting

solution to explain the legal nature of the contract that the letter of credit
constitutes a security. We do not believe so, but it is not unnecessary to make
some comparison between the principles accepted as characteristic of securities
and the way in which they could be applied to the letter of credit. They are
incorporation, literality, legitimation and autonomy.
The first holds that the issuance of the document resulting from a prior
fundamental relationship incorporates the right to which it refers, so that from
that moment on the right unrelated to the causal relationship is identified with the
title and this with the right without that neither of the two can subsist separately.
Which in other words means that the document is not simply proof of the
existence of a right but is a commercial asset, a right in itself considered and
necessary, therefore, for the exercise of the rights derived from it, which does not
they are conceived without the physical display and possession of the instrument.
This does not happen with the letter of credit, since its loss can be replaced
without major difficulties. On the other hand, nothing would prevent it from
being paid, at a given time, based on a copy existing in the hands of the bank,
without displaying the copy or the original intended for the beneficiary and
simply by complying with the requirements derived from it. letter. Which would
translate into a valid payment, enforceable even against third parties, a
consequence that does not occur in the case of securities where the payment
implies the exhibition and delivery of the document since, otherwise, any
legitimate holder thereof could exercise rights without being able to propose as
an exception the payment of the debt to a different person.
Regarding literality, this consists of the extension, content and modalities of the
parties' obligations arising from the literal expression of the respective
documents. Which within a modern formalism is aimed at facilitating the rapid
and safe circulation of wealth, since the interested parties know with certainty the
content and scope of the obligations and rights arising from the contract and
cannot be surprised with the presentation of exceptions that do not result, in
principle, from the literal wording of the instrument. This principle is lessened in
the so-called causal titles in which a reference is made to the relationship that
gave rise to the issuance of the title, as can happen in the case of the share issued
by a company, where the rights for the shareholder do not They are exclusively
those referred to in the title, but rather those consecrated by law, which, in
general, are numerous. We can affirm that, in principle, the letters of credit are
"literal" and that the most severe formalism is applied, requiring the paying bank
to have absolute conformity between the requirements that the beneficiary
intends to meet and those that are contained in the letter. as a condition so that
you can validly proceed to pay.
Autonomy says more than with the independence between the document and its
cause, with that of each of the relationships that arise in the process of creation
and circulation of a title with respect to the others. Applying this principle to the
case of the letter of credit we could say that it is valid in that, as we have already
stated, the relationships between buyer and seller generate consequences that are
not opposable to the relationships between paying bank and beneficiary. In turn,
the relations between the ordering party and the issuing bank are independent and
the latter could not be relieved of paying to the beneficiary due to the presence of
facts or circumstances linked to the purchase and sale contract entered into
between the ordering party and the beneficiary. We can, therefore, affirm that
each relationship between the parties binds them exclusively and that the others
are third parties with respect to it, so that they are not directly affected by its
results.
Legitimation means the legal power that the owner has to freely use or dispose of
a right that corresponds to him and in matters of securities it translates into the
possibility of exercising it directly or transferring it. The transfer of the right is
linked to the law of circulation of the title so that if it is a bearer title it is
perfected by simple delivery, if it is a title to order by endorsement and delivery
and if it is a nominative title by endorsement, delivery and registration in the
books of the issuing company. Transfer that implies a whole series of advantages,
from a legal point of view, compared to the traditional figure of assignment. We
will see how technically there is a difference between the transfer of a
documentary credit, which is rather a transfer of the obligation or, if you will, of
the contractual position, and the transfer of the right arising from a documentary
credit that, as All economic rights are assignable if there is no specific legal
restriction.
Thus, we can maintain that the letter of credit is not negotiable in the terms of
securities that enjoy agile and specific channels to transfer the rights as we have
seen, but that the right derived from the letter is assignable, with the fundamental
consequence of having to notify the transfer to the debtor, issuing bank or payer
of the letter. This, in turn, can propose to the assignee all the exceptions that it
had against the original beneficiary of the credit; This difference marks a sharp
contrast with the privileged position of the indorser where, as we have seen, it is
not up to the debtor to propose any exceptions that he may have against the
indorser.
Another difference with securities lies in the fact that in these the order or
promise to pay a certain sum of money has to be unconditional, while the bank's
obligation depends on the beneficiary presenting the documents and meeting the
requirements of the credit. If this does not happen, if the condition is not fulfilled,
your obligation is extinguished.
Despite the distinctions noted, since in the face of the essential requirements of
securities it cannot be stated that the letter of credit is one, it seems essential to
explore the possibilities of classifying it as such, for which its consideration as a
nominative title would contribute to saving Some differences, therefore, in these,
some of the principles discussed, are presented in an attenuated form, that is, they
are moderated in their scope with respect to what happens with titles issued to
order or to the bearer. Think of a nominative action whose rights can be
exercised without the need for presentation, since the registration of the name of
the holder in the company's records replaces, in practice, the need for
presentation. Regarding negotiability, there would be no difficulty for the law or
custom, if admitted in this matter, to allow the letter of credit to be created to
order, being then transferable by endorsement. Conditionality, finally, presents
some solution principle taken from known types of securities.
The holder of a pledge bond, for example, has the right to demand payment of a
sum of money after the auction of the property to which it refers, but, on
condition that the main obligation is not fulfilled. The beneficiary of a
documented bill who did not obtain its acceptance or payment due to having
refused to deliver the documents, could not turn against the drawer through
exchange, since his payment order, for whose non-compliance he undertakes to
respond to the beneficiary, It is conditional on the latter delivering the respective
documents to the drawee.
5.3. CONTENT
Below we will see the clauses or mentions that are ordinarily included in the
letter of credit and that are a logical consequence of the execution of the
documentary credit contract. Of course, numerous additional modalities may be
included in practice.
5.3.1. Name of the banks and the payer or payer
The first mention that appears in a letter of credit is the one that relates the names
of the contracting parties, bank and ordering party, accompanied by other
indicatives such as country, address of the credit institution, telex, etc. The
mention of the bank includes both that of the issuer and that of its branch or
correspondent, if any, in charge of fulfilling some function within the credit
mechanics. Likewise, the bank authorized to make the payment, or to accept the
bills or to negotiate, must be indicated, unless, in the latter case, anyone is
authorized to do so.
5.3.2. Beneficiary name

Indication of who has the right to demand payment or negotiation, which is
frequently accompanied by their address, so that they can be notified of the
opening of the credit.
5.3.3. Object of the credit
This, which we could also call the object of the fundamental contract, is the
delivery of certain goods whose mention must be made in the credit in order to
verify, against the invoices, compliance with said obligation. If it is a contract
other than a sale, such as the provision of services whose price is to be paid
through the opening of the letter of credit, there will be no place for mentioning a
specific object, but rather the invoice must refer to to the satisfaction, for
example, of such a benefit or it will be enough to present a simple payment
request accompanied, perhaps, by a draft against the bank. But as soon as the
credit touches a sales contract, it will be necessary to make a clear description of
the goods, so that no doubt is raised; mention that has a particular importance to
determine compliance with the beneficiary's obligations. We will see, in the next
point, how there are some regulations regarding the quantities, provided for by
the RUU, to create certain conditions of flexibility.
5.3.4. Amount that must be delivered or for which securities must be negotiated
to the beneficiary
The determination of the amount of the credit is a direct function, first of all, of
the value of the merchandise being purchased, to which other considerations
must be added depending on the modality in question, as we will see a little later.
In any case, leaving aside other components such as insurance, freight, unloading
costs, etc., the credit amount corresponds, essentially, to the price of the
purchased goods. Of course, these are factors beyond the control of the bank
since it is enough for it to verify compliance with the requirements stated in the
credit and take into account the amount for which it must pay, without the direct
relationship with the determination of the price, since the point of view of the
fundamental contract, affects it, in principle. And we say that in principle, some
provisions of the RUU can cause some confusion.
5.3.4.1. Rules on quantity and price
We refer by quantity to the volume of merchandise that must be shipped and to

which the invoices must refer and by price to the amount of the credit, in relation
to the provisions contained in the credit. Article 39 of the current codification of
the R. OR. OR. contemplates, in our opinion, three perfectly defined hypotheses,
which can be schematized as follows:
a) Precise quantity
It is expressly established in the credit that it must be one amount and not
another, that is, that it must not be "exceeded or decreased." The conclusion is
unequivocal: only documents that refer to the dispatch of that precise amount can
be accepted as regular.
b) Quantity without qualification
An amount is indicated, without express restriction as in the previous case.

Therefore, without qualifications, a certain quantity is indicated, for example, a
thousand tons of wheat. In this hypothesis, a tolerance of 5% more or less is
allowed: it is possible to ship 950 or 1050 tons of the respective product, being in
both cases within the terms of the letter of credit. This hypothesis does not apply
when the quantity is specified in packaging units or individual items, 30
motorcycles, for example, since in these cases the rule indicated in the previous
ordinal is applied, that is, the rule of the exact quantity. That is, the realization of
the hypothesis implies the concurrence of two requirements regarding the
quantity: no explicit requirement for a specific quantity and its expression in a
generic or global form.
But, in exchange for what happens with the quantity, whose fluctuation is
conceived in both directions, the price can theoretically decrease, but in no case
increase in relation to that anticipated by the credit. For example, if the credit
provides for the shipment of 1,000 tons of wheat for $10,000 and the invoice
refers to the shipment of 950 tons, the invoiced price could apparently be
acceptable, although it has been reduced proportionally ($9,500) since maintain
that provided for by the credit. On the other hand, if the shipment is made for
1,050 tons, the price will only be acceptable if it is not higher than $10,000. This
conclusion is inequitable, in our opinion, and results from the fact that in ordinal
b) of the aforementioned article the tolerance of 5% is established more or less
"as long as the amount of the uses does not exceed the amount of the Credit."
Strictly speaking, the solution should be that if a fluctuation of 5% more or less is
allowed in shipments, it corresponds to an automatic decrease or increase in the
same percentage of the total value of the credit, if it was expressed in global or if
it results from the indication, for example, of a certain price per ton, in which
case it is a simple arithmetic operation.
c) Quantity or price
If expressions such as "around", "approximately" or similar are used, a difference

of up to 10%, more or less, "on the amount, quantity or unit price to which they
refer" is allowed.
5.3.4.2. Payment Opportunity
The timing of payment depends on whether the credit has been opened at sight or
at pl o. In the first case, it must be paid immediately, upon regular presentation of
the documents, that is, in accordance with the terms of the credit. In the second
case, it must be paid upon expiration of the term, counted from the presentation
of the documents or another date or circumstance such as the date of the invoice.
- The existence of a term can lead to the bank's debt being instrumented in a
security, accepting a bill of exchange, so that the beneficiary has a certain title
against the bank to which he has delivered the documents and can mobilize his
credit through discounting the bill or obtaining an advance on it. The term for
payment should not be confused with the terms for the use of credit and for
dispatch of the merchandise, which we will discuss shortly.35
5.3.5. Deadline for credit utilization
This is the term of the credit itself, during which the documents must be
presented.
5.3.5.1. Determination of expiration
In light of what is provided for by the current RUU codification Both revocable
and irrevocable credits must have an expiration date, so that the parties know
with certainty the opportunity for the beneficiary to exercise his right and comply
with his obligations.36 When the expiration date falls on a holiday, it will be
extended. the term until the first following business day.37
5.3.5.2. Difference with the deadline for boarding
In addition to the existence of a validity period for the credit, there may be a
period indicated for the dispatch or shipment of the merchandise, which, of
course, will be prior to the expiration of the credit. Naturally, the deadlines may
coincide because it is expressly stated or because nothing has been foreseen on
the matter.
It is usual, however, to set a deadline for the shipment of goods whose expiration
date is prior to the credit deadline, so that the beneficiary has sufficient time to
obtain the documents derived from such circumstance and required by the letter
of credit and presented to the bank.
This advance presentation corresponds, moreover, to the requirement that there
be a period different from the previous ones, in this case aimed at the beneficiary
presenting the bill of lading or other shipping documents and which is counted
from the date of its issuance, which normally coincides with the date of dispatch
of the merchandise.38 In accordance with the provisions of article 43 of the
RUU, an express period must be agreed for this purpose, failing which the banks
will reject the documents that they receive. are presented after 21 have passed.
days from the date of shipment, which may not, of course, be later than the
expiration date of the credit. In this way the old problem of "stale" documents is
solved. We will return to this point when talking about the obligations of the
issuing bank, among which the rejection of documents in certain cases.39
Recapitulating, we have, from the above, four types of deadlines that can occur in
documentary credits: the expiration or validity of the credit; that of payment
when it is in installments, not at sight; the expedition or shipment of the
merchandise; and the presentation of the bill of lading or other transport
documents.
The RUU They enshrine some principles to clarify doubts related to the deadline
for boarding. It is established that expressions such as "soon", "immediately", "as
soon as possible", etc., should not be used, but if used, "banks will not take them
into account." In turn, expressions such as "in or around ("on or about")..." will
be taken as "a stipulation that the shipment must be carried out during the period
between the five days before and the five after the indicated date, including the
two limit days ". 40
5.3.6. Documents to be submitted

The opening of the credit made by the issuing bank in favor of the beneficiary
implies for the beneficiary the obligation to pay or negotiate documents up to a
certain Sl1, and for the latter the obligation to present the documents provided for
in the credit. The letter of n specify the documents against which payment,
acceptance or negotiation will be carried out and in case, contrary to what is
recommended by the RUU, vague expressions are used about the quality of the
documents such as "first class ", "well-known", "qualified", "independent",
"official", "competent", "local" or other similar, the bank will receive the
documents as they are presented, provided that they apparently comply with the
other conditions of the credit and have not been issued by the beneficiary.41
There is no predetermined list of documents that must be presented, but in

practice these result from the conjunction of several factors, such as the type of
international sale used and the logical need in the sale operation to have
documents representing the merchandise and prove the dispatch, as well as those
who prove its value. Of course, there are many others that result from the
modalities used in each country due to commercial practices or exchange
provisions or regulations that require compliance with certain sanitary conditions
for the entry into the country of certain raw materials, etc.42
5.3.6.1. International buying and selling
There are two aspects that we want to highlight in this section, firstly the
importance that the Vienna convention has in the development and conception of
international sales and then the prominent role played by the different modalities
that are recognized by the so-called Incoterms, whose Compilation and
publication have been carried out for years by the Paris International Chamber of
Commerce (ICC).
5.3.6.2. The Vienna Convention

After the efforts begun in 1930, which led to the Hague Conventions of 1964 and
given the poor reception they received, the United Nations Commission on
International Trade Law, Uncitral, promoted the development of a new project
that was adopted in Vienna in March 1980, as the United Nations Convention on
the International Sale of Goods, which has so far been ratified by sixty
countries.43
The Convention contains 101. articles in which it foresees the rights and
obligations of the seller and the buyer, the way in which the risks that exist on the
goods are transferred, the obligations imposed on the parties to preserve the
goods, the events of breach of contract and their consequences. Likewise, the
Convention refers to both the terms of the contract and the rules on its
formation.44
The main aspects it covers are the following:45
a) International Sales
The Convention applies to international sales, and to that extent its role is to be a
uniform standard for this type of contracts. Article 1(1) categorically provides
that it applies to sales contracts whose parties have their "establishments in
different places."
Consequently, the international nature of contracts is predicated on the parties

and not on the transfer of assets from one State to another. If the party has
establishments in different states, Article 10(b) provides that "its establishment
shall be that which bears the closest relationship to the contract and its
performance, taking into account the circumstances known or anticipated by the
parties at any time." moment before the conclusion of the contract or at the time
of its conclusion". If the party does not have an establishment, the place where
the party has its habitual residence will be taken as a reference (art. b).
From the above it follows that the nationality of the parties is not relevant
to determine whether the sale is of an international nature and to that extent if
two parties of the same nationality have their establishments in different States,
the Convention is validly applicable.
b) The Limitation of the Contracting State
It is not enough that the parties have their establishments in different States, but it
is necessary that the States where the parties are located are Contracting States,
that is, that they have ratified the Convention and that it has entered into force.
c) Goods
- The Convention is intended to be applicable to contracts for the sale of goods.
Although the term "property" is not defined in the Convention, there are a
number of exclusions that Article 2 establishes. These exclusions are Purchase
and Sale at auctions (art. 2b); Judicial sales
them (art. 2 C); Purchase and sale of furniture, securities or commercial

instruments and money (art. 2d); Purchase and sale of ships, boats, hovercraft
and aircraft (art. 2 e) and Sale of electricity (art. 21).
Article 3, paragraph 10, establishes that the Convention will not apply to those
contracts in which the supply of labor or provision of other services is
predominant among the obligations of one party.46
d) Sales
This Convention refers to "sale" contracts. In any case, there are some sales that
are expressly excluded from the scope of the Convention. As happens with the
Purchase and Sale at auctions (art. 2 b) And with judicial sales (art. 2 C).
Likewise, the Convention is only applicable to contracts in which goods are
exchanged with money and not for other goods.
e) Temporary application
Although the Convention was signed in 1980, it came into force in 1989. For this
reason, contracts made prior to its entry into force are not governed by the
Convention.
f) Exclusions by the parties
In accordance with Article 61, parties have the possibility to exclude the
Convention from their contract, either partially or totally.
g) Aspects not covered by the Convention
Despite the comprehensive nature of the Convention, in addition to the

exclusions already mentioned, there are a series of issues that are not regulated in
the Convention:
Validity: Article 4 provides that the Convention will not concern "a) the validity
of the contract or of any of its stipulations, nor of any use.
Sale to consumers: The Convention does not apply to the sale of goods for
personal, family or domestic use, unless at any time before the conclusion of the
contract no one had known that the goods had been acquired for such purpose.
The Convention excludes sales to consumers from the scope due to special rules
that exist to protect the consumer.
- Regarding the ownership of the goods: The contract for the sale of goods
includes both contractual elements (the agreement between the parties) and
ownership of the goods (the transfer of ownership from the seller to the buyer).
Article 4, paragraph b) provides that the Convention will not deal with "the
effects that the contract may produce on the ownership of the goods sold."
- Liability caused by the goods: Article 5 establishes that the Convention "shall
not apply to the seller's liability for death or bodily injury caused to a person by
the goods." To that extent, if the buyer is affected due to a defect in the goods,
the claim cannot allege the application of the Convention.
5.3.6.3. Incoterms
Due to the effects they have on the list of documents, we want to take into
account four modalities that imply the presentation of different documents or the
inclusion in them of certain certificates that qualify them. Of course, if it is a sale,
the primary factor included in the total value of the credit is the price of the
merchandise, so the different modalities imply that the value of these is included
in the quote given by the seller and, Therefore, the variants refer to cases in
which the amount of the credit not only covers the price of the goods but also
other costs inherent to international sales. The modalities that we consider
interesting to point out by way of illustration are those known as FAS, FOB,
CFR and CIF sales.47Let's see them below.
to)
FAS
In this case, the seller is obliged to present documents proving that the
merchandise was delivered free to the side of the ship at the agreed port of
loading. This means that the buyer must bear all costs and risks of loss or damage
to the merchandise from that moment on.
Starting with version 2000, the seller is obliged to clear the merchandise at
customs for export, unlike what was previously provided. We will see how, with
exceptions, one of which could consist of having agreed on the FAS sale, the
goods must be received in the holds of the respective ship.
b)
F.O.B.
In this case, the seller is obliged to place the free goods on board the vessel, at
the agreed port of shipment, so that from that moment on the risk and additional
costs are borne by the buyer.
c)
CFR
In this hypothesis, the seller's obligation increases because, in addition to the free
shipment of the goods, he assumes within the price the cost of freight or
transportation from the port of ship to the place of destination. The risk of loss or
damage to the merchandise is assumed by the buyer from the moment of
shipment. We will see how, even in cases in which the freight is borne by the
seller, the RUU They accept certain indications about additional expenses borne
by the buyer, which at some point could have been part of the generic concept of
freight.
d)
CIF
In this last case, within the process in which we have started from the simplest
modality to reach the most complex, the seller, in addition to the freight, assumes
the payment of the insurance, normally the minimum to cover the losses that by
loss or damage suffered by the buyer, since the risks are assumed by the latter
from the moment the shipment occurs.
In this way, as can be seen, not only does the modality determine the presentation
of new documents, as may be the case of the CIP sale where, in addition to the
documents on shipping and freight payment, the insurance documents must
appear, but that, as soon as it becomes more complex, new and precise records
must be required from the banks.
5.3.6.4.
Transport documents
The R. OR. OR. They enshrine some principles on the matter that we could
summarize as follows, after remembering that the last two versions recognize the
important evolution that the means of transport and, therefore, their contracting
modalities have had:
to)
Date
In principle, the date indicated on the document proving the shipment will be
taken as the date of shipment, noting that what in the version of brochure 400
appeared in article 50, has now been disaggregated into articles 23, 24, 25, 26 ,
27, 28 and 29 of booklet 500.
b) Freight
In cases where the freight must be paid in advance, the bank will accept as proof
of such payment any mention that indicates that this has been done, whether this
has been imposed by means of a seal or stamp superimposed on the respective
document. If, on the other hand, there is no clear indication but conditional
phrases or phrases that indicate a duty such as "freight to be paid in advance" or
other similar phrases, such mentions will not be considered by the banks as proof
of payment. If it is not incompatible with the terms of the credit or with the
documents presented, banks will accept expressions indicating that freight or
transportation costs are payable upon delivery. In this case, however, the
modality in question must be taken into account, above all, because if the paying
bank is faced with a modality of international sale in which the freight is borne
by the seller, it is clear that Documents that provide for freight payment upon
delivery would not be acceptable. And this is because the modality implies that
the conditions are met before the date of presentation of the documents in a way
that guarantees the buyer that he will not have to bear a cost or expense that,
precisely, was included in the billing presented by his seller.
However, the RUU have accepted that certain types of additional expenses to the
freight or transportation value itself, such as unloading costs or similar
operations, may be required as additional, even in cases in which a modality has
been provided in accordance with which the freight must be paid. by the seller.
This modification seems to be due to the tendency of transport companies to
reserve the collection of certain expenses whose predetermination is not always
possible, that is, their amount is only known at the time of carrying out, for
example, the unloading operation.48
c) "Clean" document
This is a qualification of the document that indicates that it does not have a
superadded clause or annotation indicating any defect in the condition of the
goods and/or packaging. In the event that the documents carry such reserve
clauses regarding the defective state of the goods or their packaging, the banks
are obliged to reject them, unless, of course, some tolerances have been provided
for in the credit.49
d) Bill of lading
The bill of lading or the bill of lading are the typical documents through which
the carrier records the conclusion of the respective contract, the parties involved
in it, the beneficiary, the goods received, their conditions, the payment of the
different costs according to the mode of transportation, etc. In other words, it is a
document representative of the merchandise, a value title that confers on its
holder, who has acquired it by fulfilling the requirements provided for in the
circulation law, the ownership of the things that are the object of the contract. It
is a title that finds its reason for being in the conclusion of the transport contract.
It can be issued in favor of a specific person, in nominative form, not within the
modern acceptance that this modality has in securities and which implies
registration in the books of the issuer, but in the sense that the beneficiary can
only negotiate it through transfer. It can also be issued to the order of a specific
person, either the charger or, what will be more usual, the beneficiary of the
credit or to the order of the charger, but endorsed in blank or to the order of the
beneficiary or the bank. Finally, it can be issued to the bearer. We will see, when
talking about the obligations of the payer, to what extent the modality used for
the issuance of the bill of lading can imply the existence of a guarantee in favor
of the bank.
The RUU have added the modalities regarding documents representative of the
goods or referring to them, to regulate the maritime bill of lading, the non-
negotiable maritime document, the bill of lading subject to a charter contract, the
intermodal transport document , to which we will return shortly, the air transport
document, the courier and postal receipts and the transport documents issued by
freight forwarders. When referring to transport documents in general and, of
course, to maritime bills of lading, they establish, first of all, which ones will not
be accepted by banks, unless they are expressly authorized by the credit. Among
them, he points out those subject to the conditions of a charter-party (charter
policy, generally issued by whoever hires a vessel for its exclusive use), and
those that cover transportation on sailboats. On the contrary, they indicate that
those issued by freight forwarders will be acceptable, unless they are expressly
rejected by the credit,5O the so-called bills of exchange or combined transport
documents, which cover several means of transport,51 including maritime
transportation, the bills called short form bills. of lading (abbreviated knowledge)
- whose analysis, however, the bank is not obliged to do - and those that refer to
the shipment of merchandise in the form of a cargo unit, such as those placed in
containers, wooden platforms or similar. 52
On the other hand, it is expected that banks will accept a transport document
indicating that the merchandise has been taken in charge or received for
shipment. As regards transfers, knowledge that provides for them will be
accepted, provided that the entire trip is covered by a single knowledge, unless
such possibility has been expressly excluded in the credit. Using the same
technique as in the previous case, it is anticipated that the simple circumstance
that printed clauses appear indicating that the transporter has the power to carry
out a transshipment will be acceptable even if the credit prohibits them. 53
e) Combined or multimodal transport document
It obeys the increasingly widespread custom of entering into a single contract

with a carrier so that he can pick up the merchandise at a certain location and
deliver it to the destination, although to achieve his purpose he must use different
forms of transportation, this That is, sea transport can be used to the destination
and then again by land, by truck, to the final delivery point. Once these
documents are admitted, it is established that, as soon as they are required, if the
form of the document is not specified, the banks will accept them as they are
presented to them. Possibility that in the event that a part of transport by sea is
removed makes the documents acceptable, even if it is not indicated that they are
on board a specific vessel, which is obvious, because there is the possibility that
when the documents are issued documents the goods are located kilometers away
from the seaport.54
f) Other shipping documents
The reception of any transport document such as a railway consignment note,

railway receipts, river bills, airmail receipts, etc., is generally established,
provided that they have apparently been issued by a carrier, indicate the dispatch
of the merchandise or its takeover, consist of the complete set of originals and
meet the other credit requirements. Although the structure of each standard is
significantly similar, version 500 independently regulates each of the hypotheses.
H.H
5.3.6.5.
Insurance documents
Insurance documents play a fundamental role in documentary credit, especially
with respect to the transportation of goods, since the risks inherent to this
contract, which may result in total or partial loss of the merchandise, must be
reasonably covered in order to guarantee the interests of the parties, according to
the type of international sales contract that has been used. We already saw, a little
further back, how there are cases in which the seller assumes the cost of
insurance within his quote and how, in other hypotheses, this cost is assumed
directly by the buyer. However, it is vital for both that the merchandise is duly
covered and likewise for the issuing bank, for reasons that we will see a little
later.
Regarding RUU insurance They contemplate the rules that we will see below.s6
a) The insurance documents must be expressly indicated in the credit and be
issued or signed by the insurance companies or their agents or the insurers
(underwriters). Consequently, notes issued by brokers are rejected, unless the
credit expressly authorizes otherwise.
b) In relation to the date, banks must reject those documents that contain a date
subsequent to the date of shipment or dispatch or the date received for that
purpose, in the case of combined transport, unless having a later date it is clearly
indicated. unequivocal in them that the coverage is effective, at least, from the
moment of boarding.
c) The amount of insurance must be expressly indicated in the credit and failing
that, the minimum insured value must be the CIF or CIP value of the
merchandise, as the case may be, plus ten percent or, failing that, one hundred
and ten. percent of the global amount of the use of the credit or the respective
commercial invoice, taking the highest of the two. 57
Let us advance from now on that, however, banks can reject invoices issued for
an amount greater than that allowed by the credit, which will lead to a valid
situation for the insurance, of accommodating this last price, but unacceptable, in
principle, for what it says with the commercial invoice.
d) Insurance documents must be constituted or expressed in the same currency as
the credit, unless otherwise stipulated.
e) Determination of risks. This is a point of particular interest, since the risks and
the type or type of insurance required must be expressly indicated. However, the
use of imprecise terms such as "usual risks" leads to banks accepting the
documents thus presented. Likewise, if there are no specific instructions,
insurance coverage will be accepted as presented. A similar solution is adopted
when generic expressions such as "insurance against all risks" are used, since
documents that indicate this will also be acceptable, although in reality not all
risks are effectively covered, a possibility regarding which the bank does not.
assumes no responsibility.58
All these provisions indicate the need to reflect on the conduct that issuing banks
must assume at the time of opening credit,--raeSIf nothing other than registering
the will of their clients corresponds to them, in principle. general provisions, as
we have seen, impose on issuing banks the obligation to discourage the inclusion
of excessive details to avoid confusion and, we would add, to point out clauses
that, conversely, due to their imprecision, may lead to the same result.
Furthermore, and this seems more serious to us, consider that legally - because
the merchandise constitutes a specific guarantee, or from the economic point of
view, since it is not in the interest of the bank that its debtor suffers disorders in
its assets that could make it impossible to pay - it seems appropriate that the
Banks carefully ensure that both the type of insurance required and the specific
risks that must be covered are clearly indicated, so that there is no doubt
regarding their content and scope. The vagueness that aggravates the situation of
the insured in the event of an accident due to inadequate coverage, for example,
will result in detriment to the issuing bank, either because it is a specific
guarantee in their favor, or because it implies a reduction in the assets of the
insured. his client who is, as we know, a general pledge of creditors.
5.3.6.6.
Commercial bills
Invoices are documents in which the nature, quality and conditions of the
merchandise are recorded; its price, the beneficiary of the same, the
manufacturing company, the name of the seller, etc. Unless it is the case of credit
transfer that we will see at the end of the chapter, invoices must be issued by the
seller, beneficiary of the letter of credit.
We will see below some norms enshrined in the Uniform Rules and Uses on this
matter. 59
to)
Expedition in the name of the ordering party
Unless the credit authorizes otherwise, invoices must be issued in the name of the
ordering party. However, since the representative document of the merchandise is
not this but the bill of lading or the bill of lading, it is there where it is interesting
to determine in the name or order of whom the respective document has been
issued.
b) Description of the goods
The description of the goods on the invoice must correspond exactly to that
appearing on the letter of credit. In this aspect, the RUU They specify that, in the
other documents, a description is possible in general terms, not incompatible with
the description given in the credit.
c) Invoices for higher value
Even though, as we said, the trend since the 1974 review. consisted, among other
things, of eliminating the discretionary powers for banks to the maximum, article
41 retains the possibility for banks to reject commercial invoices issued for an
amount greater than that tolerated by the credit. But, likewise, it is now
established that it can be received if it is limited to paying, accepting, negotiating,
etc., for a value that does not exceed the allowed amount.
5.3.6.7.
Other documents
Even though, even for those studied above, we made the observation that there
are no provisions that establish exhaustively which documents must be required
in the documentary credit, we will immediately mention some others frequently
used in international trade, for which it is not necessary. that the description of
the goods coincides exactly with that of the credit, but there is the possibility of a
description in similar terms that reasonably indicate identity with the description
given in the credit.6O
a) Consular invoices
They are those issued by a consul of the importer's country or, failing that, by
that of a friendly nation or a Chamber of Commerce, if internal legislation or
credit allows it. They may consist of the endorsement of the commercial invoice
by one of said officials, without the need to issue another document.
b) Weighing elements
In which the weights of the different packages or boxes containing the goods sent
are recorded. In this case, unless a separate and independent certificate is
required, the RUU authorize the acceptance of the weighing seal or other similar
declaration, placed by the carrier on the shipping document, in transport other
than sea transport.61
c) Certificates of origin
They are documents that, generally issued by a chamber of commerce, are

intended to prove that the merchandise has a specific origin and can be demanded
in the credit in an open manner, that is, the mention of the country from which
they come or as an instrument to verify that They come from a precise country,
required by the credit as a requirement for payment. These certificates are of
particular importance when there are agreements in force between two or more
countries, according to which products coming from one of them and destined for
any of the others, enjoy certain types of tax or customs advantages.
d) Quality certificates
They are documents that are issued by a certain authority designated in the credit
or competent in the respective country and tend to verify that the merchandise
meets certain quality standards, considered as minimum in the credit or in the
current use of the merchandise or raw materials of that is treated.
e) Packing lists
They refer to the discrimination of the content of the different packages or

packages that make up the entire shipment and allow verifying the complete
completion of the dispatch and its agreement with the order, and even facilitate in
practice the use of one or other packages, to certain commercial purposes that
concern the importer.
f) Phytosanitary certificates
They check compliance with some requirements in relation to certain types of

raw materials or agricultural products that, because they are particularly
susceptible to diseases or dangerous chemical alterations, for example, or that
affect their economic value, require the buyer or the health authorities of the
respective country, which are covered by certifications from health authorities
stating that the conditions of the goods are acceptable or not dangerous.
5.3.7. Other formal elements contained in the letter
Even though starting this point we allow ourselves to point out which
requirements should usually be included in a letter of credit, we mention, below,
some others that are less important in most cases, but are commonly used by
commercial banks.
5.3.7.1. Credit number and date
Which are explained as a means for adequate identification of the credit and to
determine the moment from which certain deadlines provided for in the letter
may run.
5.3.7.2. Provisions on irrevocability, transshipment, partial shipments, transfers,
etc.
The RUU or the contract, ordinarily provide for a set of solutions on these
different modalities or particularities that may arise in relation to the form of the
credit, which we will see in the next point, with transshipments, which we have
seen in the previous point, and with the partial shipments and transfers, among
others, which we will see when studying the powers of the beneficiary.
5.3.7.3. Refund method
We saw when talking about the intervening banks how there can be a so-called
reimbursement bank, through which the paying bank recovers the funds used in
the payment of the letter. When it comes to purchase and sale operations carried
out between parties located in countries with different currencies or with weak
reserve situations, the reimbursement bank is usually from a renowned place in
financial matters, such as London or New York.
5.3.7.Notices to some of the parties or third parties
Letters of credit also usually provide that, at the time of dispatch, notices are
given to the originator of the letter, to a consignee commissioned to receive the
goods and take care of certain customs procedures and nationalization of the
same, before make them available to the buyer and to insurance companies.
5.3.7.5. Authorization of debit to current account
When there is a current bank account relationship between the ordering client and
the issuing bank, it is usual for the ordering party to authorize the bank to charge
into account the value of the sums that have had to be disbursed as a result of the
use of the credit and other expenses inherent to the operation.
It will often be the case that the law or the current account contract generally
provides for it.
5.3.7.6. Guarantee constitution
It can also be recorded, and frequently is, in the letter the guarantees in favor of
the bank to cover itself in case of eventual default by its client. The most
common is made up of the same merchandise, as we will see later.
5.3.7.7. Ports of embarkation and destination
Even though the first could sometimes be omitted, the usual thing is that the
credit stipulates the port where the merchandise has to be shipped and the one
where it must be delivered, since both play an important role in relation to the
costs for the importer, the needs of warehouse, port facilities, etc.
5.3.7.8. Subjection to the "Uniform Rules and Practices"

Finally, and this occurs in countries whose banks have joined the RUU, it is
common to establish in the letter of credit that, in their relations and the
consequences derived from them, the parties submit to the provisions enshrined
in the RUU. Rules.
In this regard, article 10 of the current version establishes that "these articles will
be considered as integral parts of any documentary credit, provided that it
expresses verbatim that it has been issued in accordance with the RUU." on
Documentary Credits, 1993 Revision, Publication No. 500 of the International
Chamber of Commerce". The rule seems clear and convenient but it could be
insufficient if, in a specific case, the reference, being express and undoubted, is
not accompanied by the effective delivery to the ordering party of a copy of the
same, given the clear tendency of the legislations protecting the consumer to
ignore the effectiveness of the general contracting regulations or predisposed
general clauses, the knowledge of which by the interested party cannot be
proven.62
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33. See ROWE, Michael. "Credit letters". Felaban Library, Ed. Excelsior, Bogotá
1985.
34.V. Supra, Chap. X, 8.4.
35. "All credits must clearly indicate whether they are available for payment on
demand, for deferred payment, for acceptance or for negotiation." RUU art. 10,
a).
36. The same principles apply in Colombian legislation (art. 1412 C. Co.).
Honduras, for its part, establishes the presumption for both types of credit in art.
904 C. Co. El Salvador, art. 1131 C. Co. and Guatemala, art. 765 C. Co.; Bolivia,
art. 1406 C. Co., in the same sense.
37. RUU, art. 44, a).
38. RUU, arts. 23, a 1I (sea bill of lading); 24, to I1 (non-negotiable maritime bill
of lading); 25, a IV (maritime bill subject to charter party); 26, a 1I (multimodal
transport document); 27, to 111 (air transport document); 28, to 11 (road, rail or
river navigation transport documents); and 29, b (messenger and postal receipts).
39.V. Below, 7.2.2.2.
39. RUU, art. 46, b. c.
40. RUU, art. 20 a.
41. Honduras establishes the documents that must be presented in article 906 C.
Co. El Salvador in article 1133 C. Co.; Bolivia in article 1395 C. Co.
43. VÁSQUEZ LEPINETTI, Tomás. "Patrimonial Law. International Purchase
and Sale
Merchandise end. A Jurisprudential Vision". Arazandi Editorial. Navarre. Spain.
2000.- BONELL, Michael Joaquim. "The UNIDROIT Principles 01 International
Commercial Contracts and CISG- Alternative or Complementary Instruments"
(1996) URL: http://www.unidroit.org.com (online accessed March 15, 2001) V.
Footnote No. 13 of Chapter 1, where Latin American ratifications are recorded.
44. As Joern Rimke of the University of Stlellenbosh states, "The Vienna
Convention on Goods harmonizes the interests and ideas of the different legal
systems of countries at different levels of development. For this reason, the text
of the Convention is applicable to be implemented both in countries that apply
civil law and in those that apply common law and for economies that are
developing as well as for those that are in the process of development." RIMKE
Joern. "Force majeure and Hardship: Application in international trade practice
with regard to the CISG and the UNIDROIT Principles 01 International
Commercial Contracts." Pace Essay Submission (1999).
45. PRYLES, Michael et al. International Trade Law. LBC Information Services.
Australia, 1996.
46. Art. 3rd no. 2nd: "Contracts for the supply of goods that are to be
manufactured or produced will be considered sales contracts, unless the party that
orders them assumes the obligation to provide a substantial part of the materials
necessary for that manufacture or production."
47. The International Chamber of Commerce, in its Incoterms 2000, translation
of the Spanish Committee of the ICC includes the following modalities, under
the pedagogical organization that was used since the 1990 version Group "E"
Departure: EXW In Factory (...Agreed location). Group "F" Unpaid main
transport: FCA Free carrier (...Agreed place); FAS Franco alongside the vessel
(... named port of loading); FOB Free on Board (...named port of loading); FOB
Free on Board (... named port of loading). Group "C" Main carriage paid: CFR
Cost and freight (...named port of destination); CIF Cost, insurance and freight
(...named port of destination); CPT Carriage paid to (...named port of
destination); CIP Transportation and insurance paid to (...agreed port of
destination). Group "D" Arrival: DAF Border delivery (...Agreed location); DES
Delivery by ship (... named port of destination); DEQ Delivery at dock (...named
port of destination); DDU Delivered duties unpaid (...named port of destination);
DDP Delivered duties paid (...Named destination).
48. RUU, art. 33, a, b, e, d.
49. RUU, art. 34, STOUFFLET, cited by OLARRA, op. cit., p. 121, classifies
reservations into three groups: "a) reservations concerning the merchandise, b)
reservations regarding packaging, and e) reservations regarding brands and
labels."
50. RUU, art. 30.
51. RUU, art. 26.
52. RUU, arts. 23, 11.
53. RUU, art. 23, b. CD Transshipment is defined as "the unloading and
reloading from one vessel to another during the course of maritime transportation
from the port of loading to the port of discharge stipulated in the credit."
54. RUU, art. 26.
55. RUU, arts. 23 to 29.
56. RUU, arts. 34 to 36.
57. RUU , art. 34, F. 11.
58. RUU arts. 35, 36.
59. UK, art. 37.
60. RUU, art. 37, c.
61. RUU, art. 38.
62. Peru. Establishes that multiple banks are subject to the uniform rules and
practices of the ICC; Bolivia, in what is not foreseen, the uniform rules and uses
must be applied additionally.
6. CREDIT CLASSES
The aim here is to study the main modalities of documentary credits, starting
with the most important from a theoretical point of view, which is usually
resolved in practice by using only one of the possibilities. We refer to the
classification of credits as revocable and irrevocable.
6.1. REVOCABLE
A credit is revocable when neither the originator nor the issuing bank acquire a
firm commitment to support their offer, so that the promise to pay can be
withdrawn at any time. It is not necessary to speculate too much about this
possibility to understand that, in practice and in view of the purposes that explain
the existence of documentary credit, this modality is only used by exception,
since it would leave the seller exclusively free to good faith or at the whim of the
buyer of his merchandise.
Now, in any case and in order not to enshrine a situation that would be aberrant,
it is established that the issuing bank is obliged to reimburse the bank that has
paid, accepted or negotiated, in the event that any of these assumptions have been
made in accordance with the terms and conditions of the contract, before
receiving the notice of modification or cancellation of the credit.63
It has been provided, on the other hand, that in the absence of express indication
on the nature of the credit for this concept, it will be considered irrevocable.
/ble.64 Additionally, the rules have established that revocation can be made at
any time by the issuing bank, a precision that corresponds, by the way, to the
provision made by Colombian legislation since 1971. This does not mean, of
course, that such a decision cannot be made by the originator of the credit. What
happens is that, in practice and given that it is about regulating a relationship
between banks, not between the issuer and the beneficiary, it is with respect to
the one that must be specified that it is up to the issuer to take or communicate or
specify the decision that has been made. your customer.
6.2.
IRREVOCABLE
This credit, unlike the previous one, constitutes a firm commitment on the part of
the issuing bank to pay, to accept money orders or to negotiate the money orders
issued in its charge, or in charge of the payer or any other person designated in
the credit. That is, as soon as the issuing bank notifies the opening of an
irrevocable credit, it acquires a direct and autonomous personal commitment to
the beneficiary, from which it cannot be relieved, even at the request of the
originator himself, if he uses the credit within the term. and under the conditions
indicated by the letter.
You might wonder what happens with the correspondent bank. Regarding this,
we have already seen that it can act as a simple notifier, that is, giving notice of
the credit to the beneficiary or it can intervene confirming it, in which case a new
debtor appears that allows the beneficiary to turn against him or against the
issuing bank in the exercise of actions derived from the letter of credit. Although
it is clear to the RUU that if there is no confirmation from the correspondent, he
is no more than an adviser or notifier, without personal obligation, distinguished
commentators have maintained that the notifying bank cannot, however, refuse
without valid reasons to pay or negotiate the documents that are sent to it.
present, as a consequence of acting in their capacity as agent of the issuing bank.
The conclusion does not seem obvious to us, since the eventual breach of the
mandate contract would confer action on the principal against the agent, but
would not allow the beneficiary to take action against the notifier who has not
confirmed the credit.65
It can be concluded on this point that the commitments resulting from an
irrevocable credit cannot be modified or canceled without the agreement of the .
issuing bank, the confirming party (if any) and the beneficiary.
6.3. OTHER CLASSES OR MODALITIES
Without attempting to make an exhaustive list and rather for the sake of
illustration, we will mention below some other classes and modalities.
6.3.1. divisible and indivisible
As a general rule, documentary credits are open so that they can be used only
once, so that the documents presented prove that the dispatch of the merchandise
covered by the credit was carried out in full and on a single occasion. In this case,
these are indivisible credits. However, and as we will return to study when
talking about the powers of the beneficiary, it is possible that the credit is used in
fractions within the maximum period indicated, in which case there is a
divisibility of the object, to which the sales contract refers. and credit, and
translates into the possibility of making partial shipments. Let us remember that
these are allowed unless the credit expressly stipulates otherwise and that those
covered by several bills of lading of different dates will not be considered partial,
if they are all made on the same vessel and for the same voyage.66
6.3.2.
Rotary
It is affirmed by the doctrine that it is a type of divisible credit where the bank or
the originator, not wanting to be irrevocably bound from the beginning by the
entire credit, establish the dispatch in certain amounts and within certain periods,
committing the issuer to pay against the documents that prove the first dispatch
and, if these are presented on time, to be obliged to pay the next one and so on.
Therefore, if the fractional shipment is not verified within the established period
"the availability of the Credit on such use or fractional and subsequent shipment
will cease, unless otherwise stipulated in the Credit."67
Before developing the consequence of the last part of the transcription, we must
warn that there is no unanimity of opinion in the doctrine regarding the
obligations contracted by the bank and their relationship with those that the payer
must comply with. Some authors maintain that this modality allows the issuing
bank to refrain from paying a second dispatch if, once the first has been made
and the corresponding payment has been verified, its originator has not made the
provision or does not reimburse the sum immediately or within the agreed
terms.68 Others, to which we adhere, consider that there is an irrevocable
commitment of the bank for the entire credit that is conditioned in relation to
each partial dispatch to its fulfillment in the terms and conditions provided for by
the credit, but in such a way that, if the beneficiary presents the documents on
time, the firm commitment of the bank remains for the following fraction and so
on, until the credit is exhausted.69 And we accept this position because in the
first an inconvenient link is established between the obligations arising for the
issuing bank against the beneficiary and those of the payer against the issuing
bank, with which the principle of autonomy that governs the different
relationships between the parties would be destroyed.
The old article 45 of the RUU and uses indicate that revolving credit may or may
not be cumulative. It will not be when the non-use of a fraction within the
established period extinguishes the credit and the obligations derived from it. It
will be cumulative, on the contrary, when the failure to dispatch a fraction in time
allows it to be accumulated to the following fraction or fractions.
6.3.3.
Transferable
The credit is transferable when the beneficiary-debtor, obliged to verify the
dispatch and present the documents, is authorized to designate another person in
his place, which from the point of view of legal technique would imply a transfer
of the obligation, or better , of the contractual position, not specifically of the
credit, since it does not yet exist. We will see this modality, more in space, when
studying the powers of the beneficiary, even though we note, from now on, that
the credit is only transferable if it has been expressly provided for by the issuing
bank.
6.3.4. Circular
We mentioned, from the beginning of the chapter, that there is the possibility of
so-called circular credits or commercial letters of credit, which instead of
designating a bank for payment, are sent directly to the beneficiary who, due to
this circumstance, is authorized to present the documents to any bank.
In this case, there are two modalities: that the bank to which the documents are
delivered fulfills the simple task of presenting them to the issuing bank directly
or through a correspondent or that it negotiates the letter of credit assuming the
risks derived from the qualification. of the documents. Against them it is usually
covered by receipt of the "pro-sol vendo" documents, so that you can demand
reimbursement from the beneficiary if they are rejected by the issuing bank.
The commercial letter of credit is payable exclusively at the issuer's coffers,
normally a first-class bank, but it presents some advantages since the non-
presence of intermediaries, confirmers, acceptors, etc., reduces costs for the
payer and leaves the beneficiary a great freedom of action to choose the bank
from which he wants to request collection management or the negotiation of the
credit itself.?o
6.3.5.
At sight or in term
The credit can be payable immediately, upon simple timely presentation of the
documents, or paid over a certain period starting from the presentation or another
date such as the bill of lading, invoice, etc.
In the case of the term, there are two very specific possibilities: that it be
implemented in a bill of exchange accepted by the bank in charge of making the
payment, providing the beneficiary with an enforceable title against the entity
that will allow him to easily negotiate it with a third party; or that it is not
implemented and translates into the bank's simple commitment to pay you when
due.
In the last case we are faced with the so-called deferred payment credit where,
although there are some advantages such as not charging an acceptance
commission and the possibility of taking advantage of a direct term granted by
the seller, on the other hand, some problems may arise. difficulties in practice
since the buyer will take physical possession of the goods before payment is
made, which could give rise to a dispute, for example, over the quality of the
goods, which would lead the purchaser to try to inhibit the payment by the bank
in charge.?! Note, however, that if the documents were accepted without
reservation by the bank, the position of the beneficiary will be legally
indisputable since the entity is obligated in light of the formal and external
compliance with the credit requirements, without being able to relieve itself of
paying for real or alleged defects of the goods. The acceptance of a bill of
exchange, of course, is much more advantageous and removes any uncertainty.
6.3.6.
With red clause or green clause
Taking it from the English expressions, it is said that a credit has a "red clause"
when it has foreseen the possibility for the beneficiary to demand payment, in
whole or in part, against the simple promise to present within a certain period the
documents intended for use. And it is said that it is with a "green clause" when
the demand for payment is not based on a simple promise but on the presentation
of certain documents, such as those that prove the deposit of the merchandise in a
deposit warehouse, but without presenting the others. , in particular the bill of
lading that certifies the dispatch of the goods. In both cases, these are broad and
extremely advantageous formulas for the beneficiary, which imply great
confidence on the part of the orderer in the moral and economic solvency of the
seller. In practice, they seek to provide liquidity to the beneficiary to assume
extraordinary or particularly high costs generated by certain products at the time
of dispatch, such as the use of refrigerated means or the use of luxury or security
packaging, the cost of which represents a significant percentage of the total price,
to give two examples. Now, in order not to denature the mechanism, to the point
that its fundamental function of guaranteeing the simultaneous fulfillment of
reciprocal obligations disappears, the clauses are usually established by a
percentage of the value of the letter, such as "red clause - 20% ", with which the
risk of non-compliance for that percentage is assumed, but the payment of the
rest remains subordinated to the timely presentation of the required documents.
6.3.7. back to back
This modality implies that, taking advantage of the existence of a credit opened
in his favor, the beneficiary requests that the bank open another credit on his own
account in favor of a third party, for example, his supplier. In other words, a
person who appears as the beneficiary of a credit becomes the originator of a
second credit in favor of a third party, but with the support and guarantee of the
first. It is noted, however, that there is a risk because if the beneficiary does not
present the documents on time or they are rejected, the bank issuing the second
loan is left unprotected, if the only guarantee in its favor was the existence of the
first. In other words, the bank opens the second credit because it knows that the
beneficiary of the first and originator of the last must be paid a certain sum of
money, sufficient to constitute provision or reimbursement of its new obligation.
Any vicissitude, however, that inhibits or makes nugatory the
'possibility of such payment, affects the guarantee of the issuing bank which,
therefore, cannot legally consider it as such.72 Consequently, it could be said that
more than a guarantee, the letter of credit that is issued based on the preceding
one, It has an excellent source of payment.
6.3.8.
Standby
One of the novelties that was established since the previous version was the
reference made, from the beginning, to the application of the rules, both to credits
referring to the sale of goods or other commercial operations, and to those related
to letters of credit stand-by calls.
In truth, the consecration does not seem very reasonable in terms of European
continental law nor, therefore, compared to the principles that inform the
legislation of most of our countries. In fact, according to the first commentators
on the subject, this mechanism sought to overcome the technical-legal difficulties
that North American banks have usually had in offering guarantees in favor of
their clients.73
It is obvious that such a possibility has always existed, compared to the concepts
that previous versions on the subject contained, especially because the
commitment to pay at the client's request was not causally linked to any specific
legal transaction. All business, legally conceivable, was acceptable under the
definitions enshrined by the RUU. With the aggravating factor, furthermore, that
the principle of autonomy in legal relations, which governs documentary credit,
makes it difficult to understand a reference to the cause to specify that it would
not be due to a contract for the sale of goods or another similar one but to a
function, simply, of guarantee. For this reason, consecration is secondary to the
formal structure with which interparty relations are managed, especially because
the bank commits itself in exclusive consideration to the documents and
requirements that the beneficiary must present and comply with and that could be
as simple as the simple presentation of a collection account or invoice previously
accepted by the beneficiary.74
In any case, this innovation legitimizes and simplifies in international trade the
use of letters of credit with a guarantee function, whose use seems to have been
increasing a lot in recent times and is explainable in the face of growing and
widespread difficulties that have arisen. , in many countries, for the due attention
of their obligations.
In itself, and this is the most important thing, through its recognition we aspire to
have an abstract or first-demand guarantee, which empowers the beneficiary to
demand payment without the guarantor being able to invoke exceptive arguments
linked to the cause of the obligation. principal or guarantee.75
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63. RUU, art. 8, b, Honduras, art. 901 C. Co. Colombia, art. 1411 C. Co. El
Salvador, art. 1128 C. Co.; Bolivia, art. 1397 C. Co.
64. RUU, art. 6c. Colombia, art. 1410 enshrines the opposite solution, which was
that of the RUU in the 1983 version. In the same sense Bolivia, art. 1397 C. Co.
65. EPSCHTEIN-BONTOUX "Reflexions sur le Crédit Documentaire
irrevocable non confirme", Revue Banque, N" 329. Paris, May 1974, p. 489.
66. RUU, art 40. Colombia establishes the opposite thesis by establishing that "it
can only be used partially when expressly authorized in the letter of credit", art.
1413 C. Co.
67. RUU, art. 41.
69. MARCU8E, Roberto. In: "Documentary Credit in Latin America."
FELABAN, Ed. Kelly, Bogotá, 1970, p. 78.
70. MARCUSE, op. cit., pp. 73 and 74 V. Supra, Chap. XIV, 2.5.
71. NOACCO in FELABAN's book "Documentary Credit in Latin America", Ed.
Kelly, Bogotá, 1970, p. 35. The RUU establish that "all credits must clearly
indicate whether they are usable for demand payment, deferred payment,
acceptance or negotiation", art. 1O, a.
72. OLARRA, op. cit., pp. 50 and 60. MARCUSE, op. cit., pp. 75 to 77.
73. ROWE, Michael. This was stated in a paper presented within the framework
of the seminar held on the subject, in May 1984, under the auspices of the
Commercial Studies Center of the Spanish Ministry of Economy and Finance and
the Chamber of Commerce and Industry of Madrid.
74. Colombia. In the past and with the intention of discouraging the extra-bank
market that could be supported in them, the issuance of letters of credit from the
interior was prohibited, when the required documents did not reflect a sale of
merchandise (O. 2756/76) such provision has been repealed (O. 923/97).
75. See Supra Chap. X, 7.3.1.1, f. v.
7. OBLIGATIONS OF THE ISSUING BANK
Some obligations of the issuing bank can be fulfilled by the other

intervening banks, but we will see them in an integrated way to make them
clearer.
. from the didactic point of view.
7.1. ESTABLISH THE LETTER OF CREDIT
This is an obligation of the issuer towards the originator-borrower, within the

structure of the opening of credit applicable to this contract, which constitutes a
first specification of the availability as a generic obligation under its
responsibility.76
In order for the availability to be used by a third party, it is necessary to
communicate the terms and conditions under which the bank will be obliged to
make the payment. As we said at the beginning of the chapter, the letter of credit
is nothing other than the formal specification of the terms of the documentary
credit contract that, issued by the bank, gives rise to a direct obligation as long as
the bank is not revoked. order, if this is the type of credit, or indefinitely, until the
expiration of the term, if it is an irrevocable credit. In establishing the letter of
credit, the bank has a first burden of care since it is obliged to establish it in full
accordance with the instructions it has received from its client and in the event
that this does not happen and as a consequence of a poor drafting may cause
damage to the ordering party, it must, without a doubt, compensate him at the
time. From the above it can be concluded that, once the contract has been
concluded, the ideal instrument to make the availability available to the third
party and inform him of its terms and conditions is to issue the letter in the
manner indicated by the ordering party and notify the beneficiary of its opening.
7.2. VERIFY COMPLIANCE WITH THE BENEFICIARY'S OBLIGATIONS
We will see them later but, from now on, it can be said that they consist of the
presentation of the documents established by the credit within the period
provided for by the contract. The bank's obligation can be studied through the
principles and possibilities presented below.
7.2.1. Formal verification
The fundamental obligation of the bank to study the documents presented by the
beneficiary and verify that they coincide with those required by the credit, is
fulfilled through the application of the principle of formal appearance or extrinsic
conformity for which the bank must respond, remaining apart from the intrinsic
or substantive verification of the reality of the aforementioned shipments or the
content referred to in the invoices, packing lists, etc. In this regard, the RUU
establish that "banks must examine all documents stipulated in the Credit with
reasonable care to verify that they apparently agree with the terms and conditions
of the credit.77 This also implies, as established in the same article, that The
previous note refers, that in case of apparent discrepancy between the documents,
it will be understood that they do not comply with the terms and conditions of the
credit.
In development of the principle of appearance, provisions are established to

relieve banks of liability, even though some are susceptible to objection from a
legal point of view.
It is considered, first of all, that in documentary credit businesses the parties must
consider the documents before the goods. As a consequence, banks do not
assume any obligation nor are they responsible for the form, accuracy,
authenticity and legal value of the documents; nor for the description, quantity,
quality, condition, etc., of the merchandise to which they refer; nor regarding the
good faith or commercial morality conditions of the parties involved in the
process of dispatch of the goods. 78
On this point, however, it is necessary to make some reservation and for this
reason we share the authoritative opinion that although the bank cannot assume
responsibility for the conditions of quality, quantity of the merchandise, etc., nor
for the commercial morality of the companies and people involved in the credit,
it cannot be disputed that there is a greater degree of responsibility in their charge
with respect to the examination of the documents themselves, since if it must be
formal, of simple verification and comparison between the instructions and
reality, this It does not exonerate you from taking into account certain signs that
could suggest the presence, for example, of a falsified document, such as the
existence of erasures, scratches, amendments, etc. So it could not be said that the
bank is not responsible when the invoice refers to a certain merchandise, but
obvious external signs appear on it that indicate the possibility that it has been
adulterated.79.
The reflection acquires greater validity if we take into account that article 7 of the
RUU establishes the responsibility of the notifying bank, which itself acquires no
obligation towards the beneficiary, to "take reasonable care to verify the apparent
authenticity of the credit it notifies." And when reviewing the discussions that
were had to write the article in this way, as well as the experience of recent years,
it is clear that there are manifestations of fraud that do not allow the problem to
be ignored. Well, if such a burden of conduct is established for the notifier who,
ultimately, has a very modest function within the business, it is not seen why
special care should not be required, with greater severity, for the bank in charge
of studying the documents, whether it is from the correspondent or from the same
issuer.
The banks also do not assume responsibility under the provisions of the RUU
regarding consequences derived from transmission risks such as delay, loss or
mutilation, nor regarding transcription, translation or interpretation errors,
reserving, for these purposes, the possibility of transmitting the terms without
translating them. The same release of responsibility is established by what it says
with interruptions caused by force majeure that affect its own service such as
those derived from mutinies, insurrections, wars, etc., with the peculiar
consequence that, unless there is express authorization regarding In particular,
banks will refrain from paying, accepting or negotiating the respective credit
after maturity, even when the impossibility of presenting the documents has been
due to the aforementioned circumstances.80
We certainly do not share the conclusion reached, since it does not seem logical
that the consequences of force majeure affect the beneficiary. In another way,
although the existence of circumstances that constitute a fortuitous event or force
majeure may exonerate the bank from liability, it would seem perfectly within
the law to extend until the next business day after the reopening of the service or
for a number of days that could be the of the closing, the possibility for the
beneficiary to present the documents. It seems, however, that rigorism is more
due to the protection of the interests of the payer, since the deadline for the
presentation of the documents plays directly with the probable date on which
they will be available and the goods and that, after this date, they may no longer
be useful to you. Consideration that still means a burdensome consequence for
the beneficiary.
The non-responsibility of banks is also established when they use the services of
another to comply with the instructions of the payer, since it is assumed that they
do so at the expense and risk of the latter. As a consequence, they do not assume
any obligation nor are they responsible in the event that the instructions are not
executed even though they themselves have made the choice of the
correspondent bank. 81 The conclusion is even more debatable. For some
authors, the solution is acceptable in light of the provisions on commission, since
the commission agent who has replaced his order, in accordance with the powers,
is not responsible for the acts of the sub-commissioner. However, when the
relationship is structured on a mandate contract, it may arise for the agent who
delegates responsibility to his principal for the acts of the substitute agent.82
Given that, normally, these are adhesion contracts, care must be taken, as we
have said, that the client effectively knows their text and expresses their
agreement with the exoneration of liability clauses, in the face of consumer
protection laws that look specifically I am suspicious of this type of forecasts .83
Finally, the payer must assume the obligations derived from laws and customs in
force in the countries in which the credit must be paid and indemnify the banks
for any damages that may result from said provisions.84
We can summarize by concluding that, given all the exonerative clauses of
liability and with the reservations that some of them deserve, the bank's
obligation to verify the presentation of the documents in a formal manner
includes, at least, verifying that they are complete, that is, , the number of
documents required by the credit; that they are regular in their external form,
which implies a careful study due to the numerous legal considerations that arise
with respect to securities, insurance contracts, etc.; and that the documents agree
with the credit and also with each other.
7.2.2. Rejection of documents by the bank that studies them
The careful study of the documents and the qualification of the opportunity in
which they are presented can lead, in practice, to their rejection, if they are
irregular or presented late.
7.2.2.1. Irregular documents
The irregularity of the documents may result from different causes linked to the
non-existence of the required number, the lack of any issuance or form
requirement, the presence of alterations in their text, the lack of agreement with
the credit or the inconsistency between them, etc. .
All these assumptions and any other that allow one or more documents to be
classified as irregular must result in their rejection by the bank that studies them,
whether it is directly obligated, in the case of the confirming bank or if it only
fulfills an order, in the case of the simple paying bank. However, commercial
practice means that the bank does not always act with the inflexibility that would
result from the principle, but that the bank opts for alternative solutions aimed at
reconciling its own obligation to carefully review the documents with the
interests of its own client, linked to the bank on the occasion of the opening of
the credit of which he is a beneficiary or from some time ago.
Among the possible hypotheses, it is possible that the bank defers its decision
while it demands precise instructions from the issuing bank and the latter
consults them with the payer or that it goes a little further and proceeds to pay
under reservations, with the warning to the beneficiary that, Because there are
irregularities, if the issuing bank does not remove them, it will reverse the
operation by debiting your account or demanding reimbursement.
The question arises as to whether payment under reservation fits in the case of
acceptance credit, since in light of the principles that inform securities securities,
it is not conceivable. We believe that the most convenient solution for the bank is
to defer its acceptance and consult or obtain authorization of the debit on account
or other similar security in order to be able to immediately obtain the value
referred to in the bill in the event of rejection by the issuer, with which he would
have in advance the provision for the bill of exchange accepted at a certain term,
allowing the beneficiary in the interregnum to provide himself with the funds
resulting from the eventual discount of the instrument. That is, the acceptance
would not be conditioned, which would have to be pure and simple, but a
mechanism would be created to obtain the funds corresponding to the term
obligation contracted by the bank.
Now, in the case of payment under reservation, there are two practical
possibilities that translate into remaining silent with the issuing bank, that is,
formulating the reservations to the beneficiary but transmitting the documents to
the issuer without any limitations or expressly communicating to the latter. the
nature and type of reserves that the bank has formulated. Given the legal relations
that link both banks, it could be argued that the paying bank, acting as agent of
the issuer, must inform it of the circumstances linked to the execution of the
order and transmit to it the reservations it has formulated regarding the
documents presented. We would say, however, that it is a factual problem linked
to the magnitude of the irregularities revealed.
Although from a theoretical point of view it is not possible for the bank to make a
subjective analysis of the documents presented and any disagreement would
legitimize its rejection, in practice it is obvious that the bank can weigh, with the
judgment provided by its experience in handling of these businesses, if it is a
small disagreement presumably irrelevant for the issuer and the ordering party, or
if, on the contrary, it is a difference that could translate into non-compliance with
the purchase and sale contract, under the conditions required by the merchandise,
etc. In the first case, it is likely that he would transmit the documents without any
mention - but that this would be inane - while in the second, it seems evident that,
for his own security, he must expressly formulate the reservation.85 And that he
could not different conduct may be conceived, both in his capacity as agent who
must inform his principal of the supervening facts or circumstances that may
affect the fulfillment and execution of the order, under penalty of incurring the
responsibility derived from his silence, as in that of a professional bound by a
generic obligation of information towards whoever uses his services, in this case,
the ordering bank.
In the case of payment under reserve, a clear grant of credit is presented by the
paying bank to the beneficiary, receiving those pro-sol vendo documents, with
the aim that if they are accepted by the issuing bank, the payment can be
reimbursed and the payment is extinguished. The duty. However, it is very
common that, depending on the magnitude of the reserves or taking into account
the amount of the credit or the solvency conditions of the debtor, the bank
requires the constitution of a sufficient guarantee that can cover it in the event of
rejection by the issuer. .
7.2.2.2. Delayed documents
The expression could suggest two hypotheses: the presentation of the documents
outside the term provided for by the credit for its validity, in which case they
must be rejected, or their presentation within the term of the credit, but with a
delay with respect to the opportunity indicated to do so, which, in truth, is the one
to which we refer.
The reason for establishing a deadline for presenting the documents, counting
from the date of dispatch, is to guarantee their rapid takeover by the ordering
party, so that they are in a position to remove the goods received at the port as
soon as possible. Otherwise, if the merchandise arrives well in advance of receipt
of the documents, there will be burdensome consequences for the ordering party,
such as payment of storage costs or extra costs due to non-timely payment of
certain taxes, etc., if not direct risks of deterioration. of the merchandise, because
it is not easily conservable in the port's warehouses, for example, or loss of the
same.
The RUU They have contained since 1974 an evidently more satisfactory
solution with respect to the provisions enshrined in the 1962 version, in which
article 41 established that "the documents" had to be presented within a
reasonable period after their issuance, empowering the banks to reject them. if
they were presented to them with unjustified delay. The article was clearly
inconvenient, both because of the indefinite time and because of the power in
favor of the bank that forced it to evaluate in each case, subjectively, whether the
documents were late or not.
The first advance consists of establishing that every credit must indicate, in
addition to the normal period of validity, an expressly defined period counted
from the date of issuance of the document that accredits the issuance, in order
that during said period the documents to the respective bank. In this way, the
reality of the means used for dispatch can be taken into account, since, while for
the shipment of merchandise by ship, when it comes to intercontinental transport,
several weeks may be a reasonable period, dispatch by plane or train between
neighboring countries means that the goods are received at the destination very
quickly and, consequently, there is a real rush for the ordering party to have the
documents in their possession.
The second advantage lies in the fact that, in the absence of an express
stipulation, it has been provided in the same article that the banks will reject the
documents presented after 21 days have elapsed from the date of issuance of said
documents, thus there is an absolute certainty in time and the previous faculty is
replaced by a categorical order of rejection. The previous term may not exceed,
of course, that of the validity of the credit. 86
7.2.3. Rejection of documents by the issuing bank
We assume that the documents were originally examined by a bank other than
the issuing bank and that the latter receives them, with or without reservations
from its correspondent.
If any reservation has been formulated by the bank that studied the documents, it
seems logical that the computer should be consulted about it to know whether or
not to lift the reservations. It will do the former, ordinarily, if it estimates that the
non-conforming conditions found by the bank are not of such magnitude as to
harm its position. Otherwise, it will opt for the second, rejecting the payment, if it
has been made or reiterating the decision not to pay. 87 The possibility has been
noted that the payer, upon learning of the existence of reservations, may take
advantage of that circumstance to capriciously exonerate himself from
compliance with his obligation. However, it seems to us that it is a risk that must
be assumed because if the documentary credit is eminently formalistic and the
beneficiary knows that it must fully comply with the clauses established in the
letter of credit to be able to demand payment, it cannot be called by surprise later.
if payment is rejected due to non-compliance with the same. You will have
recourse through ordinary means, if the buyer, in bad faith and not having
suffered damages, uses the reservation as an excuse not to pay.
Let's see, then, some provisions that concern the receipt of documents by the
issuer that arrive without any particular observation.
7.2.3.1. Rating upon receipt
The fact that a third bank has studied the documents does not relieve the issuing
bank of the careful study of them, which continues to constitute its main
obligation at this time.
The RUU establish that if upon receipt of the documents by the issuing bank,
they or their content appear not to be in accordance with the terms and conditions
of the credit, the bank, based exclusively on that documentary consideration,
must proceed to challenge the payment, acceptance or acceptance. negotiation.
and must do so immediately or as established by the respective standard within "a
reasonable period, not exceeding seven business days from the date of receipt of
the documents" that is deemed necessary to proceed with their study and
formulate the objections and the consequent challenge.
The problem of previous versions to which several provisions were glossed is
then corrected, for establishing vague terms whose content was not easily
specified, since the qualification of what constitutes a reasonable period is
eminently subjective. It is now assumed that this period is sufficient to carry out
a careful study of the documents and consult with the client, with the
understanding that the banks have no justification for delaying this and, on the
contrary, have the professional obligation to be expeditious and prepared. with
qualified and suitable personnel to carry out this task efficiently and as soon as
possible. Even communication regarding this circumstance must be done by a
faster means than the mail, if possible, since the respective provisions have
established that notice of the challenge be given immediately "by a means of
telecommunication or, if it is not possible , by any other quick method".
Which, in summary, means that the issuing bank is obliged to study the
documents carefully within the established period and to immediately send a
notice of challenge explaining the reasons for rejection, in case it finds
discrepancies between the documents presented and the required by the credit.88
7.2.3.2. Return of documents
In addition to the above, the issuing bank is obliged, in the same communication
to which we have referred, to warn that it makes the documents to which the
credit relates available to the recipient bank or that it returns them. Otherwise, if
you do not do one thing or another, you will lose the right to claim for the
payment, acceptance or negotiation carried out. The issuing bank is not
exonerated from the previous obligations and from this last one specifically and
from the consequences that arise from it, not even in the event that it has received
the documents with a statement from the correspondent bank regarding the
circumstance of having formulated reservations for there are irregularities or that
you have paid under guarantee or in any other similar way. Which means that if
the issuing bank, within the aforementioned period, does not expressly state to
the correspondent bank its objection and the reasons on which it is based, which
may be the same ones invoked by it when making the referral, the correspondent
bank may understand that there is a tacit consent of the issuer and proceed to pay
if it has not been done or to lift the reserve or guarantee against the beneficiary.
89
7.2.4. Improper classification of documents
We have seen that the RUU They enshrine provisions aimed at exonerating banks
from liability and limit their primary obligations to classifying documents
formally, due to their extrinsic manifestations, without assuming any
responsibility for underlying defects or circumstances that subjectively affect the
presence of third parties in the bank. process. However, not only may some of the
exonerative provisions be debatable due to certain aspects, as we have seen, but,
in any case, there is a limit from which it is evident that a liability borne by the
banks can be deduced. This is related to the improper classification of the
documents on which a payment estimated by the issuer or the ordering party is
supported, if applicable, as irregular. This will happen whenever there is a
discrepancy between the goods described in the invoice and those required by the
credit or the documents do not agree with each other or have obvious signs of
adulteration, falsification, etc., or the insurance documents are dated after the
date of the issuance, without it appearing that they have covered the risks from
that moment, and in general, in any hypothesis in which any of the credit
requirements appear unfulfilled.
Two sets of relationships, of course, can arise in this case. At first, there may be
the existence of an improper qualification by the paying bank that, as verified by
the issuer, leads the latter to challenge the payment by making the respective
documents available to the payer or sending him/her the respective documents, as
we have just seen. In this case, the issuing bank will refuse to make the refund if
it has been directly obliged to do so; will attempt to prevent or reverse the
operations with the bank designated for this purpose, if this was the procedure;
or, finally, you will be in a position to try to repeat what was paid, if any of the
previous procedures prove to be ineffective.
What is, however, more important is the position of the payer when the improper
classification made by the paying bank is shared by the issuer or is not verified
by it, in terms that the payer finds that documents were received as if They were
satisfied with the credit without really being so. The question has been raised as
to whether it is required for the viability of the payer's claim that he refrain from
removing the documents in which the aforementioned irregularity is recorded.
We believe that this position is not reasonable, not only because there is an act of
trust by the client who ordinarily sends a second-class employee to collect the
documents, without this routine and automatic behavior being able to be given a
legal content of acceptance or confirmation of the actions of the issuer, but
because, in addition, the true opportunity to legally classify the documents arises
for the ordering party as soon as he has collected them and is in a position to
analyze them. If not, it would be necessary to maintain the need for the client to
go to the offices of the respective bank, carry out a careful and detailed analysis
of them and not proceed to withdraw them until they are found to be satisfactory.
This solution does not consult either experience in the matter or equity.
In case of rejection by the client, the possibilities are also diverse. If there is still
room for behaving as provided for in article 14 of the RUU, that is, if, upon the
requesting client's statement, the issuing bank realizes its error (and, therefore,
that of the paying bank), the logical thing would be immediately notify you of the
disputed payment, listing the errors or omissions, making the documents
available or sending them to you, as we saw. This seems to be the most
convenient solution for the issuer because in this way, through the gloss
formulated by its client, it can try to correct its position and transfer the
responsibility for the improper qualification to the paying bank. If, on the other
hand, this cannot be done, especially because the deadline has elapsed and the
notice runs the risk of being ineffective, the issuing bank may find itself in an
embarrassing situation in which it is no longer in a position to complain to the
bank. payer, while its omission places it in terms of having to respond to the
payer. If the client has left the documents in the hands of the issuer or he accepts
that they be returned as a result of the rejection, he will have the problem of
having the goods in his own name to compensate for part of the payment that he
will have to make as compensation. in favor of the client.
Another possibility is for the client to withdraw the merchandise, after expressing
express reservations to the issuing bank regarding the improper classification of
the documents, warning it that it can only use them partially, for example, if its
quality is different from that indicated in the credit. In this case, the client could
take advantage of them, thereby minimizing the risk of a total loss and reducing
it to that of the difference between the prices of the two qualities of the
merchandise, a difference for which the bank would be responsible.
Do not forget, however, that these academic positions must be analyzed in

practice against other types of considerations such as the need for the client to
initiate a legal action that the bank can face confident of obtaining a decision
favorable to its arguments, whether their position is defensible, so they are
closely linked to the factual circumstances present in each operation.
7.3. PAY
It is fulfilled against the beneficiary before whom the bank assumes the
commitment to pay a sum of money, on demand or in installments, or to accept
or negotiate securities, provided that the documents are presented in due form
within the expected opportunity. for the credit. This is an obligation of the
issuing bank that will be fulfilled by the correspondent when he is in charge of
making the payment. It will also be direct when the paying bank is direct as a
result of having confirmed the open credit. We will refer, in general, to the
obligation to pay specific to the issuing bank, but applicable to any of the other
intervening banks, with the reservations that result from their position.
7.3.1. a sum of money
Let us remember that the credit has a quantitative limitation that indicates the
amount up to which it must be paid upon the presentation of certain documents.
The simplest formula to fulfill the obligation is to deliver a sum of money to the
beneficiary at the time of presenting the documents, when the credit is at sight. It
is also possible that the bank is obliged to pay on a date subsequent to the
presentation of the documents without such obligation being implemented in any
way, in the case of deferred payment credits.
7.3.2. Securities
The most common thing, however, is not that the sum of money is paid directly
but that it is usually instrumented in a security.
There are several positions that the bank can adopt in this event, in accordance
with the provisions of the credit. Pay a bill of exchange that has been drawn at
your expense, where we have a credit in sight, but whose cancellation remains a
record in a title that is left in your possession. Accept a bill of exchange in which
case your intervention constitutes you as a term debtor, for the term provided for
in the letter of credit. Finally, negotiate a bill of exchange drawn on a third party,
which may be the issuing bank, if the bill is presented to the payer, in which case
there is a discount operation. If the issuing bank confirms the payment and the
repayment of the credit is verified, the operation will become final and any
possibility of directing against the discounter will cease. However, if said
payment is not made, the paying bank would be authorized to turn against the
discounted beneficiary and make the respective bill of exchange effective.
The previous conclusion is very debatable when it comes to a confirming bank,
since in this case the correspondent bank assumes a direct and immediate
obligation towards the beneficiary, which superimposes the existing obligation of
the issuing bank. Consequently, it is not logical to assume the direct obligation to
pay, which must necessarily arise from the qualification of the documents, but on
the other hand, by virtue of the fact that the credit is made through the discount,
the beneficiary sees his payment conditional on the opinion of the issuer. In the
opinion of distinguished authors, which we share, it does not seem reasonable to
support this thesis because the intervention of the confirming bank loses its
reason for being, or it should be recommended, in the protection of the
beneficiaries, that they do not accept negotiation credits but acceptance or of
payment, in order to avoid possible inconveniences arising from the discount.90
The problem seems to be resolved in the RUU which provide, in the case of the
intervention of a confirming bank, that it undertakes to "pay without recourse to
the issuers and/or holders in good faith, the draft instrument(s) drawn by the
Beneficiary and/or or the document(s) presented in use of the Credit...".91 That
is, from the contractual point of view it would be clear that the confirming bank,
when discounting or paying the bill, would do so by renouncing any resources
that could be against the issuer of the same, beneficiary of the credit. What
happens is that, given the abstraction of the bill of exchange, this contractual
limitation would not inhibit in practice the possibility of the confirming-
discounting bank from attempting exchange actions against the discounting-
beneficiary, only that the latter would be in a position to propose as an exception
the lack of resources derived from the aforementioned contractual clause or
attempt by ordinary means to repeat what was unduly made to pay.92
The obligation of both the issuer and the confirmer includes the responsibility to
ensure that the transfers are accepted and paid when due when the credit can be
used through transfers made by the originator or any other third party designated
in the credit.93
7.3.2.1. Latin American Bank Acceptances (ABLAS)
Within the modality of credit by acceptance, it is illustrative to remember the

mechanism that a number of Latin American central banks tried to put into effect
some time ago, in accordance with which the existence of available and
transferable funds destined to attend to the payment of calls was guaranteed.
Latin American Bank Acceptances (ABLAS), bills of exchange issued in the
development of a documentary credit and whose particular negotiation
mechanics tended for the area banks linked to the system to obtain financing in
the New York market, through the negotiation of the respective titles, which
unfortunately never operated.94
7.3.3. Directly or through a correspondent
We know that outside the issuing bank there may be third-party credit institutions
that receive different names depending on the function they perform in relation to
the credit. We have also seen how to the original and direct obligation of the
issuing bank can be added that of a second bank, usually located in the exporter's
country, which confirms the letter. of credit. Likewise, we study how there are
cases in which a bank can intervene as a negotiator, either because it is the
modality known as commercial letter of credit always payable in the issuer's
coffers and negotiable by any bank, or because in a heterodox way, for Thus I
decide, banks other than the designated payer proceed to negotiate the credit and
send the documents to the issuer without passing, as would be logical, through
the hands of the payer.95
7.3.4. I do not pay for reasons other than credit
We have repeated that, in accordance with the RUU, banks proceed to pay or
reject payment based on the external qualification of the documents, to the point
that various articles establish that the documentary credit contract is different
from the contracts of sale that give rise to it and that in no case will such
agreements be relevant for the intervening banks. Furthermore, it is established
that in documentary credit operations all parties must consider the documents and
not the merchandise, emphasizing, moreover, the non-responsibility of the banks
for defects in the merchandise, sincerity in the statements of the parties ,
representation thereof, etc...
However, the problem of knowing whether the bank can eventually refuse to pay,
due to facts unrelated to the considerations arising from the study of the
documents, has not ceased to arise, especially when there are criminal or bad
faith circumstances, since it is considered that The bank could not validly ignore
a completely amoral circumstance. Such would be the case of the bank that,
while preparing to study the documents presented by the exporter, finds out, and
also verifies it with probative elements of indisputable value, that the purchase
and sale contract was never concluded or, if it was concluded, it has been
declared null or non-existent and Therefore, the documents presented either
correspond to an office that does not find support in a prior and valid legal
relationship or are simulated, even if no external manifestation appears that could
have led to such a conclusion from the simple study of the documents.
The doctrine is hesitant on the matter and is divided between those who maintain
that the illegality, nullity or non-existence of the contract enables the banker to
refuse the settlement of the credit and even allows him to revoke it in advance
and those who consider that, given the abstraction that makes it independent In
both relationships, the obligation to pay subsists in any case since the simple
circumstance of opening an irrevocable credit at the request of the payer gives
rise to the risk that his bank will acquire a firm and definitive commitment to the
beneficiary. 96
In our opinion and without opening the door for documentary credit to lose its
effectiveness, which in practice is linked to both the rigid formalism and the
independence of the relationships, it is necessary to warn that if, in a specific
case, there was unquestionable evidence of acts of bad faith, the bank would have
legitimate justification for not paying, in accordance with the aphorism according
to which "bad faith corrupts everything."
7.4. SEND THE DOCUMENTS TO THE ORDER
If the reason that generally explains the opening of the credit is the settlement
through a bank of an international sales contract and if the documents presented
by the beneficiary not only prove the dispatch of the goods but some are
representative of them , the issuing bank is obliged to immediately deliver them
to its client, after their study and qualification, so that the latter can dispose of the
merchandise, a purpose that, ultimately, justifies the opening of the credit. This
obligation is fundamental if it is noted that the buyer-seller may suffer damages if
he does not dispose of the merchandise quickly and in a timely manner.
However, as we will see later, there are cases in which the bank is entitled to
retain the documents, as long as the client does not satisfy its obligation to
reimburse the sum that the issuing bank or its correspondent has had to pay to
meet compliance. of their obligations. The importance of this obligation and the
possibility of the bank refraining from delivering the documents relate not only to
the bank's relations with its originator, which could be regulated through the
general principles of bilateral contracts, according to which the bank would be in
a position to refuse to fulfill its obligation as long as the other party had not done
the same, but in view of the effectiveness or ineffectiveness that the simple
retention of the documents can produce, vis-à-vis third party creditors of the
ordering party who at a given time sought, for example, For example, the seizure
of merchandise. We will return to this matter when studying the obligations of
the payer.
7.5. TRANSFER CREDIT
This is another obligation of the bank, in certain cases, which translates into the
recognition of a new beneficiary of the credit as a consequence of having
replaced the original debtor, which we will also see when studying the powers of
the beneficiary, in the last point of the chapter.
7.6. REFUND THE PAYER
As soon as there is a bank that pays or negotiates the documents issued and
presented in accordance with the provisions of the credit, the issuing bank is
obliged to reimburse it immediately, directly or through, as we saw, a bank
authorized to do so. which, according to the current provisions, must proceed
immediately upon the simple notification of the paying bank that the credit has
been made.97 The conclusion is not the same when it comes to an unauthorized
negotiator, that regardless of the paying bank indicated in the credit proceeds at
its own expense and risk to negotiate the letter, unless it is, of course, the so-
called Commercial Letter of Credit, which we already saw.98 One last
observation to warn that, as is obvious, at this point it is an obligation which does
not relate to or affect the rights of the beneficiary or the payer.
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76. Supra, Chap. XI, 6.1.
77. RUU, art. 13, a.
78. RUU, art. 15. Honduras, art. 908 C. Co. Colombia, art. 1415 C. Co. El
Salvador, art. 1135 C. Co.
79. OLARRA, Op, cit., pp. 247 and 248.
80 RUU, arts. 16 and 17.
81. RUU, art. 18a,b.
82. OLARRA, in support of the first position, invokes article 252. of the
Argentine Commercial Code (op. cit. pp. 286 and 287). Mexico. Provide an
example of the second (art. 388 of the LGTOC) Colombia. It establishes that "the
agent may delegate the commission if he has not been prohibited; but if he is not
expressly authorized to do so, he will be responsible for the acts of the delegate
as for his own. This responsibility will take place even when the power to
delegate has been expressly conferred on him. delegate, if the principal has not
designated the person, and the delegate was notoriously incapable or insolvent"
(art. 2161 C. C.). In the same sense, Bolivia, art. 1405 C. Co.
83.V. Supra, Chap.llI, 2.4.
84. RUU, art. 18, d.
85. "If the sending bank draws the attention of the Issuing Bank and/or the
Confirming Bank, if any, to the existence of any discrepancy(s) in the
document(s), or informs such banks that it has paid, that has committed to a
deferred payment, that has accepted draft instrument(s) or that has negotiated
under reservations or against a guarantee relating to such discrepancy(s), the
Issuing Bank and/or the Confirming Bank, if any, They will not therefore be
exonerated from any of the obligations established in this article. This reservation
or guarantee only affects the relations between the sending bank and the party
with respect to whom the reservation has been made or with respect to whom or
on whose behalf the guarantee has been obtained", RUU, art. 14, f.
86. RUU, art. 43, a.
87. RUU establish such possibility as optional for the issuing bank, without
extending the period established for making a decision (art. 14, c).
88. RUU, arts. 13 b, 14, b, e, d.
89. RUU, art. 14 of.
90. JACK, Raymond et al. Op. cit. In Wahbe Tamari & Sons LId v Colprogeca
[1969] 2 Lloyd's Rep 18 it was held that, where a confirming bank reserves the
right to pay by recourse against the beneficiary, the credit cannot be considered
confirmed since in that case there is no obligation absolute head of the bank.
91. RUU, art. 9, a, v.
92. LABANCA-NOACCO-VERA BARROS, op. cit., p. 340. 03. RUU, art. 9.
94. The Central Banks of Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador,
Mexico, Paraguay, Peru, Dominican Republic, Uruguay and Venezuela
participated.
"zuela. ABLAS were bills of exchange drawn by an exporter at his own order,
expressed in US dollars and accepted by an authorized institution of the
exporting country. These bills had to be issued in compliance with express
instructions of an irrevocable documentary credit, confirmed or not, repayable
through reciprocal credit agreements and subject to a mechanism where the
entities had to be previously authorized by the central banks and have
instruments of support in the New York market, consisting of the existence of a
custodian or payer bank and the authorization of brokers in charge of placing the
securities in said market. It was a very interesting file that would have allowed
the authorized commercial banks of the participating countries to satisfy the
payment of their imports in national currency, without there being the need to
finance the payment in dollars to the exporter with a foreign bank, but rather by
achieving through the multilateral compensation system, settlement between
participants, for the balances existing on the cut-off date.
95. V. Supra, 2.5.
96. LABANCA-NOACCO-VERA BARROS, op. cit., pp. 294 And ff. v. supra,
Chap. XII, 7.2.1.
97. R. OR. U., art. 19.
98.V. Supra Chap. XII, 2.5.
8. OBLIGATIONS OF THE ORDER
We said that the originator is responsible for a preliminary obligation that

consists of indicating the documents and conditions of the credit in the clearest
and simplest way. Now, under this section, we want to refer to those that arise
under your responsibility, as a consequence of the opening of the letter of credit.
8.1. PAY THE COMMISSION
Note that the simple existence of availability in favor of the beneficiary as a

result of the execution of the contract does not constitute for the issuing bank
more than a contingent obligation, since its effectiveness will depend on the
timely exercise of the rights in favor of the beneficiary, that is, of the presentation
of the documents in accordance with the provisions of the credit. For this reason,
at the beginning of the contract the client is obliged to pay a so-called opening
commission, which is nothing other than the remuneration for the signature credit
granted by the bank and the expectation that arises at its expense. Several others
may be added to the previous commission as soon as the operation becomes more
complex and, for example, there is a confirmation and later an acceptance. In
other words, all contingent obligations for banks arising from a signature credit
generally give rise to the payment of a commission.
8.2. MAKE TIMELY PROVISION OR REFUND THE AMOUNT PAID
8.2.1. The granting of money credits

As occurs in the opening of credit, availability can be translated into the granting
of a signature credit, as an acceptance or in the actual disbursement of a sum of
money that will respond to the existence of a simple contract of IÍÍandato, when
for this purpose A provision of funds has been established or it will imply the
granting of money credit to the payer, if there are no resources delivered for this
purpose. That is, to the opening of the original credit it can be added, and this
actually happens in practice, a financing granted by the issuer to its client when,
after having verified the payment to the beneficiary, the payer has a period of
time to reimburse the respective sum.
Remember, in any case, that in accordance with the provisions of the RUU
payment, acceptance or negotiation made against documents apparently in
accordance with the credit, oblige the party that has given said authorization to
reimburse the bank that has made the payment, acceptance or negotiation.99 In
some countries it is even established for the originator the obligation to provide
funds sufficiently in advance without, in any case, failure to comply with such
obligation affecting the rights of the beneficiary when it concerns an irrevocable
credit.1oo It can be stated, in summary, that to the extent that the issuing bank or
any of the banks intervening in accordance with the credit in this position, has
paid the letter of credit, the originator undertakes to reimburse him immediately
if a grant of credit has not been foreseen and it only results from the facts, that is,
of non-provision or within the expected period, when such financing has been
agreed.
8.2.2. The guarantees
In practice, and except when the client constitutes sufficient provision from the
beginning, the bank usually demands the constitution of guarantees within the
wide range of possibilities that we have seen.I01 We are not interested in
guarantees constituted by a third party, real or personal, nor the real ones
constituted by the debtor on assets other than those that are the object of the sale.
It is more interesting to briefly review the possibilities that the same merchandise
provides as support or guarantee for the credit opening operation to be carried
out.
A first possibility is constituted by the way in which the consignment note or bill
of lading is issued, since, as we studied at the time, there is the possibility that it
is extended to the order, endorsed in white or directly to the order. of the issuing
bank, in which case it will appear, from the exchange point of view, as the owner
of the merchandise vis-à-vis third parties. Some authors maintain that the mere
circumstance of receiving the knowledge endorsed to the blank order or to the
order of the issuing bank does not constitute a transfer of ownership thereof and,
therefore, the bank is nothing more than a simple holder of the knowledge.
documents and, therefore, the merchandise they represent. The point seems
debatable to us because, according to the trading mechanics of securities, it is
evident that if a restrictive clause does not appear indicating that the transfer is
made for collection, in some cases, or as a guarantee, as could happen in the one
we study, it must be concluded that the transfer is full and therefore the endorsee
is fully owned from the exchange point of view.102
Of course, it is necessary to note that not all banks find this solution attractive as
a guarantee instrument in their favor, since the circumstance of appearing as
owners of the documents can give rise to uncomfortable responsibilities such as
the eventual payment of customs duties or other duties. warehousing rights, in the
event that the goods are not removed on time, the payment of certain tax duties
arising from the importation, etc., which they would hardly be able to transfer to
their clients, at least vis-à-vis the authorities, if on the other hand They want to
take advantage of the privileged status of endorsers of the title.
Another more interesting possibility that is combined with the form of issuance
of the knowledge is the pledge agreement on the merchandise, where the customs
agent or warehouse receives them as agent of the issuing bank so that delivery
occurs. essential requirement in real contracts. In this case, the documents must
appear in the purchase order.
. give, its delivery and deposit in the hands of the intermediary constitutes a right
of pledge in favor of the issuing bank. This right is perfected in some countries
through the figure called retention, when the possibility is generally established
for the creditor to exercise it over the assets of the defaulted debtor that he has in
his possession. However, as long as it is not a generally consecrated institution
that confers real rights over the merchandise, it has the disadvantage that it may
be effective between the contracting parties but unenforceable against third-party
creditors who, at a given time, seize the merchandise. , For example. From this
point of view, and in those countries in which retention is only established
exceptionally for some contracts, the most appropriate solution is the pledge that
has all the advantages conferred by real rights.
Among the forms of guarantee there is a figure typical of Anglo-Saxon law
known as trust receipt. It consists of the issuance of a document by which it is
recorded that the ordering party has received the merchandise but that the bank
retains the same rights that it had over it. It could be conceived, within the
framework of legislation inspired by European continental law, as a form of
pledge without possession by the creditor, but which, surely, within the
advertising registration systems, would have to be subject to this requirement,
which would It would take away some agility. 103 The situation is different
when the trust receipt is established exclusively to allow the buyer to physically
inspect the goods to verify their conditions and take the necessary measures to
prevent, for example, their deterioration.
8.3. PAY THE AGREED INTEREST
This obligation, which we mention last, arises only when the opening of the
documentary credit has resulted in a disbursement from the bank, without
provision by the client or with insufficient provision. There, as in all forms of
credit opening and in general in all credit contracts, interest is the remuneration
that the payer recognizes to the bank for the sacrifice that it makes during a
certain time with respect to the sums delivered to the beneficiary for your client's
account.
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99 RUU, art. 10, d.
100 Mexico, art. 71. LIC. This article, which repeats 55 LRSPBC, refers to
"irrevocable credit", thus correcting the inadequate reference that article 113 of
the LGICOA made when speaking of "confirmed credit" and which, precisely,
we had glossed, due to that circumstance, in editions previous.
101 V. Supra, Chap. X, 7.3.
102 Maintains that it is only a holder, NOACCO, "Documentary Credit in Latin
America", pp. 49 and 50. He states, on the other hand, that the disposition over
the goods thesis that we share is acquired, MARTíNEZ, pp. 141 and 142. ibid.
103 V. OLARRA, op. cit., pp. 379 And ff.
9. OBLIGATIONS OF THE BENEFICIARY
9.1. SUBMIT THE DOCUMENTS
This is not a question here, and it is essential to make this warning, of an

obligation resulting from documentary credit since the beneficiary does not
acquire the commitment towards the intervening banks to present the documents,
nor is it obliged to do so towards the originator as a consequence of the opening
of the letter of credit. Your obligation to ship the goods arises from the execution
of the sales contract. Therefore, non-presentation does not generate any liability
towards the banks with which it has no links that bind it, and only arises towards
the ordering party-buyer, but not for violating the terms of the letter, but because
said omission entails the breach of the fundamental obligation to deliver, arising
from the purchase and sale contract. It will be for this non-compliance, which can
be deduced from the non-presentation of the documents, that the beneficiary must
respond to the ordering party-buyer. Now, if the beneficiary wants to fulfill his
fundamental obligation, he must present the documents and in this case, taking
into account the existence of certain provisions enshrined in the RUU or in the
credit itself, which we will see shortly.
9.1;1. Within the credit term
It is obvious that the presentation of the documents must be done within the
validity period of the credit because, if this does not happen, it precludes the
beneficiary from the possibility of doing so. Regarding compliance with this
standard, it can only be remembered that the RUU They enshrine some general
provisions according to which documents must be submitted during office hours.
Likewise, when expressions relating to dates such as "first half" or "second half"
are used in the credit, these provisions will be interpreted as comprising the first
to the fifteenth inclusive and the sixteenth to the last of the month inclusive, in
their order. For its part, expressions such as "at the beginning", "middle" or "end"
of a month will be taken as indicating, respectively, one to ten, eleven to twenty,
and twenty-one to the last, inclusive.104
9.1.2. Within a precise period after shipment
We already said that the current version, in its article 43, overcomes the
traditional difficulties regarding the so-called "stale" documents, by establishing
that in the
. credits, specific deadlines must be indicated to present the documents after
shipment or delivery for shipment of the goods and that in case of silence it will
be understood that the documents must be presented within twenty-one days
from the date of issuance of the document(s). transport documents, that is, the
date of shipment. 105
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104 RUU, arts. Four. Five; 47, e, d.
105V. Supra, Chap. XII, 5.3.5.2.
106 RUU, art. 48.
10. POWERS OF THE BENEFICIARY
These, as we will see shortly, are basically making partial shipments, transferring
the letter of credit and assigning the rights derived from it.
10.1. MAKE PARTIAL DELIVERY
We have commented that partial shipments are allowed unless the credit has
expressly established otherwise. We have also said that expeditions carried out
on the same ship and for the same trip will not be considered partial, even if the
corresponding documents have different embarkation dates and even indicate
different ports of expedition. We also saw that in the case of so-called revolving
credits, where the bank is obliged to attend to shipments for a certain amount of
merchandise carried out within a certain period and in case of timely compliance
by the beneficiary to pay a second fraction within another term and up to a
certain value, it may be a simple revolving credit, a case in which the non-use of
any of the fractions, that is, its non-dispatch within the established term, causes
the credit in its entirety to cease to be usable . Or it can also be cumulative when
the non-use of a fraction allows any of the following to be accumulated, in which
case the opportunities and fractionable amounts within the total credit must be
predetermined.
Partial expeditions seek to facilitate the beneficiary's progressive use of his credit
within the maximum limit of validity and to the extent that the other
requirements set forth in the letter of credit are met. It may happen that the
beneficiary partially uses the letter of credit by shipping part of the merchandise
and then does not ship the balance. In this case it is evident that the fact that
partial dispatches are not prohibited does not mean that the beneficiary is
authorized to make a partial and incomplete dispatch of the goods that he had
been obliged to deliver to the buyer. From the point of view of documentary
credit, your position will be impeccable since you will have used the power to
dispatch the merchandise in installments. But with respect to the fundamental
relationship that binds it with the buyer, there will be a clear breach of its
obligations by not making the total delivery of the purchased goods within the
established period, which will give rise to the buyer to exercise actions aimed at
obtaining compliance. of the contract or its resolution, in both cases with
compensation for damages.
10.2. TRANSFER THE LETTER
10.2.1. Concept
This power, unlike the previous one, must arise from an express authorization of
the letter, which must be classified as transferable so that it confers the
corresponding power on the beneficiary. 106 The transfer implies, in essence, the
assignment of the obligation whose fulfillment is a requirement to be able to
exercise the rights derived from the charter. When we talk about transferring a
letter of credit, we must understand the possibility that the beneficiary has of
placing a different debtor in his position, to fulfill the obligation consisting of
dispatching the goods and, as a consequence, acquire the right to demand
payment of the corresponding sum. In summary, transferring a documentary
credit is making an assignment of an obligation or, better, of the contractual
position from which it is derived, rather than making an assignment of a credit, as
we will return to later.
As soon as the transfer is permitted, it is up to the beneficiary to instruct the

issuing bank or the bank designated to make the payment or acceptance or to
anyone authorized to make the negotiation, if applicable, to proceed to pay the
credit to a different third party against the presentation of documents that prove
compliance with the obligations derived from the letter of credit, with some
changes authorized by the RUU For the bank to be obligated, the transfer must be
made within the limits and under the conditions in which the bank's consent has
been expressed and once the expenses related to such transfer have been paid.
The question arises, in light of this last provision, if the transfer of a credit
implies the issuance of a new letter in favor of the substitute beneficiary or if it is
enough to notify the bank of such a circumstance for the new beneficiary to
present itself to the bank with the letter. of original credit and the required
documents. We lean towards the latter possibility, but recognizing that some
practical considerations may make it convenient for the first beneficiary to issue
a new title in favor of the substitute.
These reasons are linked to the intermediation possibilities of the original

beneficiary. Consider that he has negotiated with another merchant in the market
the dispatch of the same quantity of merchandise, for a price lower than that
agreed upon with the foreign importer, so that once the dispatch occurs by the
substitute beneficiary, the first one will have as his profit the difference between
the price recognized by the true dispatcher and that which the ordering party of
the letter will receive, through its banks. In this case, it is possible that there is no
interest in the second beneficiary knowing the identity of the buyer or the price
difference that has been obtained in his favor, which could lead the substitute to
attempt direct contact with the buyer in the next opportunity.
Another hypothesis, in which it could be explained in a reasonable way, is one in
which some modifications are introduced to the original credit, in which case it
seems better to issue a new letter that includes the modifications, so that the new
beneficiary or beneficiaries limit themselves to complying. with them, without
the existence of the originals causing confusion.
But excluding these circumstances, typical of intermediation or any other similar
hypothesis, it is evident that in no part of the RUU It is not required, nor does
logic indicate it, that it is necessary to issue a new letter of credit because if the
first unequivocally contains the terms and conditions of the credit and the second
beneficiary limits itself to complying with them, nothing imposes the need to do
so.
10.2.2.
Shape
The credit can only be transferred once, although it is possible that it may be
made in favor of different second beneficiaries in fractions, if partial dispatches
are not prohibited. What is important, however, is that the sum of the obligations
of these second beneficiaries does not exceed the total of the dispatch obligation
assumed and that it is known that none of them, if there are several, nor the
second, if it is one Only, they can assign all or part of their obligations to third-
party beneficiaries.
The RUU They authorize the first beneficiary to introduce some modifications to
the original letter of credit. They can only refer to the amount of the credit, any
unit price indicated therein, the expiration date, the last date of presentation of
the documents according to article 43 and the shipping period, all or any of
which may be reduced or restrict yourself. The name of the first beneficiary may
also be included to replace the originator of the credit, unless it is specifically
required that his name appear on any document other than the invoice, in which
case the requirement will be respected.
The reason for the first two assumptions is due to the possibility of
intermediation that we have already mentioned, translated into the difference in
prices between that obtained from the foreign buyer and that quoted by the
second beneficiary in the same or different market, as the case may be. This
difference explains why the first beneficiary can replace the invoices of the
person to whom he has transferred the credit with his own. From what it says
with the expiration period, its reduction constitutes a precautionary measure on
the part of the first beneficiary, since in the event that the second does not
comply with its obligation to dispatch, there will always be a margin of time so
that he can , at forced marches, comply with the respective obligation. And this is
because, in our opinion, the circumstance that the credit is transferable, although
from the point of view of the letter of credit it allows the presence of a substitute,
does not relieve the transmitter, the first beneficiary, of the original obligations
derived from the purchase and sale contract,
Furthermore, as we will see shortly, if there is the possibility for the first
beneficiary to substitute his invoices for those of the second or second
beneficiaries, the possibility also exists, even if it is not established in the RVV.
that the ordering party requires, in any case, that the invoices be issued by the
first beneficiary and this because, if he has no problem accepting that a third
party makes the deliveries, he wants in any case to keep the first beneficiary
linked, so that in the future may respond to you for the obligations derived from a
possible non-compliance with the quality of the goods, their form of presentation,
etc., in your capacity as invoicer of the same. 107
10.2.3. Invoice replacement
As we have just mentioned, the beneficiary has the possibility of substituting his
own invoices for those of the second beneficiary for amounts that do not exceed
that of the original credit and even for unit values that correspond to those of the
original letter of credit, case in which which if the invoices presented by the
second beneficiary are for a lower global amount, he may demand from the bank
that makes the payment the reimbursement of the difference or profit in his favor.
The substitution of invoices seeks to ensure that the buyer, located in a foreign
country, does not find out the identity of the substitute seller, to also inhibit the
possibility of making contact with him for future business. In other words, the
mechanics studied in transferability are aimed at ensuring that the dispatch can be
made by a third party, but that neither the third party (second beneficiary) nor the
buyer (ordering party) can know each other, but rather the first beneficiary
continues to appear ( intermediary) for all purposes.
10.2.4.
Replacement location
The substitution can be made to a second beneficiary located in the same country
or a different one, unless the credit expressly prohibits it. If you are located
elsewhere, you will have the right to request that payment be made to the
substitute on this site, without prejudice to the fact that the first beneficiary can
present his or her own invoices and claim the difference that we have mentioned
may be in his favor.
10.3.
ASSIGN THE RIGHTS DERIVED FROM THE CREDIT
Here we must once again emphasize the profound technical-legal difference
between transferring a letter of credit and assigning the rights derived from it. In
the first case, as we have explained, it involves the assignment of a debt or better
of the contractual relationship, that is, placing a debtor in place of the original, so
that he can carry out the dispatch and then, as a consequence of having fulfilled
the obligation, then yes, collect the credit. As soon as it is considered that the
transferor is not relieved of his responsibility, it would be a form of passive
cumulative delegation in which the creditor, in this case the buyer-ordering party,
has two debtors in front of him: the original beneficiary and the substitutes, if
any. knows, which is not always evident.
In any case, it seems interesting to highlight that the assignment of credit, unlike
the transfer, does constitute the transmission or assignment of a right. It occurs
when the beneficiary, having dispatched the goods and having in his possession
the bills of lading, insurance policies, commercial and consular invoices, etc.,
proceeds, at that moment, to assign the right derived from compliance with its
obligations that, like all economic rights, are, in principle, assignable. Of course,
as long as the letter of credit is not considered a security, said transfer cannot be
made by the expeditious means of endorsement but by the assignment of credit,
with notification to the debtor, in this case the bank, which may propose to the
assignee any exceptions it may have against its assignor. You may wonder what
is the practical interest for you to choose to assign your rights to a third party
who is in a position to collect. The most logical explanation derives from the
existence of term documentary credits, where the bank that issues the documents
has not been obliged to accept a term bill but rather to pay at a future date, in
which case the beneficiary would lack a document that could be mobilized in the
market. In this case, to obtain your credit in advance, you always have the
possibility of assigning the rights derived from it.
In this regard, and to clarify any doctrinal confusion between transfer and
assignment, the RUU add a specific article in which they establish that "the fact
that a Credit is not established as transferable, will not affect the right of the
beneficiary to assign any product of the Credit of which he is, or may be, owner
by virtue of said Credit, of in accordance with the applicable legal provisions".
And he adds, "this article refers only to the assignment of the proceeds of the
Credit and not to the assignment of the right to act under the Credit itself." 108
This confusion, expressly overcome in the RUU, occurs, however, among the
commentators of some legislations because when they mention the possibility of
transferring the credit and the rules that apply in this case, they do not refer to the
case of transfer. for a reason that we consider elementary. In effect, we have said
that, in principle, all economic rights are assignable and therefore it is not
necessary to say so for the owner thereof to be authorized to do so. On the other
hand, the assignment of debts is a possibility that implies, in principle, the
agreement of the creditor, which would arise when the payer allows the credit to
be transferable, unless otherwise provided, by exception in this case, to the
general principles. In summary, while one possibility is generic for all types of
rights derived from a contract (assignment of credit) and for this reason it is not
necessary to mention it specifically when talking about the documentary credit
contract, the other is exceptional and when provided for within of this contract a
mechanism that allows an assignment or transfer of the debt, it is necessary to
expressly refer to it, its authorization and its modalities.
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107 Mexico reiterates, in our opinion, that the transfer does not relieve the
beneficiary of compliance with its obligations by saying that "unless otherwise
agreed, the third party in whose favor the credit is opened may transfer it, but
will be subject to all the obligations that in the written confirmation of the credit
have been stipulated at your expense", art. 318 LGTOC,
108 RUU, art. 49.
Chapter XIII
ADVANCE
1. NOTION
1.1. YOUR AUTONOMY AS A CONTRACT
In our opinion, the advance lacks legal autonomy as a contract because,

depending on the position adopted in relation to its structure and nature, it is
subsumed within the mutual guarantee with a real guarantee when it is a real
contract or within the opening of credit. , when taken as a consensual contract,
characterized by availability in favor of the anticipated party. However, given its
classification by some legislations, we make a quick reference that allows us to
distinguish some figures and specify their concept.
If the advance is nothing different from a mutual pledge, it could be defined as

the loan granted by a banking establishment with a pledge guarantee by the
debtor. Regarding the object of the guarantee, it must relate to movable property
such as merchandise, precious metals, securities, etc.
Thus considering, the advance is an instrument that merchants or potential

debtors of a credit establishment enjoy to mobilize part of their assets, in order to
meet temporary treasury needs. As we will see regarding the debtor's position,
the advance is more advantageous than figures such as the repo or the discount,
since it allows a wider range of assets to be used as support.
Regarding the resources obtainable through the advance, it should be noted that
banks only grant credit for a part of the value of the goods given as collateral.
Logical solution since the coverage must be, by definition, higher than the
capital, since the debt collected can be increased by interest, legal costs, etc.!
Furthermore, if the property has to be auctioned at public auction, legislation
usually establishes percentage bases, in relation to the valuation of the property,
for interested parties to make a position; which in practice can lead to the goods
being auctioned for a lower than commercial value. This economic consideration
is valid for all those cases or legal transactions in which banks receive assets as
collateral, regardless of the legal modality used.
Against the thesis of mutual pledge, part of the doctrine and some legislation
consider the contract as a form of opening of credit where, rather than by the
delivery of the money itself, the guarantee is constituted to support an availability
that, from that moment on, moment, it is created by the bank and in favor of its
accredited client.2 This availability, in accordance with the stated principle,
would be, on the one hand, the value of the collateral created.
2. LEGAL NATURE
Thus, the legal nature of the contract will depend on the more general figure
within which it is subsumed. Therefore, it seems more interesting at this point to
distinguish the advance payment from some other contracts that banks can enter
into and which, corresponding to secured credit operations, tend to be
significantly similar. These differences become clearer by reading the following
chapters, where the characteristics of contracts such as discount and repo can be
consulted in detail. Let us, however, make some brief references.
2.1. DIFFERENCE WITH THE DISCOUNT
The discount, as we will see, is characterized by being the granting of a loan

against the receipt of non-payable credits, of which the client is the beneficiary.
But while in the discount the object is always an unexpired credit, in the advance
it consists of any asset capable of being given as collateral, which covers all
movable property that is not outside of commerce. Furthermore, in the discounter
the discounter becomes the owner of the credit, although there are mechanisms
that allow him to maintain the personal guarantee of the discounter, while in the
advance payment the bank is only a collateral creditor with respect to the title,
the merchandise or the goods that receive as warranty. As such, he cannot
dispose of the assets received and in the event of non-compliance with the main
obligation, he is forced to resort to the systems provided by law for the auction of
the assets, as soon as the "commissionary agreement" is prohibited.
2.2. DIFFERENCE WITH THE MUTUAL
A difference with the mutual can only be conceived in the systems in which the
advance is considered as a form of opening credit. We saw in Chapter contract
typified by law, whose principles, however
or bargo, they apply to some other contracts such as documentary credit. For
now, if the contract is regulated as a form of opening of credit, the advance
would be distinguished from the mutual in that the latter is a real contract that
involves the delivery of a sum of money, while the opening implies the
constitution of a availability in favor of the advance party, who may use it as
convenient and within the period available to do so.
2.3., DIFFERENCE WITH THE REPORT
The distinction is only precise if the advance payment is understood as a form of

mutual pledge because given that it cannot be said to be reported until the money
has been received in exchange for the securities, the availability of the opening
would establish a categorical opposition between both figures. In the repo, the
reporter delivers a sum of money as the purchase price of some securities of the
repo that the latter undertakes to purchase within a certain period. It is then, as
we will see, a double sale of securities, the first in cash and the second in term,
closely linked to stock market operations and where the profit for the reporting
bank usually consists of a price or commission that Ultimately, it must be
equivalent to the interest rate corresponding to the money paid for the acquisition
of the securities.
Thus, there are several differences that can be noted, even taking the contract as a
form of mutual: in the advance the preponderance of the guarantee function leads
to the anticipated sum being lower than the value of the goods received, while in
In repo, securities are usually reported by their stock market value, when they are
listed securities, or by their commercial value in others. While the object of the
repo is normally constituted by credit instruments, the advance involves the
receipt of a guarantee, but with a wide range of possibilities in relation to the
object. In the advance payment, the advancer becomes a pledgee while the
reporter becomes the owner of the securities. In the advance payment, finally, the
delivery of the collateral goods is consequential to the execution of the contract,
while in the repo it is an essential delivery, without which the contract cannot be
conceived.
3. OBJECT OF THE CONTRACT
We have said that the object is very broad since all personal property, which is
not found outside of commerce, is susceptible to being pledged. Furthermore, the
considerations that we already made about guarantees in general apply. 3 Let's
see, however, the most frequent possibilities in practice, regarding the goods
given as collateral.
3.1. GOODS
It should be noted that they can be delivered as a pledge itself or with possession
by the creditor, a possibility that is unattractive for the credit institution given the
natural difficulty of storage and conservation of certain merchandise or that the
merchandise remains in the possession of the debtor or a third party, specifically
and as the most suggestive solution, in the hands of a general warehouse. As
soon as this establishment has the power to issue titles representing the
merchandise, on the one hand, and titles that enable the owner to obtain a
collateral credit, on the other, it will be easier for the debtor to endorse in favor of
the bank and constitute, in in this way, as a lien creditor of the covered
merchandise. This does not prevent the representative title of the merchandise
from being endorsed as a pledge or guarantee and conferring the same rights to
the creditor. Only, in this case, the bank cannot use the expeditious and agile
procedures for the auction of the merchandise that the endorsement of the pledge
bond in its favor implies, but must use the ordinary paths indicated to the pledge
creditors to auction off the goods received as collateral.4
There may also be the case of a guarantee constituted by goods in transit when
the seller has drawn a documented bill of exchange in charge of the buyer, which
is accompanied by the titles representing the goods. In this case, the seller can
endorse the letter and delivered along with the documents to the bank as
collateral, which must take care of presenting it for acceptance or payment. In the
first case you have a new obligor and in the second you receive the
corresponding sum of money; but if neither of the two occurs, it retains, in any
case, a new guarantee constituted by the merchandise whose representative
documents it has in its possession.
3.2. TITLES
The pledge on securities is perfected in the case of securities to order by the

simple restrictive endorsement followed by delivery and in the case of
nominative securities by endorsement and registration in the books of the issuer,
the form most recognized for its effectiveness. . When the advance falls on other
securities in which a credit is recorded, the pledge is constituted with its
assignment and delivery and notification to the debtor.
3.3. PORTFOLIO IN INTERBANK OPERATIONS

The advance payment between banks is a supported operation, unless legal
provisions restrict it.
The bank that requires resources and does not want or cannot have access to
those of the central bank, uses part of its portfolio with a colleague in the market
to obtain, in exchange, the corresponding sum of money. Two notes seem to
distinguish this type of operation in practice; On the one hand, between banks the
advance amount may be the same as that represented by the negotiated securities,
that is, there is no difference in coverage that we mentioned above, a
characteristic that could suggest, rather, the existence of a repo. And on the other
hand, banks can use an ingenious mechanism to avoid the displacement of the
promissory notes signed by their clients that serve as guarantee for the execution
of the contract. In effect, instead of endorsing them as collateral and sending
them to the advance bank, they deposit them in custody in the same fiduciary or
mandate section, in the name of the advance bank, sending the latter the
respective custody title.5
4. RIGHTS AND OBLIGATIONS OF THE PARTIES
At this point, a mandatory reference must be made to mutual agreements or credit

opening, depending on the different systems or the doctrinal thesis adopted. In
any case, the bank, in its capacity as collateral creditor, has, among other rights,
the rights to retain the asset until it receives payment of the main obligation, to
use the mechanisms provided by law to auction it or request that it be awarded,
and be a privileged creditor in relation to that asset or its product, compared to
other creditors.
Of course, it is possible that the interested bank does not actually resort to the
loan with the guarantee of its portfolio, but rather proceeds to sell it with or
without a repurchase agreement. In this event, the operation would involve a
simple change in the asset items.
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1. In Ecuador, the amount of the securities must exceed the value of the advance
by 25% (art. 163, 11. L. of B.). In Venezuela, up to 90% of the value of the
documents can be delivered as an advance (art. 30, 9 LGBOIC). In the same
sense, Paraguay, art. 1420 C. Co.
Such is the case of Honduras, art. 911 C. Co.; Bolivia, art. 1318 C. Co.; El
Salvador, art. 1138 C. Co. and Mexico, V. 2. RODRIGUEZ Joaquín.
"Commercial Law". T. 11, pp. 97 And ff.
3 V. Supra, Chap. X, 7.3.1.
4. Colombia. The Banking Superintendence shares the interpretation but believes,
rightly, that the use of the bonus is more convenient than the use of the
certificate. Tit. V, Chap. 11, 1.4. EC 007/96.
5. Colombia. The Banking Superintendence has censored this practice in the past.
Circular DB 082/79; Circular 058/88.
Chapter XIV
DISCOUNT
The sequential study of discount and factoring or firm portfolio purchase and sale
contracts is necessary from a pedagogical point of view, since they correspond to
responses of banking law to the need of merchants to mobilize the portfolio
generated by their ordinary operations. and they respond to different historical
moments between which credit went from being occasional and of minor
importance compared to sales to representing one of the most representative lines
of the balance sheet asset, given the way in which its permanent use has spread
and popularized in different sectors. For this reason, the discount that was
initially sufficient and appropriate, even if it is preserved and used vigorously,
began to be complemented, at least, with a different modality that more
completely addresses the new reality, by removing the customer from the risks
derived from the portfolio.
1. NOTION
The discount contract consists, in a descriptive definition, of the delivery of a

sum of money by the bank to its client, through the transfer as consideration of an
unexpired credit owed by a third party. The amount of the delivery made by the
bank is determined by the value of the transferred credit less the interest
equivalent to the outstanding term between the date of the discount and the
maturity date of the title.1
From the previous definition it follows that the bank grants a loan by collecting
interest in advance and that the debtor transfers a credit to a third party that
enables the discounting bank to directly recover the amount delivered, always
under the guarantee of the debtor in the sense that will return the amount
received, if it is not timely paid by the debtor of the assigned credit. In other
words, the transfer of credit by the discounter is not liberating from his obligation
but only "pro-solving." Transfer to pay, which will only produce payment effects
as soon as the credit is satisfied by the third party.2
Like any granting of credit, it involves a series of risks that the bank must
evaluate with respect to the solvency of its debtor, the regularity of the title and
the eventual solvency of the third party. However, the granting of credit through
discount has the advantage for the bank that it is a guaranteed operation in itself,
since there are at least two debtors: its discounted client and the third debtor of
the assigned credit. To which could be added, when dealing with securities and
they have been previously negotiated, the guarantee constituted by the endorsers
involved in the circulation of the security on the date of the discount.
Furthermore, at least within banking orthodoxy, it is assumed that the

discounting of securities implies the existence of a commercial operation, of a
link within the economic process that has led the third party to accept the bill of
exchange in favor of the client. that requests the discount and that, consequently,
outside of the personal guarantees there is a movement of assets of both parties -
the bank's client and the third party acceptor of the bill - which, in a certain way,
constitutes an additional guarantee according to the principle that the Assets that
make up the debtor's assets constitute a general pledge in favor of his creditors.
Let's take a simple example. A merchant sells his client a refrigerator, of which
he receives thirty percent of its value in cash and finances the balance to be paid
in six equal and consecutive monthly installments, for which the debtor purchaser
accepts bills of exchange in his favor. . The merchant then proceeds to discount
them in his bank, thus anticipating the expected liquidity. Well, not only is there
a dual possibility for the bank to demand payment from its client or pursue the
main acceptor of the exchange, but in the end there is real support that derives
from the circumstance that the refrigerator entered the assets of the bank. debtor
and, ultimately, it can be pursued to seek its auction, which does not happen in
simple signature credit, as happens in consumer loans, which frequently serve the
debtor to make an expense and not an investment.
Therefore, for the banker who has a merchant for a client, the most appropriate
technique to also define the reasonable amount of credit that can be granted is to
know the volume of his sales, the way in which they are broken down between
those made in cash and those made on credit, the term normally granted to the
clientele and the cash flow that can be derived from that structure. In this way,
said amount will be a function of the dynamics of the business and the effective
needs derived from the financing it grants to its clients. Unfortunately, in
practice, if the banker does not verify this reality and the client does not act in a
transparent manner, there is a risk that these are not securities backed by a real
commercial operation, but only favor documents granted or accepted graciously
by a third party to enable the discount.3
It is therefore curious to ask why a banker would choose to grant his merchant
client a simple mutual, instrumented in a promissory note or, in the best of cases,
an advance guaranteed, even, with the same bills accepted by the merchant's
buyers, instead of actually making a discount. And additionally, why would he
choose - and he seems to frequently do so - to demand reimbursement from his
client instead of pursuing payment from the client, thereby ending up providing
an incomplete service to the client, since paying the client would satisfy the main
obligation. Perhaps in some countries this is influenced by a technical aspect,
linked to the impossibility of having a banking mechanism for collecting the
securities transferred, particularly if they are securities, through Clearing Houses.
In effect, in those in which the discounting bank can use them for that purpose,
what happens is that clients, as drawers, are required to domicile the documents
in the bank where the buyer accepts the bills and has his account. . In this way,
when maturity arrives, the discounter presents his client's title to said bank for
exchange, so that it can be paid from his account. But not having a mechanism of
such efficiency and having to set up a collection system, to present the titles for
payment to tens of hundreds of debtors in their homes, can lead to making the
operation so cumbersome, from an administrative point of view. , that the bank
discards the appropriate credit contract, that is, the discount, to opt for formulas
such as those mentioned above.
2. LEGAL NATURE
Several theories have been put forward to explain the legal nature of the discount
contract. For now and starting from a teleological interpretation, we must warn
that, in our opinion, the bank wants, above all, to grant credit and the client to
obtain the corresponding resources. It is around this axis of granting-receiving
credit that the contract must and can be explained. In this order of ideas, we
would have that the document or credit transferred by the client plays, ultimately,
a guarantee role, even if the bank becomes its owner. In other words, when
acquiring the credit, the bank does not pay in the name and on behalf of the
transferred debtor nor does it intend to make an investment by purchasing the
document and, therefore, assuming the credit risk, but rather it acquires it as a
simple instrumental means to reimburse itself for the sums. delivered to your
customer at a discount.4
2.1. THEORY OF ASSIGNMENT
Some have argued that it is a simple assignment of credit and that, as a

consequence, the bank is limited to paying the price of the credit acquired by this
means. Let us first note, in light of what we have just explained, that in our
opinion the cause that leads the bank to contract is not to acquire a credit against
a third party, that is, to speculate with it, but rather that the bank acts in function
of an interest rate, which is nothing other than the so-called discount rate.
Furthermore, as several critics of the theory have argued, the assignment of credit
can obey a multiplicity of causes and be intended to satisfy a pre-existing
obligation, make a donation, etc., while in discounting the assignment fulfills a
instrumental guarantee function.
On the other hand, and when it comes to discounting securities, it must be

remembered that they are not transferred through the transfer of credits but
through the typical endorsement, with legal consequences of the greatest
importance, among others, that while in In the assignment, the assignor is not
responsible, in principle, for the solvency of the debtor; in the endorsement, the
endorser is generally responsible for it. This difference, among many others, is
sufficient to explain how, when it comes to discounting securities, the figure of
endorsement sufficiently and autonomously explains the
- phenomenon by virtue of which non-payment by the assigned debtor imposes
on the discounter-endorser the obligation to pay the bank. In fact, what is striking
about the figure of the pro-solvendo assignment is that it is predicated on credits
not incorporated into securities, because in these the possibility of the bank
repaying its client flows naturally from the negotiating structure that grants it a
return exchange action against those who precede him in the chain of
endorsements.
Finally, when talking about the obligations of the discounter, we will see the
peculiar characteristics of the obligation to reimburse the amount received, to the
point that, for some, the bank can demand it without even attempting to collect
the transferred credit, which does not would have no explanation within the
theory of simple assignment of credit.
2.2.
THEORY OF PURCHASE AND SALE
It has been argued by others that the discount operation implies the execution of a
purchase and sale contract, where the bank limits itself to paying the price of the
credit, a thesis that, in essence, is identical to the previous one.
The theory is not acceptable to those who consider that the discount is a real
contract, since the sale is always consensual. However, and even admitting the
possibility that the discount was also consensual, in the purchase and sale the
purchaser considers above all the price of the good that is going to enter his
assets and when he is a merchant, as in our case, the possible profit that he may
obtain. at the time it was made. This is what happens, for example, in exchange
operations, when foreign currencies are acquired and the bank calculates the
profit it will make at the time of sale. In discounting, on the other hand, the
lucrative element does not lie in the eventual difference in prices between the
acquisition and recovery of the credit, but in the certain return on the capital that
is placed in the hands of the discounter, in the interregnum between that
operation and the time of recovery of the sum.
Finally, in the sale, once the price is paid and the thing is delivered, the
obligations of the parties are extinguished, while in the discount the delivery or
transfer of the credit, as it is not "pro-so mourning" but "pro- "solving", always
leaves a latent obligation in charge of the discounter which consists, as stated, of
paying or reimbursing the sum received.
2.3. MUTUAL MERCANTILE THEORY
It is perhaps the most widespread theory and the one that best resists the
numerous criticisms leveled at it. It is maintained that the discount is a second-
degree credit contract, unlike the mutual one, itself, which is of the first degree.
The above is stated because the bank grants credit on which, in turn, the
discounter had granted to a third party. The client mobilizes the credit granted by
obtaining a loan based on the assignment of his credit. It would be Ferri's
definition, seen in the previous footnote, which explains the discount through a
complex operation composed of a mutual plus a guarantee business consisting of
the "pro-solvendo" transfer of a credit right.
Critics of the theory have argued that if it were a mutual with guarantee, that is,
an advance, there would be no reason for the transfer of the property credit. In
other words, while in the advance the realization of the pledge is a subsidiary
instrument to satisfy the obligation, if it is not attended to by the main debtor, in
the discount the assignment of the credit is a direct or immediate means to cancel
it. The credit is transferred so that the discounting creditor is paid with it and,
only if the collection effort fails, does the discounted creditor come in to respond
in a subsidiary manner. There would, then, be an inversion in the logical scheme
that would explain the difference between both figures.
It is worth noting, however, that several legislations have classified discounting
in such a way that there is no obligation for the discounter to judicially collect the
credit owed by the third party, but rather he can choose between going against
him or demanding the discounter reimbursement of the amount delivered, in
which case the discounter must directly exercise the collection actions of the
transferred credit.5 In this case, the extraordinary similarity with the advance
payment contract could not be denied. This assimilation that reiterates the final
will of the parties, that is, granting and receiving credit with a guarantee,
somewhat denatures the mechanics of the discount, since the pro-solving
assignment seems to logically impose on the discounter the obligation to attempt
collection. of the assigned credit and produces certain practical difficulties, which
we will see, with respect to the actions that the discounter can exercise against
the assigned debtor.
Another difference consists in observing that in the case of the advance, the sums
delivered do not necessarily have a relationship with the value of the securities
given as collateral, since these may have a much higher price than the credit
granted. In discounting, on the other hand, there is a quantitative correlation
between both sums, the difference only resulting from the application of the
discount rate.
Remember, finally, in any case, that the assimilation to the advance would have
to be partial, since the discount only refers to unexpired credits, while it allows
receiving any movable property as collateral, without ruling out the theoretical
possibility of receiving a credit. defeated.
Based on the above, we think that the fair position is to maintain that it is a
mutual with guarantee, but it would not be pledged except as derived from the
pro-solvent transfer of a current credit and that this explains its difference with
the advance payment and the need for, With few exceptions, the bank first turns
against the transferred debtor.6
2.4.
THEORY OF CREDIT OPENING
In accordance with this theory, the assignment of credit made by the client does
not imply the immediate delivery of the amount corresponding to the discount,
but rather its making available to the client. It is the general phenomenon of
accreditation, or signature credit, with which the theory of credit opening is
explained as a general framework of reference for credit businesses in certain
systems and which translates into the fact that there is no coexistence in
benefits. , that is, a simultaneity in the transfer of credit and in the granting of
resources by discount, but the transfer precedes the delivery of the money which
is left to the will of the client, who will request it within the agreed period.
In addition to not sharing the approach of opening credit with that breadth, as
seen in chapter XI, we think that this is not what usually happens and that the
benefits are concomitant.
We quickly list the main characteristics of the contract, stopping only at those
that raise some discussion.
It can be stated that the discount contract is principal, commutative and onerous.
It is debated whether it is a real or consensual business, that is, whether it is
perfected by the delivery of a thing or by the simple agreement of wills.
For those who maintain that it is a real business, the characteristic is predicated
on the behavior of both parties since the contract would not be perfected except
to the extent that, on the one hand, the client assigned or transferred the credit
and, on the other, the bank delivered the amount of the discount. The point is
complex because if we accept that the discount is a form of mutual, the delivery
of the money would be essential to perfect the contract. Now, in practice it is not
as a consequence of receiving the money that the client assigns his credit. On the
contrary, it is based on such transfer that the bank proceeds to disburse it, so that
the real element would be constituted by the transfer of the discounted credit,
which would oblige the bank to deliver the sum of money immediately.
Some, for their part, support the thesis of the consensual contract, where the
reciprocal deliveries - of credit and money - would be obligations of the parties
arising from the agreement of wills on the matter. Thesis of mutual consensual
that we express with some reservations in the respective chapter.
It is also discussed whether the contract is unilateral or bilateral. The answer is
linked to the definition of the previous point. If the contract is real by virtue of
the assignment, the delivery of the money would be an obligation borne by the
bank. If it is real for both elements, delivery and transfer would be essential and
it would be necessary to inquire, from that moment, if obligations arise for the
bank and the client. This assumes, at least, a conditional obligation consisting of
paying the sum of money if the bank does not obtain payment from the assigned
debtor. The bank, for its part, in the opinion of the dominant doctrine, is obliged
to exercise actions derived from the title against the assigned debtor and, in any
case, adopt measures that allow legal actions to be preserved in favor of the
discounter and against the debtor. of credit.
Therefore, and even more so for those who consider it consensual, it can be
concluded that it is a bilateral contract.
The object is twofold: for the client the receipt of the sum of money and for the
bank its placement against the receipt of the credit that is transferred to him. We
refer exclusively to the foreseeable modalities according to the nature of the
credit object of the transfer, since in terms of the delivery of money it is not
necessary to add anything. Three main modalities are recognized: credits
incorporated in a security, credits not incorporated into said securities, and book
credits.
4.1. SECURITIES
The most used and safest for the bank consists of the discount of securities that,
by definition, incorporate the credit owed by the debtor. The great advantage of
its discount lies in the fact that the bank has action against the acceptor or grantor
of the title and against the discounted client as in other cases, but it also has
recourse against the endorsers. There is, therefore, a multiplicity of debtors that
more broadly guarantee the interests of the bank.
There is another interesting aspect and that is that, although it is not established
in the law or agreed in the contract that the assignment of credit is pro-solving, its
non-payment by the obligor, assigned debtor, empowers the bank to turn against
its client discounted in its status as endorser and by virtue of the trading
mechanics of securities.
Due to the nature of securities, several hypotheses can be conceived: the simplest
involves the transfer by endorsement of a bill of exchange, a promissory note or
other similar instrument, in which case the bank enjoys all the advantages that we
have just listed. But the discount of a documented bill is also possible, that is,
those accompanied by the clause against acceptance or against payment and the
documents representing a merchandise for which a contract has been concluded.
In this case, in addition to the fact that the law may confer some special rights,
the bank enjoys the legitimate pressure that derives from having in its possession
the documents representing the merchandise, without which the drawee or the
drawee-acceptor, Depending on the case, they cannot dispose of them.7
The discounting of a security with peculiar characteristics is also conceived, such

as the pledge bond issued by general deposit warehouses, which confers on the
discounter the rights of a pledgee. If, in addition, the certificate of deposit is
endorsed, the discounter acquires ownership of the merchandise and can request
its delivery to the warehouse. In these cases, in addition to the personal rights
against the various debtors, there are real rights that can be transferred with the
document, and that improve the credit position of the bank.8
4.2. OF CREDITS NOT INCORPORATED INTO SECURITIES
In the case of other credits not incorporated into securities and, even, not
mentioned in any document, the procedure for the assignment of credits is
followed, that is, notification to the debtor of the existence of the discount that
enables the discounter to demand in full. direct payment of the debt.
4.3. OF CREDITS IN BOOKS
This is a peculiar modality in which the credits do not appear in titles against the
debtor of the bank's client but, only, in the latter's books. The bank discounts
them through a fiction that more resembles the operation to an advance payment
than to a discount itself. In effect, this is an agreement between the client and his
bank, which is not enforceable against the debtor, since the latter pays directly to
the client with the latter's commitment to immediately transfer the sums received
to the bank. For this reason, curiously and as an exception, the discounted debtor
is obliged to collect the debt, which is why in some legislations he is considered
the agent of the bank, with the obligations inherent to his position.9 It may even
happen that the discounted debtor finds himself constrained to draw bills of
exchange in charge of his assigned debtor and in favor of the bank, but without
the latter being able to negotiate them, keeping them in his possession for
security purposes. it
4.4. CREDITS REQUIREMENTS AGAINST THE CENTRAL BANK
When talking about rediscounting and other passive operations, we had said that
usually the monetary authorities or the central bank, if they are different,
establish minimum requirements so that discounted securities can be presented
for rediscounting. The titles must meet the requirements established by law, refer
to real, not fictitious, operations and correspond to the financing of certain
sectors. Usually it is required that they have two or more signatures and that their
expiration period does not exceed a certain time.
In any case, these are regulations specific to each country aimed at discouraging
the granting of credit through discounts, in certain cases, which are considered
inconvenient in light of the government's credit policy or healthy banking
orthodoxy regarding to the nature and term of the placements.
If the contract is considered real, some of the obligations that we will mention
below should be considered more as the fulfillment of essential requirements for
its birth. In any case, and from a didactic point of view, we have considered it
convenient to present, under the section of obligations, the conduct that normally
corresponds to each of the parties in the celebration or development of the
contract, that is, that the expression "obligations "must be understood in a broad
sense as synonymous with behaviors expected in the contractual relationship and
not necessarily in its legal meaning, which implies the power to
creditor to demand a certain behavior.
5.1. TRANSFER CREDITS
We have said that the logical budget, essential for some or the client's first
obligation, for others, is the pro-sol vendo transfer of the credits that precisely
support the discount banking operation. This transfer must be made in
accordance with the proper mechanisms, according to the nature of the credit, as
we saw in the previous point. The fact that the assignment is pro-solvendo
implies that the client will only be released as soon as said credit is adequately
satisfied, if the bank chooses to pursue the assigned debtor.
5.2. REFUND THE AMOUNT RECEIVED
This obligation, logical if we remember that it is a credit operation, is fulfilled

through the use of two procedures: firstly, the client fulfills its obligation in
advance by transferring the credits intended to pay the debt, if they They are
canceled upon maturity. But, as an obligation remains, in the event that the debt
is not paid by the assigned debtor or that the bank chooses to directly demand
reimbursement when the law grants it such power, the client will be obliged to
cancel the sum and proceed to exercise the actions derived from the credit, which
will return to your assets by virtue of one circumstance or another.
5.3. PAY THE REMUNERATION
It is fulfilled automatically in the case of discount, at least in credits other than

those recorded in books, because when the bank delivers the sum of money, it
discounts, as the name of the contract suggests, the sum corresponding to the
interest between the date on which the operation is carried out and the expiration
date of the transferred credit. When it comes to the assignment of book credits, it
may happen that the bank demands advance payment of interest or that it is
recognized at the time of collection, even though the first possibility corresponds
better to the structure of the discount. 12
Let's see them below, with the same reservation made above, when it is
considered that the contract is real and not consensual.
6.1. DELIVERY THE SUM OF MONEY
The bank's consideration, as a consequence of the transfer of the credit, is to

deliver the sum of money, that is, the value of the credit, after applying the
discount rate.
6.2. SUBMIT THE DOCUMENTS FOR COLLECTION
In most systems, the bank is obliged to present the documents representing the
credit for collection from the debtor and only in the event that the debtor does not
satisfy the obligation, is it authorized to sue for discount. However, we have
already noticed how there is legislation that empowers the bank to take action
against the assigned debtor or against its client. Obviously, one cannot speak of
an obligation borne by the bank since it is a power that it can exercise at its
discretion or not. In this case, the terms are reversed and the bank will choose, in
most cases, to demand reimbursement from the discounted party and only if it
does not obtain it, will it use the document against the assigned debtor. Here
there is, without a doubt, a documentary transfer for exclusive guarantee
purposes, similar to what happens with the mutual pledge.
6.3. TAKE CONSERVATIVE MEASURES FOR THE PROPER EXERCISE
OF ACTIONS
Obligation linked to the previous one that finds its exact content in the discount
of securities, since these documents are subject to certain requirements in the
presentation for payment and the performance of some procedures aimed at
preserving the fullness of the actions derived from them.
We can quickly list them like this: 13
Presentation for acceptance or payment of securities depends on the form of

maturity. Presentation for acceptance, as a general rule, will be unnecessary if
they are documents at sight, optional if they are documents with a deadline and
essential if they are titles payable at a certain time at sight, that is, within a
certain period counted from their presentation, because Only from this date will
the term to make the incorporated credit payable begin to run. The same occurs
with presentation for payment, which may be made within a certain time, for
example, one year from the date of its creation in demand securities or within a
short period from the maturity date. in term securities. 14
6.3.2. I protest
The protest is the express proof of non-acceptance or non-payment of a security.

The trend in Latin America is to turn the protest into an exceptional formality,
given the frequent use of the toilet power. Between making the protest obligatory
but authorizing the parties to excuse it, it seems better not to be required unless
one of them explicitly states it in the same security document. 15
When the protest must be raised because the law requires it and it does not fit or
has not been excused or when it is expressly demanded in the title, it will usually
be done before the public official who leaves a record of the elements of the title
and the circumstances of the non-acceptance or non-payment. Exceptionally, and
this is also a contemporary trend, the intervention of a bank in the presentation of
the bill for collection or the confirmation that it puts on the check of not having
been paid, after having been presented on time, may amount to to protest for
legal purposes. The lack of protest causes the loss of the return shares that the
holder has against parties other than the principal obligor.
To the extent that the bank has the obligation to present the title for payment and
take conservative measures for the proper exercise of the actions, failure to raise
the protest in a timely manner may incur liability. If the main debtor does not pay
because he is insolvent, disappeared, died without leaving a fortune, etc., and the
discounted debtor is forced by the bank to reimburse him for the value of the
credit, he will receive in return a damaged title with which he will not be able to
appeal against other exchange debtors other than the principal obligor. In this
case, it will not be difficult to deduce the liability of the bank arising from its
omission.
Even if you have the power to refrain from collecting the transferred credit and
instead demand reimbursement from your client, practical problems still arise
since you must take care to return the title in a timely manner so that the
discounter takes the necessary precautions, including the I protest. Otherwise, if
it limits itself to demanding direct reimbursement from its client without
returning the instrument or if it does so after the date on which the protest should
have been raised, the bank may incur liability. Even his client could argue that
his obligation has been extinguished because the bank failed, through his fault, to
carry out the procedures aimed at maintaining the integrity of the actions or
inhibited him in practice so that he himself could do so; thesis that, although
remote, always leaves him safe from liability.16
6.3.3. Signs of rejection
In addition to the protest, some legislation requires that within a certain time
notice of rejection due to non-acceptance or non-payment be given to the people
who appear on the title with an address to which it can be sent. The sanction for
not giving said notice may be to respond for the damages that these parties may
suffer.17
There is little left to add at this point since the termination of the contract
corresponds to the extinction of the obligations that have arisen and, especially,
that of the client who is indebted for the sum received. Consequently, general
means of extinguishing obligations are acceptable.18
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1. Numerous definitions can be found in legislation and doctrine. The Italian
Civil Code defines it in article 1858 as "the contract by which the bank, after
deducting interest, advances to the client the amount of a credit against third
parties not yet due, through the assignment, except for good purpose, of said
credit ". Cited by GIRALDI, "Introduction to the study of banking contracts", op.
cit., p. 54. CERV BEFORE, op, cit. p. 240, says that it consists of "the
acquisition, by the discounter, of a credit in charge of a third party, of which the
discounter is the owner, through cash payment of the amount of the credit, less
the discount rate." ALDRIGUETTI, op. cit., p. 42, maintains that it is "the cash
acquisition of a term loan." BAUCHE, op. cit., p. 239, states that it consists of
"obtaining in advance the value of a credit instrument in charge of a third party,
through the transmission of the title by means of endorsement." MURATTI, op.
cit., p. 88, defines it saying that it consists of "the transfer to the bank of an
exchange document to receive, in its place, the nominal amount of the same less
a proportional part of the time remaining until its maturity." For FERRI cited by
BAUCHE, p. 241, is "a complex operation that results from a combination of a
(mutual) credit operation, with a guarantee business ('pro-solvendo' transfer of a
credit right). Finally, for LABANCA and NOACCO, "The Contracts...", p. 59, is
"that by which one party (discounter) undertakes to deliver to the other
(discounter) the amount of a personal pecuniary right pending enforceability that
the latter has against a third party, deducting the corresponding interest between
the time of delivery of the money and the maturity of the credit plus the
commission, and the discounter agrees to assign for the payment or
reimbursement of the sum that this personal pecuniary right receives with the
document that incorporates it (exchange discount) or that implements it (non-
exchange discount). if there was."
2. GARRIGUES, Joaquín. Op. Git. p. 148: "The assignor is not a guarantor: he is
the main debtor of the bank, who has delivered to it a pro-solvendo credit
instrument, which, being unpaid later, demonstrates the failure of the assignment
and renews the original debt. of the assignor".
3. CANO RICO, José R. "Practical Manual of Commercial Contracting. 1. "Bank
Contracts and Securities". Ed. Tecnos SA, Madrid, maintains that "the principle
of good faith that governs commercial transactions obliges the client to provide
truthful information about the causal contracts that have been the origin of the
bills, as well as the bills themselves" (p. 148).
4. BONFANTI, Mario A. "Banking Contracts". Ed. Abeledo-Perrot. Buenos
Aires, 1993. It would seem to disqualify this position by saying: "some consider
that the credit function has a guarantee function. Against this thesis it is pointed
out that, only if the assigned debtor does not pay, the bank can turn against the
assigning debtor, in which case there would be the paradox of a guarantor who
pays. In normal cases, in a credit operation the one who pays is the debtor, not
the guarantor and only the payment of the debtor - not the guarantor - closes the
circle of the operation "," (p, 187). We do not share the position of the prominent
writer. The fact that the client is the debtor does not prevent in any way from
considering that he transfers the titles with an economic function of guarantee
and source of payment that does not make him a guarantor, but simply a
guaranteed debtor and that title will pay the obligation if the bank demands it,
5. Colombia. This is established by saying that "when the credit is granted
through the discount of securities and these are not paid when due, the bank may,
at its option, pursue the payment of such instruments or demand the restitution of
the sums given. for these" (art. 1407 C. Co.). In practice, the doctrine has
understood that such provision does not contain any novelty with respect to
securities, since in them it is obvious by the eventual exercise of the return action
that the law grants to the legitimate holder. On the contrary, the concept has been
taken to structure discount contracts in general and extend it, precisely, to
discounted credits that are not incorporated into securities.
6. CANO RICO, José R. Op. cit. p. 148. GARRIGUES, Joaquín. Op. cit., p. 256.
7. Honduras, for example, establishes in favor of the discounter of a documented
bill, the rights of a commission agent, art. 893 C. Co. In Bolivia, the discounter
of a documented bill has the rights of an endorsee in guarantee as long as he
retains the titles in his possession, art. 1329 C. Co. Paraguay, establishes that the
bank that discounts documented bills has the privileges of an agent over the
merchandise, art. 1430 C. c.
8. Colombia. The Banking Superintendency has carefully developed the issue of
discounting pledge bonds issued by general deposit warehouses, but we want to
highlight the restriction according to which ".The Warehouses... are not
authorized to pay commissions for discounting pledge bonds. pledge to its
clients, because there is no cause for it, since when the bank discounts the bond it
does not provide an additional service, but rather carries out a credit operation
remunerated with the interests authorized in this type of operations" (CE 007/96,
Title. V Chapter. 11, 6.4).
9. Mexico, art. 289 LGTOC; Honduras, art. 895 C. Co.; El Salvador, art. 1124 C.
Co.; Guatemala, art. 733 C. Co.
10. CERVANTES, op. cit., pp. 243 And ff.
11.V. Supra, Chap. IX.
12. Colombia. The interest or discount rates must always be expressed in such a
way that the client can know the "annual effective rate" that is, not simply the
nominal rate that applies to the operation, but the one that results from taking into
account the effect of the advance payment and the Settlement Period. In other
words, the nominal interest or discount rate of a credit operation carried out for
one year would be identical to the nominal if the interest were paid at the end of
the period, as when it is said to be 12%, a loan is received for 100 pesos and after
a year you pay 112. But if the way of paying the interest is in advance of the
expiration of the term, as when in the same example interest is paid semester or
quarter in arrears or, even, in the extreme, the interest is charged in advance, as
occurs in the discount, the The result will be that the effective rate is higher than
the nominal one, since whoever advances the payment deprives himself of the
opportunity cost that would result from having that money invested between the
moment in which he makes it and the moment in which the main obligation
matures. The Banking Superintendency in the Basic Legal Circular defines the
effective interest rate as that which "refers to the unit of time and the unit of
capital and is settled per unit of time" and the nominal interest rate as that which
"refers to the unit of time and to the unit of capital and is settled by fraction of
the unit of time" (CE. 007/95. CI/, TI/, 1, h), 16).
13. GARRIGUES, Joaquín. Op. cit., p. 148. "In effect, when a pro solvendo
assignment fails, the assignee can restore the title to the assignor and claim
payment of the debt that motivated the assignment of the credit. But this
restitution must be made in the same state that the credit was in when it was
transferred. In other words, the bank must return to its assignor the bill of
exchange endowed with the same rights that it had when transmitting it to the
bank."
14. Intal, arts. 68 to 84.
15. This is established by the Intal when it says that "the protest will only be
necessary when the creator of the bill or some holder, inserts the clause 'with
protest' on the obverse and with visible characters" art. 85. Colombia establishes
the same principle, art. 697 C. Co.
16. GARRIGUES, op. cit. adopts this position by maintaining: "The bank cannot
exercise against its client the causal action derived from the discount to
reimburse itself for its advance, if it does not return the title to its assignor in the
same state in which it received it, that is, not damaged. If through its fault it
allowed it to be harmed, the Bank must know that the decline of its exchange rate
return action is linked to the decline of its causal action, born of the discount
contract" (p. 284).
18.V. Supra, Chap. I 4.4.
Chapter XV
FACTORING
1. NOTION
There are multiple questions that arise when undertaking the study of this
contract. The first says with its name because, as in the previous contract, we
have used the English expression that translates in Anglo-Saxon countries or in
those that have taken it as their own, a whole complex of services that does not
find an easy and clear name in English. Spanish. Some authors have proposed the
term factoring, synonymous with factory, the latter defined as "employment and
assignment of the factor" and "office where he resides. Given, however, that -
from a legal point of view the notion of factor or Commercial dependent suggests
a relationship of management of other people's businesses in a commercial
establishment, its possibilities are too broad to indicate the specific services that
correspond to the contract.
However, and despite the conceptual imprecision that may arise, we have
accepted as necessary to use the expression factor to identify the company or
natural person that provides the factoring or factoring service. Similar difficulties
have been found to adapt the expression to other languages, both to name the
contract and the person or entity that provides the service, although there are few
cases in which the authors have preferred to retain the English expression as
representative of the contractual modality that we will see shortly.2 If we wanted
to better insinuate the content, we could talk about a modality of financing or
firmly mobilizing the billing of a merchant, but, of course, the description goes
beyond the necessary synthetic presentation of a contractual name. For this
reason, we will use the expressions factoring and factoring interchangeably,
without being satisfied with either of them.
A second point that gives rise to concerns is knowing to what extent this
relatively new contract can be concluded by a commercial bank. There are
countries in which the possibility is not discussed, because it is defined in the law
as the power of credit establishments of this type, to carry out operations that
coincide with the fundamentals of the contract.3 In the others, it can be stated
that commercial banks are authorized to grant advances and acquire and sell bills
of exchange, promissory notes and other securities. Based on this generic power,
they could, therefore, enter into the contract in relation to part of their clients'
portfolio, as long as it was represented in one of the aforementioned securities or
were exchange or duplicate invoices, since meeting the requirements of the
securities would fit within said authorization. It could be added that the
management of collections also corresponds to its functions and that certain
modalities of technical accounting advice and provision of other services could
be structured on the basis of orders received from its clients to be carried out
through the fiduciary sections. or mandate or as part of the collection itself. From
which it is concluded that, with some not too subtle elaboration, it could be
argued that most of the commercial banks in the area would be in good condition.
of entering into the contract, at least to develop the most interesting possibilities
that arise from it and, of course, the central one of purchasing a portfolio.
Once this question is satisfied, an academic question arises about the nature of
the contract and the derived operations to know if it should be classified among
the contracts that precede the carrying out of active operations or if it could be
treated as support and antecedent of neutral or complementary operations.
Because, in effect, the richest possibility derived from the contract consists of the
acquisition of invoices or collection accounts from the client in charge of its
buyers; possibility in which there would not be a true credit operation, that is,
there would be no current transfer of ownership of an asset from the client to the
bank or vice versa, with a charge to be returned later. Although, complementing
the previous possibility, there is, among others, the possibility of making
advances or granting credits both on invoices to be sold and on inventories, in
which case the credit rating is indisputable.
Let's say, then, that if the operation is analyzed teleologically (due to the purpose
that leads the parties to contract) it can be concluded that for the merchant there
is an interest, the reason for his action, to obtain liquidity from the banking
entity. , by mobilizing all or part of its portfolio and that, due to this
circumstance, it would be appropriate to treat the contract, as we do, in this part
of the book and not in the next. But, furthermore, and as far as the bank is
concerned, it does not buy the portfolio to be kept indefinitely in its assets, as
- would occur with the permissible investment in shares of a company, but for
collected. That is to say, what the bank buys is a loan and this means transferring
its resources to the adherent client to recover them from the hands of the assigned
debtor, but always in an intermediary function, which allows us to recognize,
ultimately, a typical credit business, which in We could classify this case as
indirect, due to this circumstance.
1.1. BACKGROUND
It is maintained by the authors that the direct antecedent of this contractual form
were the orders that the English producers, especially of textiles, formulated to
their factors in the United States to provide them with certain services, including
advances on the invoices in their possession. and at the expense of American
buyers. Provision of services that produced a rapid evolution in the
organizational structure of the factor to replace its function as a storage and
selling agent with that of a financing entity for English products.4 I
The convenience of being able to quickly mobilize your portfolio and the
circumstance of having an intermediary, with deep knowledge of the market and
the financial conditions of the debtors, explain the importance and attractiveness
of this service for certain types of companies that, due to their size, Self-
financing difficulties, reduced profit margins on large volumes or the nature of
their products, require agile collection and a high turnover in their inventories.
1.2.
DESCRIPTION AND CONCEPT OF THE OPERATION
We will see how, in its most evolved forms, factoring implies the lack of a
defined object and rather includes the provision of a whole set of services that
require us to focus on one of them as a point of reference, to determine the main
obligations of the companies. parts and the consequences derived from them.
In a schematic way it can be said that once the contract has been concluded
between the factor (bank) and the adherent industrialist or merchant (supplier),
the latter notifies the clientele of its existence, from that moment on it subjects
the orders to prior analysis and approval of the factor and sends him the invoices
resulting from the shipments carried out, to obtain reimbursement immediately or
to his
. expiration, as the case may be. Simple scheme that is enriched by the possibility
of obtaining complementary services such as the production of invoices,
previously determining their physical conditions, their content, etc.; the issuance
of securities that may arise; the management of accounting records; the
commercial investigation of the clientele and, even, the judicial or extrajudicial
collection of credits not yet transferred to the factor.
Thus, in our opinion, the Argentine definition is fortunate, according to which the
contract seeks to "grant advances on credits from sales, acquired, assume their
risks, manage their collection and provide technical and administrative
assistance." It has also been said that it consists of a system where credit
assistance is combined with the administration and collection of invoices
resulting from sales of goods or services.5 Others, referring to one of the
modalities of international factoring, affirm that it is the purchase of credits from
exporters that they have against their foreign buyers.6
From all of this it follows that for the merchant who uses the service it implies a
set of advantages that, in addition to the financial ones themselves, include the
possibility of delegating the administrative management of their portfolio, with
the advantage of having strict controls over the selectivity of its clientele.
1.3.
REASON FOR ITS DEVELOPMENT
It seems essential to highlight how the development of this contract obeys market
realities by virtue of which its use constitutes an adequate response to the needs
of the community and, consequently, even if, from the point of view of the
legislative powers , its realization for commercial banks has been allowed for
many years, only in recent times have such realities stimulated its growing use.
Perhaps the starting point to understand it is to affirm how in consumer societies
the use of credit has become an irreplaceable mechanism for economic life, to a
point where authors and courts have rightly stated that credit constitutes a " social
good". You can't live without it. It is required at par in all stages of the economic
process. They need it
- industrial to manufacture their products. They must grant it to wholesalers to
ensure its distribution. It is required by retailers to reach consumers and is
required by them to be able to acquire the goods and services offered to them.
and as the media are different, including aggressive and overwhelming
advertising, which are responsible not only for reminding people of their needs
but also for creating them artificially, and all of them seem to be reduced to the
common expression of acquiring and having goods such as maximum ambition
of the world in which we live, this allows us to understand that without credit it is
impossible to access the expanded market that is offered.
As we have stated on numerous occasions and at conferences, people's

purchasing power is no longer measured by their present income but by future
income, increasingly over longer periods. The sale of goods and services is not
made in cash but in installments or in such a way that, finally, cash payments
refer to the partial delivery of goods that will later make up the whole that is
desired to be acquired. As occurs, for example, with the sales of literary or
scientific products that are no longer offered in the original compilations or
versions, but are supplied to the market in monthly or periodic installments or
installments. Or, as most people are supposed to purchase today, durable
consumer goods, including a home, a vehicle or so-called household appliances.
Well, this imperative need for credit at all levels, especially in those sectors that
produce mass-acquired consumer goods, such as vehicles, to take a very
representative example, has created serious difficulties for financial
intermediaries, since they are seen forced to channel increasingly greater
resources towards them, increasing not only the particular risk with each of the
manufacturing plants but also the global exposure with a sector of the economy
that, like all others, may be subject to cyclical difficulties or cyclical variations.
that alter him deeply. All of this conspires against the elementary principle of
financial activity that makes risk dispersion the golden rule for its operation.
Well, this has led to giving the contractual technique of factoring or permanent
and massive portfolio purchase a particular appeal, since if, for example, a bank
has received from the industrial plant producing vehicles a request for a
supplementary credit for one million of dollars, the banker can find an alternative
route, immensely favorable, granting 100 credits of 10,000 dollars to the final
buyers of the vehicles, that is, allowing the industrialist to sell for cash and thus
obtain the financial resources he requires in the short term and that the credit is
dispersed among the buyers, who, in themselves, have been carefully analyzed as
subjects of credit and usually grant complementary guarantees on the same
vehicle and through insurance of different types, which very reasonably cover the
creditor's risk. . To which we should add, in the example taken, that within the
expectations and ambitions created by consumer societies it would seem that one
of the products that most satisfies the aspiration of obtaining a better status is the
purchase of a car, which leads its owner to be willing to give up many other
goods or comforts, rather than return to the mass of pedestrians without a car.
Furthermore, it is indisputable that, from the point of view of financial technique,

factoring introduces a new and fundamental element to the extent that credit is
not granted based on the payment capacity of the bank's client but on the quality
and payment capacity of the final debtors of the latter, which leads to granting it
without any consideration to the first circumstance. And this is revolutionary in
many ways because a small producer who, in itself, would not have a great
capacity for payment or, therefore, debt, but who is dedicated to manufacturing
an excellent product and finds large markets of buyers, will obtain automatically
and through this means, a real expansion in their capacity to access resources
from the financial system without, in itself, having yet strengthened their own
assets or their individual debt capacity. '
For the above reasons, we have maintained that the appearance of factoring
constitutes a second level of credit service, after discounting, to facilitate clients'
mobilization of financial assets and, in particular, their portfolio. That is to say, if
this was appropriate for a world in which business credit appeared to be
occasional or confined to some sectors or operations, its current massification
finds in the factoring contract a better response that also carries implicitly the
message that it is appropriate It is more up to the businessman to dedicate himself
fully to his productive activity and leave to the banks what is theirs, that is, the
financial activity. And perhaps that is why the service is particularly attractive for
medium-sized or expanding companies, because given the increase in their credit
sales and the need to set up their own organization to carry out the special
accounting they require, manage the portfolio, and carry out collections. internal
proceedings, advance judicial collections and, of course, bear the losses of non-
payments and financing costs, it is a more advantageous option to leave this
complex process in the hands of a specialist against the payment of a price that,
most likely, will be lower than the of the costs that they would have to assume
but that, even if it were not, allows them to free up their administrative capacity
and their energy to dedicate exclusively to their business activity.
2.
LEGAL NATURE
To talk about it, we must focus on the fundamental provision that usually derives
from the conclusion of the contract, since, in practice, this is accompanied by a
set of complementary services.
2.1. THEORY OF CREDIT OPENING
Some authors have maintained that in the factoring contract there is an opening
of credit made by the factor, which would be usable against the presentation of
the corresponding invoices or collection accounts. However, one cannot properly
speak of early availability, in the sense of the existence of a credit quota, since, as
a general rule, the amount of the contract is not essential and may result in
practice from the volume of accounts receivable. that are transferred to the factor.
But, in addition, when opening credit there is an obligation for the borrower to
reimburse the sums that the bank has had to disburse in compliance with the
provisions of the contract.7 Such a thing does not happen, as a general rule and in
the most attractive modality. , when it comes to factoring.
2.2.
DISCOUNT THEORY
It cannot be denied that there is an enormous similarity between factoring, in
some of its modalities, and the discount contract. It could, in effect, be an
advance on undue credits, where the remuneration in favor of the factor would be
the result of the application of an interest rate for the period between the
conclusion of the contract and the maturity of the obligation. 8 Factoring is
differentiated from discounting in cases where the former does not imply
immediate disbursement, upon transmission of the invoice, but such
reimbursement is only carried out by the factor upon expiration of said invoice.
But it also differs, in most cases, and this would be the essential element, in that
the transfer of the invoice is not done "pro-solving" but rather the factor assumes
in its entirety the risk of the insolvency of the debtor without having the
possibility of vQlverse against his client. Now, when in factoring the transfer of
credits is made with legal recourse against the transferor, the similarity with the
discount is indisputable,9 but we think that there the figure would not be
developed with the specificity that differentiates it and constitutes, precisely , its
reason for being.
2.3. THEORY OF PURCHASE, SALE OR ASSIGNMENT OF CREDITS
The theory that seems to best fit the main modality of the contract is that of the
sale or assignment of credits, that is, the acquisition of the right by the factor
whose existence is guaranteed by the client, but without being responsible for the
solvency of the debtor, which which explains why, in most cases, the factor lacks
recourse against his client. Multiple and successive sales that would allow us to
maintain that the contract, rather than a sale, has as its main objective carried out
on a permanent basis, in a scheme that could be subsumed within the concept of
the supply contract. Of course, if the other complementary services are taken into
account, different contractual modalities arise, with their own legal natures, such
as mutual, in the case of an advance payment; the mandate, if the factor's
obligations refer to carrying out collection procedures, etc.1O
The important development of this contract is reflected, among others, in the
existence of the Ottawa Convention on "International Factoring", prepared under
the auspices of Unidroit and signed in May 1988.11
As in all contracts, we refer to notions studied in the first part of the book and in
accordance with which we could affirm that the factoring or factoring contract
would be main, consensual, bilateral, because obligations arise for both parties,
onerous, commutative and successive tract. Add, if you wish, that in most of our
countries this is an atypical and unnamed contract.
4. PARTIES INVOLVED
4.1. THE ADHERENT CUSTOMER
This is the natural or legal person, industrialist or merchant, who, having a

significant volume of portfolio, presents its financial statements to the factor or
factoring company; their sales systems; commercial information about your
debtors; the economic indicators about the sales process, such as portfolio
turnover, percentage of overdue portfolio, doubtful collection, written off, etc.
Based on this information and prior to entering into the contract, you obtain the
fundamental service of cash settlement of all or part of your portfolio.
4.2.
THE FACTOR (BANK)
This or the factoring company is the entity that, with financial resources and a
technical accounting structure that allows it to manage billing, from the
investigation of the economic solidity of the buyers to its collection through
judicial means, offers the services that we mentioned above. and especially that
of acquiring credits at your own risk.
4.3.
THE DEBTORS
Strictly speaking, it can be stated that they are not exactly parties, from a legal
point of view, since they are undoubtedly third parties, but they play a
fundamental role in the development of the contract. We could say that its
consideration is decisive for the conclusion of the agreement because if the
physical object is the invoices and the legal object is the credits, what ultimately
counts for the factor is the economic capacity of the debtors, that is, the solvency
with which they will be in a position to satisfy the obligations under his
responsibility.
5. MODALITIES
Basically following the classification presented by Rolin1z we can present the

following factoring modalities.
5.1. ACCORDING TO THE TYPE OF COMPANY
5.1.1. Traditional factoring3

This is the form of service provision that seems to correspond, in general, to the
execution of the contract in Europe and where the fundamental provision by the
factor consists of the acquisition of credits without recourse against its client,
with the eventual provision of ancillary services, but of secondary importance.
5.1.2. Expanded factoringdol4
In this case, the factors, in addition to providing the fundamental service already
mentioned, offer a whole set of complementary services that correspond to those
that we will mention in the next point of this chapter. There is therefore no
essential difference with the previous one; Only in the second case are much
broader and more complete services offered that cover a good part of financial
aspects and that make the factor a true credit intermediary.
5.2. ACCORDING TO THE FORM OF EXECUTION
5.2.1. Factoring with notification15
This modality corresponds to the most recognized, the one in which the client
undertakes with the factor to notify all its buyers of the existence of the contract,
not only by general means as a commercial notice, but by including a clause in
each of the invoices where it is stated that the corresponding credit can only be
paid to the factor.
5.2.2. Factoring without notification16
In this case, the existence of the factor goes unnoticed by the debtors of the
adhering company, who ordinarily proceed to pay their credits at the scheduled
time. The adhering company, for its part, undertakes to the factor to immediately
transfer the amounts thus obtained and on which it has frequently received an
advance from the factor. The usefulness of the contract is reduced in this case,
since the factor's service is limited to covering the risks of insolvency and
eventually financing the client without other very important services, as we will
see, fitting within its benefits. It has the scientific interest of constituting a
modality similar to that of discounting credits in books. 17
5.3. ACCORDING TO FINANCING
5.3.1. Factoring at maturity 18
In this case, the factor is obliged to its client to pay the invoices upon the
expiration of each one of them or at a certain average term of their maturities,
previously agreed upon between the parties. That is, the client or adhering
company does not actually receive an advance but rather the security that when
the credits mature, the amount will be paid to them. The bank purchases the
invoices without recourse, but simply pays them to the extent that they become
due, even if at that time they were not paid by the debtors.
5.3.2. Factoring at sight19
Under this modality, however, and unlike the previous one, the factor
immediately pays into his client's account the amount of the credits that are
presented to him, but since this implies a financial cost, in addition to the general
remuneration for the service, settles an additional payment calculated on the
amount of the credit.
5.4. ACCORDING TO THE TERRITORIAL SCOPE
5.4.1. Domestic factoring

It refers to the assumption that the adhering company and the buyers of its
products are located in the same country.
5.4.2. International factoring
Unlike the previous one, one of the parties is located outside the factoring
company's operating territory. It is the basic event planned by the Convention
that we have called COF!.
5.4.2.1. Export factoring - Fortification
Under this modality, the factoring company acquires invoices from its member
companies in the country, in charge of foreign buyers to whom they have shipped
a merchandise. For adequate knowledge of the foreign market, factoring
companies usually establish their own chains or with the help of correspondents
in other countries, with which they accumulate vast and complete information on
buyers in different economic sectors, technically supporting the provision of the
service and acquiring a more advantageous position than an individual producer
could have to analyze and evaluate its potential buyers.
It is within this context that the fortification technique has been developed, which
involves the purchase, without recourse, by a bank in the exporter's country, of
the bills of exchange accepted by the importer or of the promissory notes granted
by the importer, previously guaranteed by a bank in your country.
Its use is interesting if the export credit is inadequate or more expensive or the
export credit insurance leaves some risk on the seller's head and has all the
advantages derived from factoring, predicable in this case of an international
operation, such as the possibility of quoting on credit but obtaining cash
collection, the elimination of commercial risk and political, transfer and
exchange risks and exact knowledge of the financial cost of the operation. But,
precisely because of the above, it is usually an expensive mechanism because the
banks or fortifying companies charge a price that takes into account the cost of
the different variables, both financial and coverage of the various risks.
Although it participates in the principles and characteristics of factoring, there are

some peculiar notes linked to the type of international business it involves. While
in the first contract the factor usually studies the universality of its client's -
adherent - portfolio, the forecasting technique involves an individual study of
each case. The former is normally used in domestic markets for short-term
operations, while the latter satisfies medium-term financing needs. In the former,
the factor assumes the risk of the transferred client based on its estimated
solvency, while in the latter such assumption is supported, above all, by the
existence of the endorsement or guarantee of the first-line bank that intervenes in
support of the operation. While factoring involves the possibility of offering a
series of complementary services, given the permanent relationship with the
adherent client, fortification constitutes a unique and eminently financial
mechanism.
It should also be noted some differences with documentary credit, which is why
in both cases they are payment mechanisms, closely linked to international sales.
While documentary credit involves the use by the issuing bank of its own
position or its lines with correspondents, fortification usually involves going to
international markets to finance the particular operations that are assumed. While
in the former the paying bank makes a formal study of the documents presented
and it is in light of their legal appearance that it makes the decision whether or
not to pay, in this the fortress makes a background study, both of the purchasing
client and the operation, as well as, of course, the quality of the bank that backs
it. Finally, while in the former, bills of exchange may or may not be issued, in the
latter, their existence or that of equivalent promissory notes constitutes the
budget necessary to carry out the operation.2O
5.4.2.2. Import factoring

In this case, it is the acquisition of invoices from foreign clients or participating
companies by national importers or buyers. In this case, the company's client is
abroad while the buyers are in their own country, which of course allows them to
make a faster and more direct study of their financial conditions, their payment
capacity, etc.
6. FACTOR SERVICES
The services of the factor (of the bank in our case), which we have already
mentioned, are diverse depending on the companies and countries. They can be
presented, however, on a scheme consisting of the guarantee of the credits,
resulting from their purchase, the management or collection of the same and their
eventual financing.
The fact that there is no defined and precise object but rather a complex
possibility of services, has inclined us to present a list of the best known, to treat
as the factor's own obligations, in the next point, those that would correspond to
the most important. However, it is clear that the provision of any of the others
will generate for the factor the obligations inherent to the contract to which they
correspond.
6.1. ASSUMPTION OF CREDIT RISK
The most important service that results from the acquisition of credits by the
factor is constituted by the simultaneous assumption of financial risks so that, by
renouncing the resources against the adhering company, it sees its natural credit
risk disappear. In this sense, it is improperly stated that credit insurance or
guarantee is granted by the factor. In reality, it is nothing more than the logical
consequence of purchasing a handbag, therefore, lacking recourse against the
seller - except in the case of hidden defects or claims from third parties. who
claim to have a better right - the risk of eventual non-payment by the debtor of
the credit is their responsibility. The assumption of risk, moreover, finds its
support in the existence of a double obligation borne by the
- adherent client and that can be expressed through the enunciation of the
principles of unity and universality in relation to billing.
The first means that the adhering company is obliged to send the invoices to a
single factor and, the second, to send them all, so that the client does not have the
possibility of selecting them. From where, knowing the factor that will receive all
the invoices, you can treat the problem within the laws of large numbers, taking
into account, of course, the very careful studies that you must have made of the
market in general and of each of the clients in particular. It should be noted,
therefore, that the result of the purchase cannot be confused with that of a typical
credit insurance, because while its existence arises for the factor the need to pay,
that is, its obligation consists precisely in it. , the insurer, for its part, only pays
upon the occurrence of an incident or, in other words, it is not obliged to pay
directly but rather to compensate. 21
In order to assume financial risks, the application of the principles of unity and
universality is not enough for the factors, but they reserve the power to
previously qualify the clientele of the adhering company, both through a general
study of its books and commercial relationships. prior to the conclusion of the
contract, as well as requiring that each order be submitted for approval. It will
only then be possible to transfer the invoices or accounts as property and without
recourse as long as they correspond to orders previously approved by the factor.
Unitary approval that can be replaced by the establishment of credit quotas for
buyers, which they do not know, but which are imposed on the adherent client
and which allow the transfer of invoices up to a certain amount per client and
without prior consultation.
In summary, credit assumption implies the impossibility of selecting the invoices
or buyers that are going to be submitted to the contract by the adhering company,
while the factor can be selected through the exposed mechanisms. Which means,
in practice, that if an order is not approved by the factor, but is anyway
dispatched by the adhering company, the corresponding accounts cannot be
transferred without recourse, but it could be agreed that they would be received
upon collection.
An observation that must be made regarding this service and the obligations that
derive from it is that it is not always provided by factors; There are cases in
which the transfer of credits is "pro-solvendo" and the factor enjoys a return
action against his client. Although this is not the most interesting possibility, as it
deprives the contract of its fundamental attractiveness, the truth is that in some
countries it is practiced and seems to be a much more widespread trend than the
other. 22 In our opinion, this completely denatures factoring since it assimilates it
to a discount mechanism, in the face of which it would lose all its individuality
and reason for being.
6.2. DEBTOR ADMINISTRATION
It includes several possibilities, among which we will mention the most

important ones.
6.2.1. Management and control of invoices
This service can start from the drafting of the invoices in order to guarantee that
they fully comply with the law and constitute the most appropriate title for
eventual judicial collection. Consider, for example, that it is more convenient for
the creditor to have securities, provided by law with certain advantages such as
the presumption of an open date or authenticity of the debtors' signatures, etc., in
which case, instead of A common invoice will prefer to have exchange or
duplicate invoices. However, this service entails obligations for the adhering
company, since it is constrained to accept the formats and clauses imposed by the
factoring company.
Once the content is determined, the management of invoices involves their own
classification and physical conservation, the establishment of records that allow
their timely presentation, etc.
6.2.2. Invoice collection and reimbursement
This service says with the timely presentation to the debtors of the invoices
received that will be of direct interest to them when it is a sales contract or will
correspond to the fulfillment of an obligation in favor of their client, otherwise,
or for the portion of portfolio with respect to which you simply carry out
collection management. Timely presentation is essential when the possibility of
taking legal action depends on it or the omission of which may result in the loss
of some shares, in the case of securities. In the event that he only carries out the
collection management, once the payment has been made by the debtor, he must
reimburse the amount to his client, prior to the deductions that correspond to his
remuneration, if it has not been paid in advance.
6.2.3. Accounting
Another service that deals with the administration of debtors and that is logical
given the management and control of their credits, is to keep the accounting
corresponding to the portfolio that, ordinarily, constitutes the entire portfolio
generated by the adhering company. In this way, the auxiliary books that record
the sales volume and collections will be kept by the factor as part of the services
or obligations derived from the contract. It would not be difficult, furthermore, to
carry out comprehensive accounting for clients who wish to do so, as an
additional service.
6.3. FINANCING
Direct financing by a factoring company presents a categorical advantage over

known systems, as mentioned, since the financing
Traditional takes into account the debt capacity of the potential debtor, so
medium-sized companies or companies that are just starting out encounter great
limitations in achieving access to timely and sufficient credit. On the other hand,
as in factoring what counts and is analyzed, ultimately, is the capacity of the
buyers of the possible debtor - acceptors or responsible for billing - the
circumstance that a company, even medium or new, works with lines to being
sold to firms with great economic solvency, automatically expands their credit
capacity.
Financing takes two specific forms: on invoices and on inventories.
6.3.1. About invoices
We have already pointed out how the most important service is constituted by the
assumption of risk in relation to the invoices received. Leaving it aside and
studying only the moment in which clients receive the amount of the invoices,
whether or not there is an appeal against them, let us remember that due to this
aspect the operation may involve cash payment or payment upon maturity.
In payment at maturity we assume that the credit risk is always assumed by the
factor, since one could not speak of factoring if he were limited to receiving
invoices to pay when due, but with the possibility of turning against his client in
the event that the debtors did not cover their amount. This would be a simple
collection management, possible as a collateral service but insufficient, on its
own, to configure this contract. The disbursement with the factor's own resources
will occur when, precisely, the debtor does not pay. You will then have to
exercise the actions derived from the titles in your possession.
When, on the other hand, the factor pays upon receiving the invoices, there is
undoubtedly a direct financial operation that allows the client to receive in cash
the amount of the sales made on credit, deduction made of the commission and
interest on the amounts; advance in relation to the due date. This financing is
different from the guarantee on the solvency of the debtor that may or may not
coexist with it. If the risk is assumed, the operation will be a purchase and there
will not strictly be a direct credit since the factor will not be able to turn against
its client, who will have obtained the benefit of firmly mobilizing his portfolio,
getting rid of it. In the opposite and exceptional case, of receipt of invoices
without guarantee, a typical credit operation will be presented between the
payment date and the expiration date, since the client will have the obligation to
reimburse if the debtor does not satisfy its obligation.
6.3.2. About inventories
Since the factor knows better than anyone the commercial activity of its client, its
flow of resources and its payment capacity, as well as the volumes of stocks that
it has to maintain to meet its demand, it is in unbeatable conditions to grant
credits on the merchandise. or raw materials in the process of transformation. In
this way, the adhering company finds in the factoring company a particularly
agile financier, which will be able to serve not with a cash payment at a certain
time, but with the transfer of the invoices corresponding to the sale resulting from
the transformation of the raw materials for which financing has been received.
Here there will also be a credit operation that will lead to payment in the most
general case, through the "pro-solutum" delivery of the securities and in the
exceptional case - without credit guarantee - with their "prosolving" delivery.
6.4. OTHER SERVICES

A quick list of the main ones that can be provided in addition is as follows:
6.4.1. Market study and client selection

The factor can carry out general market studies both because of the knowledge he
has of those that correspond to his client's activities, and because they tend to be
complemented by the vision provided by other markets of different clients, even
if he also provides services to them, since that are part of a sector whose figures
are widely disseminated and with respect to which a sufficiently representative
global evaluation can be made. This is how the launch of new products to sell on
credit, which generally have some relationship with the ordinary lines of the
company, can be subjected to the factor so that it investigates the market
possibilities and even prepares a preselection of clientele such as most advisable
from the point of view of its economic solidity, with which the promotion can
begin.
6.4.2. Commercial information
For reasons that are obvious, it is also feasible for the factoring company to
provide commercial information services, which are enriched as soon as there are
chains of companies that exchange information, even in different countries.
6.4.3. Statistical information
The factor is able to offer its client statistical lists that show the behavior of the
market and that can be obtained with some ease by studying the different
production companies, their sales volumes, profitability indices, etc., with the
natural reserve regarding the aspects that you know by virtue of managing other
competing clients. Which will lead, in practice, to providing global data, without
discriminating by entities, given the reserve loads that must be supported, but
which constitute an excellent point of reference for your client. To which
financial analyzes of the competition can be added, taken from their published
balance sheets.
6.4.4. Storage of goods
Some factoring companies, returning a little to the origins of the institution, offer
their clients the possibility of keeping the raw materials that are going to be
processed and the products obtained in storage, while they are shipped to their
buyers. This possibility does not fit, surely, for commercial banks in specialized
banking countries in which there are general deposit warehouses, since among
the functions of the former it is not usually enshrined that of receiving goods in
storage, which is reserved for the latter. . In any case, the service is provided due
to factors in some countries and can be an interesting complement for its clients.
6.5. COMPREHENSIVE ADMINISTRATION
In practice, it turns out that the most complete and attractive service provision for
the client, in addition to the other services, may consist of the factor assuming the
comprehensive management of the portfolio through the combination of a series
of contracts at its disposal. Consider, for example, an agreement under which the
bank undertakes to buy 50% of the client's portfolio, which also includes the
purchase of 100% of the portfolio generated by its three main clients, up to a
certain sum each. that, on the balance, compared to the one that originates in the
month, it offers to deduct all that is caused by certain types of previously
qualified clients and the rest is received in collections. Different consequences
will flow without difficulty there: you will free yourself from the risk with
respect to the purchased portions, you will assume it, eventually, against the
discounted portfolio and you will maintain it, in its entirety, for the segment that
is barely received in collection. But, above all, and as a result of using different
combined paths, the comprehensive management of the portfolio produced will
remain in the hands of the banker. And he will have an obvious interest in
arriving at that eclectic formula, because once he has set up an organization
dedicated to portfolio management, he will find it beneficial to carry out
complementary collection efforts, even if it is not his acquired portfolio, because
in this way he will be able to maximize the distribution of its fixed costs and, in
this way, improve the expected profit of the operation.
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1. BAUCHE, op, cit., pp. 274/3. Dictionary of the Spanish Language, eighteenth
edition, Madrid, 1956, p. 605.
2. This is the case, for example, of ROLlN, Serge. "Le Factoring" (A prize in
charge of creations) Ed. Gérad & Co., Verviers, 1972, who, given the possibility
of using the expressions "factorage" and "facteur", prefers to use the terms
"factoring" and "factor", this one of clear Latin origin. Colombia, in its Organic
Statute of the Financial System, continues to call these companies factoring or
portfolio purchases, art. 108 No. 2 Superintendence of Securities. Concept 9604
141/96. BJF #857, p. 14.
3. CARELLA, Mario. "Notions about Factoring in Argentina." FELABÁN
Magazine, No. 15, Ed. Kelly, Bogotá, 1973, pp. 1976 And ff. notes how article
17 of Law 18061 of 1969 empowers commercial banks in its subsection e) to
"grant advances on credits from sales, acquire them, assume their risks, manage
their collection and provide technical and administrative assistance", Colombia
authorizes to Commercial Banks "discount and negotiate promissory notes,
drafts, bills of exchange and other debt securities" and "buy and sell bills of
exchange currency and gold", EOSF, arto r, a. The fact that it has recently been
recognized that exclusive purpose factoring companies operate under the
supervision of the Banking Superintendency does not limit this possibility in any
way. It is common to verify how some functions traditionally assigned to banks
and other credit establishments, They are developed simultaneously by
specialized entities, for reasons of technology, marketing, community service,
etc. This happens, for example, with the fiducia also carried out by the Trust
Companies, art. 29 fOSF
4. ROLlN, op. cit., pp. 10 And ff. BAUCHE, op. cit., pp. 274/5.
5. CARELLA, op. cit., p. 177. MARTINS, Fran. Op. cit., 469 et seq.
6. SCHUL TZ, Hugo. "Factoring". FELABÁN Magazine, No. 15, p. 174.
7.V. Supra, Chap. XIII.
8.V. Supra, Chap. XII.
9. KONDER, Fabio. "Factoring in Brazil." FELABAN Magazine, No. 18, pp. 84
and 85.
10. BAUCHE, op. cit., pp. 305/6. DE CAMARGO VIDIGAL, Gerardo.
"Banking Contracts". FELABÁN Magazine, N" 36, 1979, p. 203. maintains that
"in factoring operations, on the contrary, there is no loan: the bank is subrogated
to the client's rights, substituting it for the risks of non-payment by the drawee.
For the drawer there is an advance on a future collection, through the definitive
transfer of the papers or documents of the respective billing. In that case, it is not
a loan but rather the negotiation of securities." Colombia. It defines supply as
"...the contract by which one party undertakes, in exchange for consideration, to
perform in favor of another, independently, periodic or continuous provision of
things or services" (C. Co., aft. 968). COFI has established, regarding the
international leasing contract, that references to purchases of "goods" and "sale of
goods" include the notions of services and provision of services. (art. 1, 3).
11.V. Footnote No. 16 of chapter 1. We refer to this Convention with the

acronym COFI.
12. Op. cit., pp. 25 to 28.
13. "Old line factoring."
14. "New style factoring".
15. "Notification factoring", This requirement is mandatory for contracts of
parties to which the COFI applies, (ar!. 1,4).
16. "Non-notification factoring".
17.V. Supra Chap. XIV, 43.
18. "Maturity factoring."
19. "Credit-cash factoring."
20. GIMUR, Charles. "Fortetization and international banking." FELABÁN
Magazine, N" 39, 1980, p. 305, ROWE, Michael, op. cit., pp. 301 And ff.
21. KONDER, Fabio, Op. cit., pp. 88/9.
22. CARELLA, op. cyl., pp. 177/9.
23.V. Infra Chap. XX.
7. OBLIGATIONS OF THE FACTOR
Strictly speaking, as we noted from the previous point, the factor's obligations
would be as many as correspond to the number of services provided to its
clientele. We are going to limit ourselves, however, to studying those that arise
from the contract according to which the factor is obliged to receive and pay the
invoices that correspond to previously approved client orders and without there
being any recourse against the client, but with the full assumption of the financial
risk on your part.
7.1. PAY THE PRICE
Within the typical scheme indicated and with the exceptions seen, the first.
The factor's obligation is to pay the price of undue invoices at the time they are
presented to him, in which case he will charge an interest rate as consideration, or
at the time of maturity, if that is the agreed modality.
The price will be a function of the value of the credits, deduction made from the
commission for their services and the interest rate in the first case.
The amount delivered may also be reduced by a certain percentage converted
between the parties; when there is no credit guarantee to cover in advance part of
the possible non-payments by the debtors and even when there is, in the event
that it has been established that it only covers a part of the value of the invoices.
In this case, the percentage would be a kind of deductible intended for the client
to assume part of the financial risk, which will be credited to their account as the
debtors pay the respective credits and which they will lose otherwise; But the
formula that best reflects the nature of the contract is related to the historical
study of the behavior of the portfolio, since the financial cost of which in long
periods corresponds to write-offs or definitive non-payments, as well as that
which can be attributed to delinquency or average delay with which a part of the
payments is made and which cannot be recovered by charging late payment
interest, will be considered to estimate the additional points that the factor will
charge to compensate for the known or estimated risk that it assumes in its head.
7.2. ASSUME THE FINANCIAL RISK
Within this scheme, the factor's second obligation is to assume the financial risk,
renouncing any resources it may have against its client. There may be some
difficulties in certain countries where, when dealing with securities, their
endorsement without liability is not possible and the endorser must respond in
any case for the solvency of the debtor. What could be saved, as regards the
relations between the parties, with a contractual clause always enforceable to the
extent that the executive action was exercised by the endorsee (factor) against the
endorser (adherent company). The risk would be reduced to the case in which the
factor has negotiated the securities with a third party and the latter, given the
non-existence, due to legal impossibility, of the endorsement without liability,
takes action against the adherent company (first endorser) which, in this
hypothesis , could not propose the aforementioned exception.
We present it as an independent "obligation" but, in truth, it is only the
consequence derived from the purchase without recourse and does not exclude
claims for hidden defects or for acts of third parties with supposedly better rights,
for which the seller.23
7.3. RECOVER CREDIT WITHIN CERTAIN STANDARDS
Although it is true that by acting as owner you have the right to collect the sums
owed by all means, in factoring contracts it can be agreed that, in certain cases
and with respect to certain clients, the factor, before taking legal action, consult
with the adhering company, which may, if it deems appropriate, reimburse the
corresponding sum, receive the invoice in return and make the decision to
directly advance the collection. And this is because at certain times and in the
case of some very important clients for the adhering company, it may prefer to
handle the problem directly, rather than see its client seized by a third party, with
consequences that could be fatal for its commercial relationship. .
Within the same scheme seen in the previous point we will study the main
obligations of the client.
8.1. CHECK ALL ORDERS
We have already seen that the assumption of the risk by the factor implies that it
can have sufficient elements of judgment and defense instruments. Among them,
the study of the orders that are made to your client so that, only with their
approval, the invoices can be sent without recourse, which we have talked about
so many times. Well, as a consequence of this, the client is obliged to submit all
of his orders to the factor or to obtain lines of credit for his clients, so that the
invoices he sends are always covered by the general or specific authorization of
the factor.
8.2. SEND ALL INVOICES
It is the principle that we have called universality and that, more than in relation
to invoices, in truth, it refers to the obligation to submit all orders to the factor,
without reserving some. The aim is to avoid that, at any given time, the client
only sends to the factor the orders that he considers to be of some risk, reserving
for himself and directly assuming the attention of the orders that he considers
optimal because they are paid in cash or can be dispatched on credit because He
believes he has no risk. In this way you would avoid paying the corresponding
commissions or interest and would increase the overall risks of the factor. The
aim is, therefore, to avoid a negative risk selection left in the hands of the client
that would be ruinous for the factor. You will see, as we explained in the
previous point, which ones you approve and which ones you don't.
The principle of unity is also applied to the sending of all invoices, which we call
this to indicate that, unless otherwise agreed, the client is obliged to send its
comprehensive billing to a single factor.
8.3. GUARANTEE THE EXISTENCE OF CREDIT
Although in the most interesting modality that we have taken as typical, the client
does not guarantee the solvency of the debtor and that is why the factor assumes
the credit risk, it is no less true that the adhering company has the obligation to
guarantee the existence of the credit. , which arises from having made the
dispatch and obtained receipt to the satisfaction of the debtor, that is, without a
claim on his part. Consequently, if the delivery was made on time and if the
debtor's express consent appears from that delivery, it is not difficult for the
adhering company to guarantee that the credit exists. But, if this were not the
case, if the goods had been rejected by the debtor immediately or later and the
credit had not arisen clear and indisputable, the factor would be authorized to
reverse the operation. And this if there is no reason to terminate the contract in
the event that the client, knowing of the rejection, had maliciously sent the
invoices.
For this reason, it must be emphasized that one thing is the assumption of credit
risk, which can be transferred to the factor, and another is the guarantee on the
reality of the operation from which the client who sells the merchandise cannot
be discharged at any time.
8.4. NOTIFY DEBTORS
We have said elsewhere in this chapter that this notification is, on the one hand,
generic, by notifying them of the conclusion of the contract and the main
consequences that have arisen, and, on the other, specific, indicating on each
invoice that the corresponding credit has been transferred. to the factor and that,
consequently, it will only be possible to make payment to him. A possibility, of
course, that does not exist in the case of factoring without notification, when the
adhering company prefers that its client not know the existence of the factor. But
in most cases, as we have seen, this notification is appropriate and corresponds to
the operational and legal mechanics of the contract and this is the provision that
has been made in the International Convention that we have mentioned.
Now, it should only be added that when dealing with securities, specific
notification would be unnecessary and would not be an essential requirement for
the perfection of the transfer of the rights arising from the credit. Indeed, one of
the clearest differences between the endorsement of a security and the
assignment of a credit lies in the fact that, while the latter must be notified to the
debtor for it to take effect against him and third parties, the endorsement
produces all of them in immediately without requiring any notification. Since, on
the other hand, the exercise of the rights derived from a security implies its
exhibition, the debtor will only pay to the person who presents it to him. In our
example to the factor, who has it in their possession.
The logical consequence of the notification of the credits is that the debtors are
warned that any return or claim must be made known to the factor, so that the
factor can discuss with his client the basis of the respective claim, before making
a decision.
8.5. REMUNERATE THE FACTOR
We have already said that this remuneration can be mixed: a commission on the
volume of invoices or credits transferred, as a base, in consideration by the
administration and depending on the complexity and scope that each case has,
some points to cover the derived risks. of the proven history of the behavior of
the portfolio and an additional interest rate for the financing granted, on the
portions in respect of which it occurs.
As this is a bilateral contract, all the grounds for termination that we had the
opportunity to study at the time are applicable, without it being evident that there
are specific grounds linked to its own structure. Among the main ones are, of
course, mutual consent, expiration of the term, the extinction of any of the legal
entities involved or their situations of bankruptcy, insolvency, etc.24
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24.V. Supra, Chap. 1, 5.6.
Chapter XVI
REPORT
1. NOTION
1.1. LOCATION
It is worth starting with the warning that the repo contract, which is not very
widespread in Latin America, at least as a banking operation, is closely linked to
forward stock market operations, in the countries where it has reached its highest
development. In the field of stock market operations, the repo mechanism itself
seems to provide the most interesting uses in countries like Italy where it is of
notable importance.
But, on the other hand, there is a practical difficulty in all countries in which, not
being classified, there is a specific limitation for banks regarding the type of
investments they can make and the nature of the securities or companies in where
such investments are possible. That is, since commercial banks, in a good part of
the countries, are short-term credit banks, the legislation establishes investment
possibilities in a restrictive manner, exhaustively indicating the companies of
which they can form part and thus limiting the possibility indiscriminate
acquisition of shares and other securities that may be subject to a repo contract. If
there is no prohibition or no room for restrictions on the investment and purchase
of securities or securities that, according to the doctrine, correspond to the object
of the contract, it may be developed, even if it is not classified, a possibility
encouraged by the evolution of banking towards a multifunctional provision of
services typical of multibanking schemes and which makes the specialized form
less frequent and strict.
A final observation says with the gloss formulated by some scholars, according
to which the repo contract has been used in some countries to avoid with it the
prohibition of commissioner agreements, those that allow the creditor to directly
appropriate the asset that is the object of the pledge in case of default by the
debtor. Or that it aims to ensure that in the event of the client's eventual
insolvency, subjecting it to a bankruptcy process, the bank is exempt from having
to participate because it is the owner of the title and not a creditor. In these cases,
it would be an improper use, due to its purpose, of the contractual mechanics that
we will mention shortly.!
1.2. DEFINITION
The repo can be defined as the contract by which the reporter, ordinarily the
bank, acquires securities from a third party (reported party) by paying a price
with the obligation to transfer the same or others of identical type, against the
recognition of an increased price or the same price, plus a premium, commission
or interest.2 This is a typical credit business, from a legal point of view, where
there is the current transfer of ownership by the party reported to the reporter
with the obligation for the latter to retransmit it later. There is, then, a double
transmission separated in time that gives rise to the recognition of a pecuniary
remuneration in favor, ordinarily, of the reporter, who delivers the sum of money.
The previous statement raises several reflections. Firstly, one might ask why if
the reporter transfers a sum of money but, in turn, receives securities or credit
from the reported party, both parties could not be considered remunerated in a
sufficient manner, that is, there would not be a balance. perfect economic, from a
legal point of view, as happens in the case of sale. The answer seems to be based
on the teleological analysis of the contract or purpose sought by the parties, since
it is assumed that, as a general rule, the person seeking to obtain a direct benefit
from its conclusion is the party reported, who requires a sum of money to obtain
which he transfers in property securities that, ultimately, will fulfill a guarantee
function. Or where there is a certain similarity with the discount, as far as the
economic function and legal effects are concerned, since the transfer of
ownership of the securities is neither definitive nor liberatory.
In other words, the bank does not seek the acquisition of certain securities but
rather the granting of credit to its client, for which it receives them as property
but undertakes, at the same time, to retransmit them in kind or for its equivalent
against the reimbursement of the sum delivered plus remuneration, which
precisely explains the interest of the reported party in having such resources
available for a certain period of time. This consideration would explain why in
some systems, as we will see, the reporter is an owner in very peculiar conditions
with respect to the rights that normally derive from property and acts, rather, on
behalf of and for the benefit of the reported party. The thing is that, we repeat,
except in the exceptional case in which the contract is concluded in the interest of
the reporting bank to be able to carry out an operation with such securities, what
happens is that the reported party remunerates the bank because it intends to
receive a benefit, but, in exchange , although it transfers ownership of the titles, it
maintains in its head the rights that would ordinarily have corresponded to the
credit institution in its capacity as owner. The bank, in turn, remunerates the
client when he is the reporter.
As can be seen from what has been said, and arises from the legislative
definitions to which we have referred in the last note, the obligation of the
reporter is generic, to deliver titles of the same type and quality, a premise that
will allow us to maintain later that the object of the contract must be constituted
by fungible titles, except in the case in which, by exception and from the context
of the rules, hypotheses are found in which the obligation would be of a certain
type or body.
2. LEGAL NATURE
As is the case with a good part of the contracts that we study and especially with
those whose disclosure and development are still precarious, at least in certain
latitudes, the first effort of jurists consists of locating, as far as their legal nature
is concerned, within the long-established and best-known contract structures. The
most frequent assimilation has been made with the loan contract and the purchase
and sale contract, with different modalities.
2.1. LOAN THEORY
For some authors and considering its purpose, the repo contract is nothing more
than an advance contract, that is, a loan with collateral.3 The theory has been
criticized with several arguments, among which, that the repo is a transaction
integrated unitary, unique, if you will, while in the mutual with guarantee two
contracts necessarily overlap; one main one, that of mutual and one accessory,
that of the guarantee. On the other hand, it is rightly noted that in the pledged
loan there is no transfer of ownership of the collateral, nor payment of a price for
it, while in the contract we study the reporter acquires the property titles.4 Legal
differences that do not overshadow, however, the similarities that stand out in
terms of economic purpose.5
2.2. THEORY OF PURCHASE SALE

It has also been held that it is a purchase and sale contract with the simultaneous
obligation to resell or accompanied by a promise to sell or, simply, a double sale
separated in time, but linked by the same contract. Without stopping to study all
the hypotheses in detail, it is enough for us to point out, with the dominant
arguments among the critics of the theory, that while the sale is a consensual
contract, the repo for them is real since it would only be perfected by the delivery
of the titles. And that, on the other hand, if it were a sale with any of the
combinations or modalities mentioned, the legislative regulations could not be
explained according to which the reporter, who would be the full owner, does not
acquire the benefits, improvements or increases derived from the titles. received,
but rather receives them to transmit them along with the titles to the reported
party. Furthermore, the term in the repo, as in all credit contracts and unlike, of
course, what happens in the sale, plays an essential role since none of the parties
would enter into it if it were not for the fact that the reporter obtains a specific
remuneration. for the term of the operation and the party reported benefits during
the same from the monies received.6
The theory of double sale is highly questionable in countries that do not regulate
repo and prohibit, in a generic manner, the commission agreement, that is, the
power that the secured creditor has to appropriate the debtor's assets by means
other than those provided by law.7 In effect, if the purpose pursued by the parties
is taken into account, it could be considered that, in the event of non-compliance
by the party reported, the party reporting party would not be empowered to
definitively appropriate the titles or dispose of them, but rather would have to go
to the courts or the special auction procedures that are usually established in
favor of the banks, when it is one of them.8 In this case it would be necessary to
determine the sanction applicable to the business or the possibility of applying
the principle of convertibility, understanding that it is of a secured loan.9 In
countries that have not regulated the figure but that accept pledged transfers
(transfer of property for security purposes), the problem could be of less
importance, even though problems could remain in insolvency events. of the
reported, 10 that lead it to a bankruptcy process, in a similar way to what happens
with the guarantee trust, 110 in cases where the guarantee lacks the legally
required registration requirements.
In any case, and returning to the form of its perfection, we believe that it is only
possible to classify it as real in those countries in which it has been defined this
way when classifying it, which occurs in numerous legislations, but that such a
statement would not be possible when otherwise since the sale is inherently
consensual and this is the dominant general principle in commercial matters.
2.3. SELF-EMPLOYED CONTRACT
We use the expression autonomy to indicate only that it seems to be a sui generis
contract, not identifiable with any of the contractual structures that we have just
mentioned, characterized by being a credit business with the peculiar note that
there is a simultaneous transmission in the opposite direction. between the
contracting parties, with the obligation of both to retransmit the objects of their
initial delivery.
For the majority, it is a real contract that is only perfected by the delivery of the
titles,12 which would be acceptable by legal definition but would be unthinkable
as a doctrinal position, if the alienation is supported in a transaction of sale.
Generally, some formalities or solemnities are required, such as putting it in
writing.13 It is a main, bilateral contract, because from its conclusion obligations
arise for both parties, and it is commutative, that is, both parties ab initio estimate
the economic results or expected compensation as equivalent. . Statement that is
not distorted by the circumstance that the securities may have losses or gains
between the moment the contract is concluded and the transaction is
subsequently settled. And this is because the eventual fluctuation is typical of all
those operations that are carried out in a term, even those that involve the
execution of mutual contracts where in the interregnum between the date of
receipt of the money and the date of its restitution, a devaluation may occur. or a
reevaluation, with negative consequences for one or another of the interested
parties, - these are the usual exchange differences in contracts in different
currencies that are part of the "normal area" of the business - or what happens
with the forward purchase and sale where, later If the contract has been
concluded, the asset may acquire a sudden appreciation, without it being possible
to affirm in either case that it is a truly random contract. 14
The legislative trend usually considers that the contract must relate to securities
or credit instruments. Nothing would prevent, however, the object from being
broader and could be made up of documents that met the fungibility requirements
that would allow them to be replaced by others, if the reporter had not otherwise
kept the same ones received. 15 It is clear that as soon as the contract is used to
carry out forward or complementary stock market operations and, in general in
the stock exchanges, the documents that are negotiated are, for the most part,
credit titles, this could explain the aforementioned trend. .
4.1. FUNGIBLE TITLES
From which it follows that, with the bank being obligated in a generic way, the
contract can only fall on fungible titles, which are usually serial and bearer titles,
easily obtainable in the market and allow in practice to replace those received
with others of identical species and quality. When studying the obligations of the
reporter we will see some, however, that would only be explained if an obligation
of a certain type or body had been contracted.
4.2. SECURITIES IN WHICH BANKS CAN INVEST
We already warned this from the beginning of the chapter. Given the restrictions
that exist in most countries regarding bank investments, it must be taken into
account that in order for them to be able to carry out the contract in their capacity
as reporters, they must be securities or documents whose purchase is permitted or
that correspond to tolerable investments from the point of view of their
faculties.16
Another possibility may refer to operations carried out on securities that
constitute portfolios, managed by banks or specialized trust companies.17
5. OBLIGATIONS OF THE BANK (REPORTER)
If, as we have admitted, for some legislations this is a real contract, it cannot be
said that the first moment of the operation properly constitutes the fulfillment of
reciprocal obligations: transferring the respective securities to the bank and
delivering the repo price for them, as naturally and, on the contrary, they would
be considered a simple sale whose perfection is consensual. If you want to make
a descriptive presentation, it could be admitted that with the fulfillment of these
two constitutive or consequential benefits arises the obligation to fulfill those that
we will see below.
5.1. KEEP THE TITLES
Since the statement may seem illogical and imply a contradiction, it is necessary
to note that when we talk about conservation of titles we are not referring to their
physical conservation but to what we could call legal conservation; saves the
equivalent or takes measures that guarantee the possibility of acquiring the same
on the market to satisfy in time the obligation to transmit them to the reported
party. This is somewhat what happens in the case of irregular deposits of money
in that the obligation of conservation of the deposit is transformed into that of
conserving sufficient resources, measurable through indices of solidity and
liquidity of the banks, to be able to meet the demand. refund of the amount
received. 18 Nothing prevents, of course, the repo from being constituted on
specific titles with respect to which a specific obligation is acquired, committing
the reporter to retransmit the same ones that he has received. In this case it would
no longer be a matter of generic conservation or custody but rather a specific
obligation to maintain the received property and return it at the time provided for
by the contract.19
5.2. EXERCISE THE RIGHTS DERIVED FROM THE TITLES

}
If in most cases the titles are received with the generic obligation to return the
same number, the reporter becomes the owner of them and, at least formally, has
the power to exercise the rights derived from said titles. By virtue, however, of
what was stated in the previous point and of the peculiarity that we will see later,
it could be affirmed that more than a right, which it certainly has, by appearing as
owner, the exercise of the powers derived from the title It constitutes an
obligation borne by the reporter,
- since through them the economic integrity of the titles received that are planned
to be retransmitted is ultimately maintained.
5.2.1. Nature of rights
The rights are of a different nature, depending on the type of securities in

question and, if they are securities, depending on the nature of the right
incorporated. The credit content titles will give the right to collect them if the
maturity occurs during the course of the contract and, failing that, to exercise the
derived accessory rights, such as the collection of interest. If they are corporate
titles, as could happen with shares, there will be several powers that, let's put it
this way, you must exercise, such as the option, the election of officers of a
board, the collection of dividends, etc.
5.2.2. Peculiar situation of the species reporter
Although the reporter is the owner of the titles against third parties and against
the reported party himself, the right that he acquires over them is not full and
unlimited but is subject to a set of restrictions in relation to the enjoyment of the
titles received. The reporter can dispose of them and give them, for example, as a
pledge, if he is able to recover them in time, but he cannot enjoy them in the
sense that the fruits or accessory rights derived from them settle in his head, as
would happen If it were a right of full ownership, but rather they are acquired for
the reportee, as a general rule. A little bit about what happens with the trustee in
the trust business that we will see in the last chapter of the book and that in the
repo is explained by the economic function by virtue of which the reporter is
remunerated with interest, as in any credit operation, or with a price difference, in
stock market operations, as we will see shortly, but not with the performance or
the fruits thereof documents, since they are intended to benefit the reported party
who will have to be reacquired.
The above translates into three specific possibilities: rights in the head of the
reporter, rights naturally in the head of the reported party, and rights in the head
of the latter, provided that some requirements are met.
Among the first, we could point out the right to vote, which in principle
corresponds to the reporter and which would pay for the hypotheses in which the
contract is concluded to obtain a benefit in favor of the bank, such as acquiring
certain shares for the purpose of to be able to improve their voting power in an
assembly, obtain positions on the board of directors and later transmit the titles or
their equivalents.
Within the latter we can mention the accessory rights that must be exercised on
behalf of the party and the dividends or interest produced by the securities during
the term of the contract and which will be credited in favor of the party at the
expiration of the contract. Finally, an example of the third class of rights may be
the reimbursements or premiums earned by the securities, as would happen with
securities redeemable through a lottery, but with the requirement that they be
individualized and the bank acquires an obligation of kind and not of gender,
against what usually happens. Restriction that is explainable because if the title is
not identified at the time of receipt, the bank could dispose of it in accordance
with general principles, on the one hand, but, in addition, when one of the many
in its possession is drawn, there would be no way of knowing who delivered it
and, without a doubt, the benefit would be for the bank. And we say that it is a
kind of obligation because if the bank were in a position to dispose of the titles
received and limit itself to returning the same number at the end of the contract,
there would be no room for the possibility of reimbursement by lottery with
respect to the originals and the identification of the titles would be useless. 21
The obligation to exercise some rights in favor of the party reported is subject to
certain conditions, such as the latter's establishing sufficient funds with prudent
advance notice, as soon as said exercise requires the reporter to disburse
resources. Such would be the case of executing the option derived from an issue
of shares, where it is possible to subscribe some in proportion to those reported
or the case that during the repo period it is necessary to pay some exhibition, case
in which the proceeding must be same way. If the provision is not constituted, the
reporter will be released from his obligation to exercise the rights and may even,
in certain events, proceed to liquidate the repo.22
5.3. RETRANSMIT THE TITLES

It is of the essence of the contract that after having acquired the titles by paying a
price, the reporter is obliged to retransmit them to the reported party, against the
remuneration that has been agreed upon. We have already said that the bank's
obligation is gender-based, with exceptions, and therefore it can freely dispose of
the securities received with the simple obligation to return as many others of the
same quality and conditions.
6. OBLIGATIONS OF THE REPORTED
If the contract was not real, the first obligation of the party reported would be to
transfer the corresponding titles. If this is its nature, however, the delivery made
by the party reported is an essential element to perfect the contract.
Consequently, we will only study the obligations that arise from this moment.
6.1. READPURCHASE THE TITLES
The immediate consequence of this obligation is to pay the price that, ordinarily,
is the same price received by him plus interest when the operation is linked to
credit business or a premium, usually in stock market activity but which could be
another price set. from the beginning and composed of the original plus the sum
corresponding to the premium or award in favor of the carrier for the service
provided.
Some legislation and certain authors allow the possibility of liquidating the repo,
so to speak, with the price, paying the differences that result in the event that the
value of the securities has changed. Let's study an example and think that the
client has transferred ten securities of $100 each to the bank as a repo and has
received $1000 as a price in exchange. Once the deadline has expired, the bank
obliged to retransmit them must receive the same $1,000 plus the aforementioned
premium. But it happens that the securities have gone down in the market and are
no longer worth $100 each but $90, that is, the client is going to pay $1000 for
securities whose market value, at that moment, is barely $900. . Settlement for
the payment of the differences would imply that the client would limit himself to
paying the bank $100, without receiving the securities, plus the premium or prize
that properly constitutes the remuneration for the use of the money. This
possibility partially distorts the repo with respect to the mechanics of double
transmission, but produces the same result as if the repo had to pay the price,
receive the titles and immediately sell them for their new diminished value. The
opposite assumption, if the securities were at $1,100, would imply for the bank
the recognition of $100, keeping the securities in its possession, without
prejudice to receiving the premium.23
6.2.
PAY THE REMUNERATION
COfresponds to the pecuniary recognition that the person reported makes to the
reporter
'for the granting of the money it receives and for the conservation of the titles and
their subsequent return. The remuneration can be defined from the beginning or
the elements or systems can be established to calculate it, which in the simplest
form can be expressed through the establishment of an interest rate on the money
received, typical remuneration for the use of money, which appears in almost
invariably in all credit contracts. We already said that there may be a single price
to which the premium, prize or interest rate is added or there may be a double
price, where the first is the value of the securities and the second includes this
value plus an additional sum that represents the aforementioned remuneration. It
is noted that just as the general rule is that the reported party recognizes this
bonus or remuneration to the reporting party because, usually, it is the reported
party who intends to obtain the greatest benefit from the conclusion and
execution of the contract, it may happen that the prize is agreed in favor of the
reported in the more or less remote, but possible, assumption that the bank is the
entity interested in receiving the titles, as would be the case of wanting to
exercise the rights that may remain in its head, such as voting, to elect a board of
directors in a capital company. In this case it is said that there is no repo but
rather deporto to indicate that the remuneration is in favor of the reported party
and not the reporter.
6.3. MAKE PROVISION AND REIMBURSE EXPENSES
We have said that there are some cases in which the reported person has to make
provision for the reporter to exercise on his or her behalf some of the rights that
correspond to him, such as the right of option. In these cases, if the reported party
does not constitute the provision, the reporting party is released from its
obligation to exercise the rights on behalf of the reported party and, in certain
cases, could even terminate the contract, depending on the systems.
In addition, the party reported must reimburse the reporter for the expenses that
he or she would have had to make in the exercise of the legal conservation of the
titles, such as the payment of certain taxes, to give an example. Logical
consequence that could be based on the consideration that when the reporter
exercises the rights on behalf of the reported party, he acts for his benefit in the
manner of a commercial commission agent and, consequently, has the right to
obtain reimbursement for the expenses incurred.
7.
TERM AND TERMINATION OF THE CONTRACT
The repo contract is usually subject to very short terms, perhaps due to its
speculative nature in some cases or short-term credit in others. The Latin
American legislations studied agree that in the absence of an expressly agreed
term, the contract will be deemed to have been concluded for a period that will
not exceed the last business day of the respective month, unless the contracting
date is after the 20th of said month. month, in which case it will be understood
that the settlement period is moved to the last business day of the following
month. In no case, however, will the period be extended to more than 45 days,
although it is possible to extend it indefinitely; The latter possibility makes the
severe restriction on the term somewhat illogical and which in any case translates
into the simple formality consisting of the parties expressing in each case and
expressly their intention to extend up to the legal maximum. Given this
possibility, nothing would prevent the parties from agreeing ab initio on longer
terms, if they can be obtained through successive extensions.
The contract can end, then, firstly, due to the expiration of the agreed period and,
secondly, due to non-compliance with the obligations of any of the contracting
parties, as occurs in all bilateral legal transactions. In the latter there will be
recognition of damages, to which the provision enshrined in some legislation
seems to refer in the sense that if the due date arrives, the party reported does not
settle the obligation "it will be considered abandoned and the reporter may of
course demand from the reported the payment of the differences that result from
their responsibility". 24 In other words, changes in the price of the reported
securities that occur after maturity, during the default of the reported one, could
only harm without benefiting in any case.
-------------------------------------------------------------------------------
1. CERVANTES, op. cit., p. 228.
2. The Italian Civil Code defines it in article 1548 as "the contract by which the
reported party transfers ownership of credit titles of a certain kind to the
reporting party, for a certain price, and the reporting party assumes the obligation
to transfer to the reported party, "At the expiration of the established term, the
ownership of as many titles of the last type, against reimbursement of the price,
which may be increased or decreased to the agreed extent." Cited by GIRALDI,
"Introduction to the study of banking contracts", pp. 53 and 54. Mexico, art. 259
LGTOC; Venezuela, art. 46. LGBOIF; Honduras, art. 929 C. Co.; El Salvador,
art. 1159 C. Co.; Guatemala, art. 744 C. Co.
3. ALDRIGHETTI, op. cit., p. 81.
4. CERVANTES, op. cit., p. 226. MESSINEO, op. cit., pp. 168 And ff.
5. Colombia. The accounting regulation of the Banking Superintendency
implicitly recognizes the guaranteed credit nature of the operation, by
maintaining the securities reported in the balance sheet of the "seller", under the
understanding that it is not a "firm" sale, PUC for the Finance system. The
Uniform Commercial Code considers a repo as a collateralized loan, recognizing
the financial purpose of the contract.
6. CERVANTES, op. cit., p. 227; RODRIGUEZ Joaquín. "Commercial Law". T.
11, pp. 109 and 110.
7. Colombia. "Any stipulation that, directly or indirectly, in an ostensible or
hidden manner, tends to allow the creditor to dispose of the pledge or appropriate
it by means other than those provided for by law, will not produce any effect" (C.
Co. art 1203).
8. GOODE, Roy. Op. cit., p. 651. MENDOZA, Álvaro. "The repo contract" in
Legal Essays Liber Amicorum. 1" ed. Ed. Rosaristas. Bogota. 1996, p. 235.
9.V. Supra. Chap. 1, 5.5.
10. SERICK, Rolf. "Movable Guarantees in German Law." Ed. Technos. Madrid,
1990.
11.V. Infra Chap. XXII, 2.13.3.
12. Honduras says that "the repo is perfected by the exchange delivery of the
securities", art. 929 C. c. Guatemala in the same sense, art. 744 C. Co. El
Salvador, in the latter case registration in the issuer's books is necessary, art.
1159 C. Co. Venezuela states that "it is perfected by the delivery of the titles",
art. 46. LGBOIF; Mexico, like the previous one, adding the "endorsement when
they are nominative", art. 259 LGTOC. Colombia. The Banking Superintendence
has maintained that, given that the contract is not classified, it must be held that it
is consensual, by virtue of the general principle enshrined in article 824 of the
Commercial Code. "The Repo Market: Economic, legal and accounting
considerations." Banking Superintendency Magazine. Volume 1, number 1.
Bogota, 1988.
13. Honduras, art. 930 C. Co. Venezuela, art. 46 LGBOIF; Mexico, art. 260
LGTOC. Guatemala, art. 745 C. Co. El Salvador, art. 1160 C. Co.
14.V. Supra, Chap. 1, 5.4.3.
15. Venezuela, for example, speaks of "credit titles or securities" with which it
seems to expand the possibilities, art. 46 LGBGIF. MESSINEO, however, is of
the opinion that according to Italian law they must be credit titles, op. cit., p. 134.
Guatemala talks about credit titles, art. 744. c. Co. Colombia, art. 3.2. EC 58/96.
16. Colombia. When referring to the possibilities of the supervised entities, it
establishes that "only securities may be negotiated whose purchase is permitted
or that correspond to a credit portfolio or investments permitted by law for each
particular establishment" CE 58/96. 8.B.
17. Colombia. The Banking Superintendence has limited the possibility of
carrying out repo operations to 30% of the value of the portfolio of ordinary
common funds managed fiduciarily and, in general, to those operations strictly
necessary to meet the temporary liquidity needs of financial entities. R. 5359/87;
Circus 50/87; Circus 58/88; d. 2360/93; EC 100/95. 8.B.
18.V. Supra, Chap. IV, 3.3.
19. Colombia. This would be the modality that corresponds to the most common
banking practice. The Banking Superintendence expressed concern because it
estimated that, at the beginning, the operation showed many risk factors that
ranged from physical insecurity due to the transportation of the documents, to
legal insecurity due to the lack of contractual support and non-compliance with
the law of circulation of the securities subject to contract, as well as notable
discrepancies between the book value, the market value of the security and the
amount of the operation. For this reason, Circo 058/88 was issued. which has
been complemented by subsequent provisions such as D. 2360/93. and the EC
100/95, 58/96, and 75/00 that regulate the matter today.
20. ALDRIGHETTI, op, cit., pp. 81 And ff. It maintains the opposite principle,
that is, that the reporter has all the rights, even those of enjoyment, unless
otherwise agreed.
21. Honduras, art. 932 C. AC.; Mexico, art. 262 LGTOC; Guatemala, art. 747 C.
AC.; El Salvador, art. 1162 C. AC.
22. Honduras, arts. 931 and 933 C. AC.; Mexico, arts. 261 and 263 LGTOC.
Guatemala, arts. 746/8 C. Co. El Salvador, arts. 1161/3 C. AC.
23. The single price system, that is, identical for initial transmission and
subsequent reacquisition, seems to be that of Latin American legislation.
However, it is admitted that "when the repo expires, the operation may be settled
by payment of the differences, in the event that the value of the securities has
suffered a "variation"". CERVANTES, op. cit., p. 226.
24. Mexico, art. 266 LGTOC; Honduras, art. 936 C. AC.; Guatemala, art 749 C.
AC.; El Salvador, art. 1166 C. AC.
Chapter XVII
LEASING OR FINANCIAL LEASING
1. NOTION
1.1. PRELIMINARY WARNING
Before undertaking the study of this topic, it should be noted that leasing or
financial leasing is a contract that is little developed in Latin America, at least
from a legislative point of view, as a specific possibility of action for commercial
or short-term credit banks. . Consequently, unless its celebration can be based on
some faculty that, without specifically pointing it out, gives rise to understanding
it as possible, it can be stated that two circumstances conspire, in principle,
against its celebration by deposit banks, in the systems specialized banking. The
first, that they are not authorized to make real estate or personal property
investments indiscriminately, but rather such authority is reduced to some
specific operations limited to the maximum, so that banks can only carry them
out exceptionally. This happens in general with investments, but, specifically, in
relation to furniture (machines, equipment, etc.) and real estate, the general
principle is that only those that are required for the exploitation of the social
businesses can be acquired.
On the other hand, leasing is a contract that is concluded for a long or medium
term, which represents an obstacle to its implementation by deposit banks since
most of their operations are short-term.
The rise that it has reached in some countries and its eminently financial
function, to which are added the trends that are significantly expanding the
possibility of action of banks, under group or multi-banking schemes, explain,
however, the decision to study it in a schematic way, with the warning that what
we say about the leasing or leasing company must be understood as what we say
about the banks, when they can enter into the contract.l
1.2.
BACKGROUND AND REASON FOR EXISTING
The birth of deleasing and the great development obtained in the first years of
operation seem to be linked to circumstances, somewhat generalized, that affect
the world of business and industrial activity. On the one hand, the difficulties
encountered by industrialists in having sufficient and adequate working capital
and, on the other, the speed with which technological advances tend to make
obsolete machinery and equipment that, when acquired, seemed to be a
satisfactory response to the requirements of a process. industrial. The possibility
of replacing the use of one's own resources for the acquisition of machinery,
freeing them to have more abundant working capital and accommodating a
permanent process of renewal of machinery and equipment, seem to have been
determining factors in its reception. There are others of a fiscal nature, for
example, which largely depend on the regulations in different countries, and
which will be taken into account by the tenant before making their decision.
Some author, with great fortune in our opinion, maintains that the leasing
contract presents a new and rich modality in the relationships between savings
and production. In effect, anyone engaged in a business activity requires
additional resources for its development can count, first of all, on the
contributions of new partners, who link their resources to the fate of the business
itself, with the natural costs that may arise for them. , those derived from an
eventual low profitability of its resources or the presence of high risks in
industrial exploitation and for the original partner or partners, the possibility of
losing control of their company or having to share it with third parties, making
administration and decision making. There is also the option of going to the
saver-obligator or bond taker, which eliminates the risks of shareholding but
commits the company to a fixed remuneration that can mean a heavy burden for a
given moment. Likewise, credit resources can be obtained from channeling
financial entities, ultimately, from available savings or idle resources, in their
typical intermediation function, which will ensure that, as far as possible, the
applicant assumes part of the credit with their own resources. of the cost of the
projects it intends to finance.
Well, easing constitutes a new modality in which the owner of the resources is
not linked as a partner, nor as a bondholder, but rather allocates them to the
acquisition of goods for lease to the industrialist or businessman, within
conditions and features that provide many sales
~ jas from a practical and financial point of view.2 It is, therefore, an alternative
financing formula, flexible and fast, which has the great advantage of not
involving an initial investment by its user and that, as Consequently, it allows the
working capital of companies to be expanded by the equivalent.
For this purpose and as a result of the work carried out by the International
Institute for the Unification of Private Law (Unidroit), it was held in Ottawa in
1988. the conference that adopted a Convention on International Leasing
(CUL!.), which constitutes a significant contribution to the contract formation
and disclosure process.
1.3.
CONCEPT AND DEFINITION
The concept of casing can be easily reached through a descriptive presentation of
the operation. In its simplest and purest form at the same time, the casing contract
supposes the presence of an entrepreneur, normally an industrialist, in need of
capital goods, machinery and equipment, in principle, or real estate that, in the
first case, You contact a supplier to determine which equipment and under what
conditions could meet your company's needs. Once the need and solution has
been identified, it comes into contact with a specialized company which
proceeds, in the development of the contract and against the promise that the
good will be rented, to acquire it from the supplier and lease it to the industrialist
for a period of time longer than less long, generally linked to the tax amortization
period of the assets and with the subsequent possibility...9~ to continue the lease
under new conditions or sell the asset for a value that will be the residual or one
very close to it. That is, whoever needs to make the additional investment,
instead of contributing their own resources, which they have in cash or are in a
position to request from their associates or obtain credit in an equivalent amount
to purchase the goods, chooses to obtain from a company. specialized in its
acquisition, so that it can effectively solve the technical requirement that has
prompted it to act, against remuneration as payment for the lease of such goods.
The name of the contract in English ¡casing comes from the verb to ¡case which
means to take or give in lease. Of course, the authors have been quick to point
out that the expression lease is insufficient to indicate the very complexity of the
contract, since from the relationships of the parties and the obligations that arise
it can be seen how its development far exceeds that which would be typical of a
simple lease contract. Furthermore, in some aspects, the practice has led to
reversing or transferring obligations that would be those of the lessor and become
those of the lessee in this contract.
French legislation, for example, has called it a crédit-bail contract (credit-lease)
which, although it has been glossed, indicates that the lease overlaps or coexists
with it, a credit function.3
Starting from this idea we could affirm that in Latin America it begins to
make a career of the name "financial lease" which, although in some aspects it
may be shown to be insufficient, indicates without hesitation how, using the
structure of the lease contract, the realization of a financial tender is ultimately
obtained, which due to its final and decisive participation In the conception of the
contract, it explains how and why there are frequent exceptions to the traditional
rules of the rental contract. To all of which it must be added that leasing, in its
most representative form, has the characteristic of enshrining an option in favor
of the lessee to continue the contract for another period or acquire the goods that
are the object of the initial agreement.
Thus, we could define the leasing or financial leasing contract in its most
representative form, as that by virtue of which a specialized company acquires, at
the request of its client, certain goods that it delivers to it as rental, through the
payment of remuneration and with the option for the lessee, at the expiration of
the term, to continue the contract under new conditions or to acquire the goods in
his possession. 4
1.4.
MOMENTS IN ITS EXECUTION
From the above it can be argued that the leasing business involves three well-
defined moments.
A first stage of collaboration where the client, with the technical resources that he
obviously has, since he has determined the needs of his company, identifies the
goods he requires and obtains from the leasing company the financial support
consisting of knowing that they will be acquired by This is to transfer them to
you as a lease, with the consideration at your expense of committing to lease
them for a certain period.
A second stage, the central stage, which truly corresponds to the execution of the
contract and which is characterized by being unmodifiable by the lessee, since
the determination of the term is a fundamental factor normally linked to the fiscal
amortization period of the goods that are the subject of the contract. and the
leasing company must have complete certainty about the validity of the contract
during said period. Or if you want, looking at it another way, during this period
the impossibility of modification by the lessee means that, in the presence of such
a hypothesis, neither wanted by the lessor nor compatible with the purposes of
the contract, the lessee has to be subject to particularly burdensome sanctions.5
Finally, if at the expiration of the term the lessee is not inclined to return the
goods received, he can choose to extend the lease under new, more advantageous
remuneration conditions, taking into account that the goods are already
depreciated for the lessor or acquire them for a residual value. which must be
agreed upon from the beginning or will be determined following the principles
established in the contract or by common agreement between the parties.
1.5.
PARTICULARITIES
The contract must take into account some particularities that affect one or the
other party and that relate to accounting, tax or financial aspects and the risks
derived from the operation.
1.5.1.
Accounting aspects
A circumstance that financial institutions and credit analysts must take into
account when they proceed to study a company, in countries where leasing is
frequent, is that, from an accounting point of view, the transaction is not
recorded. ordinarily and specifically in the balance sheet. The materials received
do not appear in the assets, nor is the debt incurred for the unchangeable period
recorded as a liability item.
This circumstance does not fail to provide some advantages for the tenant
company because it does not increase its fixed assets or its liabilities and, as a
consequence, improves some ratios or financial coefficients that are the subject
of careful analysis by experts and by the entities that, at a given time, are in a
position to grant them credit. However, it can translate into additional risks for
third parties, who can only infer the existence of leasing contracts from a careful
analysis of the income and expense accounts, in which the amounts paid for rent
may appear disproportionate taking into account the activity. ordinary of the
company.
For this reason, the authors recommend the establishment of very strict
accounting provisions in this regard, in order to reflect the existence of these
contracts in the balance sheet, perhaps through their registration as contingent
debts, even when in the case of contracts with an unchangeable period. one could
speak more appropriately of true liabilities borne by the entity.6
1.5.2. Tax aspects
In those countries in which there is a tax limitation in relation to the maximum

amount of interest deductible for obtaining credits, but there is no restriction on
the amount of leases paid, there is a net tax advantage in choosing to enter into a
leasing contract rather than obtaining credit for the direct acquisition of the
respective assets. Of course, it is essential for the lessee to carry out a very
careful study that allows him to verify the tax advantages of entering into the
leasing contract instead of obtaining monetary financing or what the higher cost
he must bear if it were the opposite.
1.5.3. Financial aspects

As in the previous case, it is necessary to analyze the financial costs by studying
the different possibilities offered by the market. What is evident and seems to
constitute a notable advantage over almost all forms of financing, especially
medium and long-term ones, is that through the leasing contract
_The lessee can take possession of the assets and use them fully, without having
to contribute any sum, since the operation can be 100% financed.
1.5.4. Risks
This aspect of the particularities is related to the position of the leasing company,
the lessor, since in addition to the risks inherent to the operation such as the
default of its client due to financial incapacity, which tries to be controlled
through a careful study of the additional profitability of the goods or equipment
delivered, there is a generic risk derived from the eventual alienation by the
lessee of the goods received from the company.7 High risk in the case of
movable property due to the almost impregnable position that the third party has
in practice. bona fide acquirer. As the assets apparently form part of the
company's assets, the risk that the lessee, in bad faith, disposes of them is high
and could only be eliminated, from a legal point of view, through the existence of
a legal advertising system. such as the one that exists for certain real liens or the
one we saw in the case of the pledge without possession,8 to allow the leasing
company to pursue and claim the asset in the hands of third parties.
In practice, leasing companies use some procedures that do not have the legal
effects of the advertising system but that tend to notify third parties about the
existence of the contract, such as the placement of plates on the machinery and
the ability to make visits. at any time to the facilities to check the condition of the
goods, in addition to obtaining additional guarantees that must be provided by the
lessee to cover all of its obligations.9
2. LEGAL NATURE
Given the difficulty of being able to absolutely identify the leasing contract with
the lease, different interpretations have been sought that vary depending on
whether or not it takes into account, within the structure of the contract, the
participation of the manufacturer supplier of the goods that are acquired to
constitute the object of the contract with them. If from the point of view of the
descriptive analysis of the contract the figure of the supplier cannot be dispensed
with, it must be noted that a legal analysis must be limited to considering only
two parties as essential: the leasing company and the user of the goods. 10
In some countries, companies have applied an eclectic solution, vaguely

configuring the terms of the contract so that it appears simultaneously to be a
rental and a sale, in order to take advantage of the advantages derived from one
or the other contract in certain difficult situations, a possibility that has been
object of fair censure by the courts.l1
Some authors have attempted to explain leasing on the basis of a supposed
mandate contract in accordance with which the leasing company would act as
agent of the future user to acquire the goods that are the subject of the contract.
Thesis that has been criticized because it is noted, correctly in our opinion, that if
it were a mandate they would be acquired in the head of the principal, user, and
as we have seen such a thing does not happen in reality, because he only receives
them as a lease. 12 Position that we reaffirm, despite the fact that it seems to be
the solution adopted by the CUL!.
It has been stated by others that it is a mixed contract, that is, a single contract
but with elements that correspond to both the purchase and sale contract and the
lease and where its regime results "from applying the provisions of each of the
types, combined at appropriate times" and a reasonable thesis, which we do not
share in its entirety, since the elements of the sale apply to the existing
relationship between the lessor, leasing company, and the supplier, which we
wanted to leave a little aside to We focus exclusively on what we could call the
primary and basic relationship of the contract: that between the company and the
user.
From all of the above, we lean towards the simplest but most understandable
thesis, according to which leasing implies the execution of a rental or leasing
contract with a unilateral promise of sale, which gives the user the option of
acquiring the goods upon expiration of the initially term. agreed. This
interpretation of the legal nature has been criticized, among others by Coillot14, a
very distinguished author whom we have followed in much of the exposition on
this contract. He states that, in his opinion, this definition of its legal nature is
insufficient since the option is just one among several possibilities that the tenant
has. The other two would be to deliver the asset at the expiration of the term or
continue the lease under new conditions. However, we allow ourselves to
observe, as the author also does elsewhere, that delivery, more than an option,
strictly speaking, is the normal consequence of concluding the contract and
continuing the lease is nothing other than extending its term. , under different
remuneration conditions, but without distorting in any way the fundamental lease
contract.
. Curiously, this possibility that for the doctrine characterizes the leasing contract,
at least the one that has been called "financial", could modify or denature it
somewhat in some legislative systems or what is the same, in a concrete way,
make it transform into a sale in installments as a consequence of foreseeing that
the lease contract will be considered as such as soon as the lessee has the
possibility of acquiring the goods at some point during the contract.15 It would
be another interpretation of its legal nature.
3.
LEGAL CHARACTERISTICS
We will make a quick list of them. This is a main contract; atypical in most
countries; consensual in that it is perfected by the simple agreement of the parties
and as opposed to the real one, it does not require the delivery of the thing as an
essential element; onerous, commutative and successive due to the periodic
manner in which the benefits payable by the lessee are fulfilled. It is bilateral,
although for some it could be considered plurilateral if the supplier is
incorporated into the contractual structure, which can occur with some frequency
when the leasing company shifts to the latter some of the obligations that would
correspond to it as lessor. 16
4. PARTIES INVOLVED
We have already seen them and in this case it is only a matter of specifying them
in relation to the descriptive scheme of the contract and with the observation that
the presence of the supplier is in any case secondary, with respect to the
fundamental relationship.
4.1. LESSEE OR USER
It is the industrialist or businessman, the client who will be the leasing company,
who ensures the technical aspect of the operation in the sense that, as a general
rule, he identifies and determines his needs and chooses the supplier and the type
of machinery or equipment that satisfies you. Therefore, it is he and not the
leasing company who gives his consent on the quality and functioning of the
goods at the time of delivery.
4.2. LEASING COMPANIES
It ensures financial support which, as will be seen throughout the chapter,

ultimately constitutes your only concern, since it transfers, as far as possible, to
others the obligations that would correspond to you as a landlord. Their
intervention is determined by the possibility of providing financial resources to
acquire the goods that are the object of the operation.
4.3. SUPPLIER
This has a marginal participation, at least in relation to the contract in its most
typical form, which is financial leasing. However, it must be admitted that on
some occasions he takes the initiative to make contacts with the client and the
leasing company as a promotion or viable presentation of the sale he proposes
and may be linked to the contract if he signs it and is bound instead. of the lessor
to deliver the property, guarantee its operation, carry out the
repair!CS where there is room, etc., as it is increasingly used."
5. OBJECT
5.1. EQUIPMENT GOODS
The object on which leasing falls in most cases and with respect to which its
development is most notable, is that made up of equipment or capital goods;
movable property that can eventually become real estate through incorporation
and that the industrialist uses as a fundamental instrument for the production of
the goods resulting from his industrial process. 18 These are non-consumable
goods, which leaves out the raw material and as such they can be subject to tax
depreciation that ultimately translates into the economic decrease in their value.
They are goods for professional and profitable use, from whose use the
industrialist can expect an additional increase in his income. This explains why,
in practice, leasing companies not only analyze the financial capacity of their
client but, in a very special way, the greater profitability that can be deduced
from the use of the assets and, consequently, the capacity that they will have. the
industrialist to pay the periodic fees with said product.
The doctrine has been insisting, in recent times, on the use of leasing to acquire
goods intended for the provision of public services, with respect to which, of
course, the measurement criterion is not related to the capacity to generate
additional income, as is stated. produce, but mainly with the predictable
budgetary payment capacity of the debtor entity.
.
. 5.2.
ESTATE
If we have said that, as a general rule, leasing contracts relate to movable
property, not consumables, this does not exclude the possibility that they may
concern real estate, although in this case there are some technical peculiarities
that imply the filling of a greater number of requirements and the evaluation of
additional factors by the company and the tenant. First of all, it is necessary to
remember that the amortization of constructions is slower than that of equipment
and that the land is not susceptible to being subjected to this tax treatment. To
which is added that the long-term amortization of a construction linked to non-
amortizable land, presents serious questions about the incidences of monetary
depreciation, the appreciation of the land, against the natural price decrease in
industrial equipment, etc. . For this reason, the formulas used for the leasing
contract for real estate tend to be much more complex and frequently involve the
constitution of a company that acquires the land and leases the buildings built on
it, and the legal difficulties that arise must be reconciled. the company that owns
the land appears as the lessee of the buildings, by virtue of the leasing contract,
but, on the other hand, appears before civil legislation as the owner of the latter
by accession that occurs from the secondary, the buildings, to the main thing, the
terrain.19
6. CLASSES
6.1. OPERATIONAL LEASING
Operational leasing, actually different from what we have been dealing with until
now, is presented in relation to goods whose market is widely in demand and,
consequently, allows them to be re-leased with some ease at any time. Typically,
this type of contract enshrines the power of the lessee to request termination of
the contract at any time, due to obsolescence, for example, of the leased goods, to
receive more modern ones in exchange. As a consequence of the above, the
periodic rate or fee no longer looks exclusively at the amortization period of the
assets, although it takes this into account, but rather increases with the assessable
costs derived from this eventuality. The contract is frequently accompanied by
the provision of a series of paid services such as maintenance, material repair,
technical assistance, etc., which marks important differences in relation to
financial leasing.
In relation to operational leasing, two types of leasing company can be

envisaged: that it is the producer of the goods that simultaneously plays the roles
of supplier of the material and lessor of the same or that it is leasing companies,
different from the supplier, who acquire the goods for lease within the framework
that we have just presented.2o
6.2. FINANCIAL LEASING
Denomination that properly corresponds to the lcasing that we have been

studying and in which the company, at the request of its client, acquires certain
goods or equipment from the supplier to lease them to them by paying a
remuneration, where the initial reference point is the amortization period of the
assets and with the option in favor of the lessee to extend the contract under new
conditions or acquire the asset at the end of the contract.
6.3. LEASE-BACK
In this case it is a type of leasing in which the client himself plays the role of
supplier. That is, in this dellcasc-back figure, the industrialist, owner of goods
and equipment, which requires working capital, proceeds to sell them to the
lcasing company, which, in turn and immediately afterwards, leases them within
the general framework which we have pointed out in the first points of this
chapter and which allows, among others, to enshrine the purchase option in favor
of the lessee. In this type of contract, the industrialist mobilizes his fixed assets,
acquiring working capital, but with the advantage of continuing to use them for
production.
- same productive purpose to which they were assigned from the beginning.21
6.4. RENTING
This contract, which is similar in many aspects to the so-called operational

lcasing, presupposes the existence of materials in the possession of the company
and eliminates, of course, the so-called collaboration stage between the parties
destined for the acquisition of the goods, which are simply leased to the user. It is
accompanied by a series of exclusive services in favor of the lessor for
maintenance, repair, technical assistance, etc., of the assets. In this type of
contract, which certainly has similarities with leasing, the purchase option for the
user is extremely remote and, on the contrary, it is very common for leasing
companies to refuse to sell them, since part of Its market structure implies
keeping the equipment under its control indefinitely.
6.5. NATIONAL AND INTERNATIONAL LEASING
We mention this type to highlight the tendency to exploit the possibilities derived
from the so-called international leasing, cross border leasing, that is, one in
which the leasing company and the lessee are under the jurisdiction of different
national legislations. It is the hypothesis of the leasing company that is located in
one country and leases the assets to a user in another country, having to provide
for a whole complex of mechanisms and specific solutions to bridge the
differences that may arise from the different applicable laws. It will be common
for contracts to provide that differences arising between the parties are subject to
the legislation of the lessor's country. However, there are many problems that
may arise, especially due to the risks assumed by the company against third
parties if in the tenant's country there is no advertising system that makes the
rights of the owner-lessor enforceable.22
In this regard, as we saw and after a process of several years under the auspices
of Unidroit, the convention on international furniture leasing was signed in 1988,
limited to the form of financial leasing and applicable when the lessor and the
lessee have domiciles in the United States. different and said States, as well as
that of the supplier, are contracting parties to the convention or when the sales or
leasing contracts provide that they will be governed by the terms of the
aforementioned convention.23
6.6. OTHER FORMS OF LEASING
The so-called Leveraged lease could be mentioned simply as an illustration for

large projects that require significant capital and multiple investments, in which
the leasing company, although it maintains ownership of the assets in its books,
only finances a portion of the price, since the The rest is contributed by investors,
without any corporate relationship with the company24 and the different forms of
syndicated leasing, which are normally imposed by the same size of the project
or by the complexity involved, at the same time, leasing equipment and real
estate, in an industrial expansion project, regarding which companies that have
strengths in both fields are sought to complement them.
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1. Some regulations in Latin America are: Venezuela, for "financial lessors", art.
117 LGBOIF. Argentina, currently financial entities, leasing companies,
manufacturers and importers. L. 24.441. Colombia authorizes financial
corporations to invest in companies whose exclusive purpose is financial leasing
or "Ieasing", art. 10, D. 148/73. Currently, a curious scheme is established by
virtue of which leasing contracts can only be concluded by commercial financing
companies, even if they are specialized, in which case the leasing business will
not be less than 65%, since it is not are in which case they cannot exceed 35%. d.
913/93, art. 1. Ecuador authorizes investment by banks and the National
Financial Corporation and private financial companies, in addition, the direct
provision of the service, D. of the Supreme Council of the Government, 1978.
Mexico authorizes the existence of Financial Leasing Companies, art. 5 LACP.
TRIANA CASTLE, Rafael. "Leasing. Financial Mechanism of the Future". Ed.
Leaves and Ideas. Bogotá, 1994 highlights its development in Latin American
countries and mentions the operation as active in Brazil, Chile, Colombia,
Ecuador, Mexico, Panama, Venezuela, Argentina, Costa Rica, Dominican
Republic, Guatemala, Peru and Uruguay. MARTINNS, Fran. Op. Cit. p. 449 And
ff.
2. COILLOT, J. "The Leasing". Translation by Tomás PÉREZ RUIZ, Ed. Mapfre
S. A., Madrid, 1974, pp. 103 and 104. Also consult BARREIRA DELFINO,
Eduardo. "Leasing. Legal, accounting, tax and operational aspects. Ed. Cangallo,
Buenos Aires, 1978; "Leasing or Financial Leasing", published by the Banking
Association of Colombia, Ed. Presence. Bogota, 1978. ARRUBLA PAUCAR,
Jaime Alberto. "The Leasing Contract". Forum of the Jurist Magazine, Vol. 11,
No. 6, Medellin, 1989. "Leasing: Perspectives arising from its global regulation",
published in document number II1 of Nueva Frontera, Bogotá, 1988; "Leasing
and its contribution to business development", published by the Superintendency
of Companies, Bogotá, 1989; OLlVERA GARCíA, Ricardo. "The Leasing.
Analysis of its legal regime". Ed. Amalio M. Fernández, Montevideo, 1985.
TRIANA CASTLE, Rafael. Op. cyl.
3. Crédit.Bail is regulated in France by a law of July 2, 1966. Such law was the
result, among others and in the words of CASTILLO TRIANA, of a ruling
issued. given by the French Court of Cassation in 1964, in which it was
concluded that rather than a lease, the contract was approaching a "disguised
form of conditional sale." For its part, Italian law No. 183 of 1976, art. 17, says
that "financial leasing operations are understood to be the operations of movable
and immovable property, acquired or built by the lessor, in accordance with the
indication of the lessee who assumes all the risks and with the possibility for the
latter of becoming the owner." of the leased assets at the end of the lease period,
upon payment of an established sum". Cited in Felabán Magazine, W 45, May
1982, p. 232.
4.V. definitions in COIUOT, op, cil., pp. 91 AND 92: PARRA BORDOT, Édgar.
"Legal considerations about leasing." FELABÁN Magazine, W 18, Ed. Kelly,
Bogotá, 1974, p. 66. TRIANA CASTLE, Rafael, op. cyl. maintains that "...it is a
tripartite, complex contract, of successive execution, onerous, precarious, by
virtue of which a leasing company, at the request and on behalf of a user client,
acquires ownership of capital goods intended primarily for purposes other than
the user's personal, family, or domestic use, to give the user the possession of
said assets through the payment of income calculated with a view to the total or
substantial amortization of the cost of said assets over a more or less long term. .
Sometimes the leasing company also grants the user the possibility of acquiring
the good that is the subject of the contract for a price established in advance, at
the end of the term agreed within the contract." Mexico, the thing. fine saying
that "by virtue of the financial leasing contract, the financial lessor is obliged to
acquire certain assets and grant their temporary use or enjoyment, for a
mandatory period, to a natural or legal person, obligating the latter to pay as
consideration, which will be settled in partial payments, as agreed, a determined
or determinable amount in money, which covers the acquisition value of the
goods, the financial charges and other accessories and to adopt at the expiration
of the contract any of the terminal options referred to in the article. 27 of this
law", arl. 25 LGOAAC. Colombia. "A financial leasing operation is understood
to be the delivery as a lease of assets acquired for this purpose, financing their
use and enjoyment in exchange for the payment of fees that will be received
during a specific period, agreeing for the lessee the power to exercise at the end
of the period a purchase option" (0.913/93, art. 2). Venezuela. A financial lease is
considered the operation through which a financial lessor acquires a movable or
immovable property in accordance with the specifications indicated by the
interested party, who receives it for use, for a specific period, in exchange for a
monetary consideration that includes amortization of the price. , interests,
commissions and surcharges provided for in the contract.- The respective
contracts will establish that the lessee may choose, during the course or upon
expiration thereof, to return the property, replace it with another, renew the
contract or acquire the property, in accordance with the contractual stipulations"
(LGBOIF. Art.80).
5. Colombia. The effects of an early termination are foreseen, prior to the signing
of securities until their maturity (CE 007/96, Chap. Third, 1.6).
6. Colombia. It establishes a mixed regime, which will govern until 2006, by
virtue of which the accounting and tax treatment is distinguished as follows: 1.
Financial leasing contracts for real estate, whose term is equal to or greater than
60 months; of machinery, equipment, furniture and fixtures, whose term is equal
to or greater than 36 months; of vehicles for productive use and computer
equipment, whose term is equal to or greater than 24 months, will be considered
an operating lease. The foregoing means that the lessor will record as a
deductible expense the entire rental fee incurred, without having to record in its
assets or liabilities, any sum for the property subject to lease.- 2. Contracts on
real estate in the part that corresponds to the land, whatever their term; lease back
or retro-lease contracts, whatever the fixed asset subject to lease and their term,
and financial leasing contracts that relate to the assets mentioned in the previous
section, but whose terms are shorter than those established therein. , will have for
accounting and tax purposes the need to record an asset and a liability for the
total value of the asset that is the subject of the lease. That is, for a value equal to
the present value of the agreed royalties or purchase options, calculated on the
date of initiation of the contract and at the rate agreed upon therein (L. 223/95,
art. 88).
7. One of the aspects that is usually studied with greater care by the leasing
company is the circumstance that the incorporation of the goods or equipment in
the production process is capable, itself, of increasing the flow of funds and
supporting the payment with it. of the periodic canon.
8.V. Supra, Chap. X, 7.3. Mexico, art. 25 LGOAAC. 9. Colombia. Law 599/00,
art. 249.
10. The CUL! It notes, however, in its preamble, how characteristic triangular
relationships arise in Leasing operations, since, in practice, far from there being
independence between the legal relationships, they are intertwined to achieve the
common purpose.
11. COILLOT, op. cit., pp. 84 And ff.
12. COILLOT, op. cit., pp. 95 and 97, who shares the criticism.
13. PARRA, op. cit., pp. 70 and 71. ARRUBLA PAUCAR, op, cit., p. 24, after
reviewing the different doctrinal appearances regarding nature, concludes that it
is "an autonomous, complex and atypical contract, which serves as support for a
financial operation." OLlVERA GARCIA, Ricardo, op. cit., p.38.
14. Op. cit., p. 95.
15. PARRA, op cit., pp. 72 and 73.
Mexico, art. 25
16. LGOAAC requires that the contract be in writing.
17. eUL!., art. 10, establishes that: "the obligations of the supplier that result
from the purchase and sale contract must also be due to the lessee, as if
The latter was a party to said contract and as if the equipment had to be delivered
directly to the lessee. However, the supplier will not be liable to the lessor and
the lessee, simultaneously, with respect to the same damages."
18. Colombia. Expressly prohibits the contract from involving documents with
credit, patrimonial, participation or market representative content.
ría, whether or not they have the character of securities (D. 913/93, art 3, d).
19. COILLOT, op, cit., pp, 242 and ss, Colombia. The Council of State has made
an illustrative analysis of the contract, its legal nature, its essential elements and
the different modalities of the contract (Fourth Section. Exp. 1661, December/88,
M, p, José Ignacio Narváez García),
20. DOSSE, Christiane. "Le Leasing (Credit-Bail) aux Etats Unis", In Banque
Magazine, W 349, March 1976, Paris, p. 297,
21. Mexico, art. 24, 111, LGOAAC. Colombia. It may only concern fixed
productive assets, computer equipment, machinery or cargo or public
transportation vehicles or real estate and the value of the operation must be paid
in cash (O. 913/93, art 3, e).
22. MAROIS, Bernard. "le leasing International". In Banque Magazine, No. 349,
March, 1976, Paris, pp. 288 And ff. Colombia. Commercial leasing companies
can be co-owners of a property leased by a foreign leasing company to a local
tenant, up to 15%. They may lease goods that are exported subject to exchange
regulations (D. 1799/94, arts. 2, 3).
23. CUl!., art. 30.
7. OBLIGATIONS OF THE LESSEE
We must note that when we refer to the rights and obligations of the parties we
will be placed within the framework of leasing in its most typical form, that is,
financial delleasing and in relation to capital goods and not real estate.
7.1. CHOOSE THE MATERIAL
It could be discussed whether this is, in fact, an obligation borne by the lessee or
rather a power derived from the mechanics of the contract. In truth we could
affirm that one and the other. However, we have included it from a didactic point
of view as an obligation because, in practice, the leasing company will not
proceed to purchase the goods until its client is obliged to lease them, as a
consequence, precisely, of having chosen them. and found suitable to meet the
needs of your company. In other words, after identifying an industrial need, it
proceeds to search the market for the different solutions that can be provided,
until it finds machines or capital goods that fully satisfy it. And that is when,
having studied the different alternatives in the financial market, you go to the
leasing company so that it, through the provisions of the respective contract,
allows you to use the assets you require. Consequently, if the leasing company
undertakes to transfer them as a lease, it is because its client has chosen and
indicated the one that is convenient for him.25
Note, on the other hand, that freely choosing the material seems to be a
possibility of financial leasing that distinguishes it, in the first place, from
renting, where it is forced to choose it from the stocks (the stock) in the
possession of the leasing company, without that produced by a third party may be
imposed on it. What cannot be done in the case of operational leasing, when it is
concluded with the same entity that supplied the goods26 or, as is common, by
one of its related parties.
In the financial leasing contract, this choice, which, so to speak, translates into
imposing the acquisition of the assets on the leasing company, has a set of very
important legal consequences that support the latter's ability to discharge a good
part of its obligations, regarding the receipt of the equipment from the supplier
and its consequent delivery to the lessee, as we will see a little later. It should
also be noted that the choice of the material by the lessee seems to be a logical
assumption that precedes, if you will, the conclusion of the contract, in which
case, of course, it would not be an obligation derived from it, but it explains how
and why that the leasing company is in a position to make a specific evaluation
of the project, which would be impossible if there were not a prior definition on
the subject AND
In summary, it can be stated that the existing collaboration between the two
parties translates into the technical choice of the material by the lessee and its
adequate financing by the leasing company.28
7.2.
PAY THE PRICE OR FEE
7.2.1.
Price determination
Like any lessee, the leasing client must pay remuneration during the term of the
contract and for the use of the goods that are the subject of the contract. The
determination of the price, in financial leasing, results from the establishment of
the tax amortization rate which, in turn, is a function of the probable useful life of
the asset on which it falls; of the interest that would arise from the contribution of
the equivalent capital and of the benefits that the leasing company expects to
obtain after meeting its general expenses. That is, the monthly cost for the user is
usually higher than the interest rate that would have to be paid for obtaining the
capital necessary to purchase the equipment on credit, obtained at a term
identical to that of the leasing contract.29
7.2.2.
Guarantee
In order to guarantee timely payment of the agreed price, leasing companies
usually require the provision of guarantees, as any financial intermediary would
do when placing its resources in the hands of a third party. These guarantees,
which can take any of the forms we know,30 can be accompanied by insurance
aimed at covering certain types of events in which, due to damage to the
machinery or any other reason, it may be suspended.
- production and as a consequence the lessee faces treasury difficulties that
prevent him from punctually fulfilling his commitments.
Failure to pay the price, as well as any of the obligations derived from the
contract, may give rise to a demand for termination or compliance with
compensation for damages by the leasing company. For this purpose, the
inclusion of penal clauses that provide for the amount
of the deductible penalty borne by the defaulting tenant. In this case, however,
the problem arises of specifying the amount of this penal compensation clause
since leasing companies tend to establish as compensation in their favor the
amount of the sums owed by the lessee, who also due to the simple circumstance
of Failure to comply with the contract would be obliged to immediately return
the property that is the subject of the contract.
It is noted, of course, to justify such a drastic sanction, that it is common for the
assets leased and acquired by the leasing company to be very particular in the
sense that they can only be used in certain types of industries or activities and
that, therefore, Therefore, it would be very difficult and uneconomical for the
leasing company to place them in the hands of third parties, who would surely
demand more favorable economic conditions given the difficult situation of the
lessor or will have little interest, if by the date of non-compliance they have
appeared on the market. new machines or equipment with greater efficiency and
higher profitability for potential customers.
However, the clause that in practice leads to the lessee continuing to comply with
the obligations of the contract, without being able to benefit from the use of the
equipment received, remains debatable. It will therefore be up to the courts to
decide to what extent the penal clause can consist of the payment of the entire
obligation, when on the other hand the object thereof has had to be returned.31
7.3. ASSUME MOVABLE OBLIGATIONS
7.3.1. Concept
The economic purpose of the contract, consisting of obtaining financing for the
acquisition of an asset by the lessee, is clearly reflected in the clauses in
accordance with which the lessor tends to transfer all of its obligations, either to
the supplier, as We will see it in the next point, already to the lessee himself. And
this is explained because in the case of financial leasing, the lessor wants to get
rid of the acquired goods or machinery because it understands that all the
economic interest in them belongs to the lessee, who, ultimately, Before dealing
with the owner, understand that he is related to the creditor who finances his
equipment. Something different happens in operational leasing and in renting,
because the positions of the parties are different with respect to the economic
purpose of the contract.
Fundamentally, as we will see shortly, the displacement is possible due to the
natural functional parallelism that exists between the sales and lease contracts in
that, in both, the property must be delivered and in both, ultimately, it must be
guaranteed that there are no defects that would prevent it from being used for the
economic purpose that led to its purchase or rental. Given, then, that the supplier
should deliver it to the buyer and the latter to the lessee, what is done in practice
is to eliminate the unnecessary step and that the supplier delivers it directly to the
latter and guarantees its good use, implicit in the reason for being. both contracts.
7.3.2.
Classes
In accordance with general rules, in the lease contract the lessor's obligations
consist of the delivery of the leased item, the guarantee that it will be able to
serve the purpose for which it has been contracted and that the lessee will be able
to enjoy of the assets in a peaceful and calm manner, without being disturbed by
third parties.
Regarding the obligation to deliver, the tendency of leasing companies is to

transfer their obligation to the supplier, who, for his part, and as seller of the
goods, is, in turn, obliged to the leasing company to deliver the goods. estate. As
one author rightly maintains, it is about replacing the company's obligation
towards the lessee, to deliver the property, with the right that the latter has
towards the supplier to demand delivery, so that its intermediate position
disappears and supplier and supplier are directly related. tenant.33
This shift towards the supplier of the obligation to deliver to the lessee generates
for the latter, in turn, obligations towards the leasing company, in particular the
obligation to expressly record the delivery and, above all, of its compliance with
the conditions of operation and state of the equipment, since given the prior
choice made by him, he is the only person truly qualified to express conformity
or rejection.
As regards the obligation to maintain the thing in the state in which it serves the
purpose for which it was contracted, the leasing company also tends to displace
its obligation, in this case making it assumed directly by the lessee. As a general
rule, it is up to the lessor to carry out and assume the cost of the repairs necessary
to maintain the assets in the state in which they can be used, except for those
secondary repairs called for by some rental legislation, which result from the
simple use of the assets and which could be considered as normal deterioration
due to use. However, in financial leasing and in the development of the technical-
economic principle according to which the lessee assumes the owner's own
burdens, he must bear the costs of all types of repairs and is, in addition, obliged
to carry them out, since he must maintain... perfect condition of the assets that,
legally, belong to the lessor. However, if the deterioration occurs as a
consequence of defects unknown to the lessee, which can be explained for this
reason despite its compliance, the transfer of obligations is made again to the
supplier. This, in effect, is obliged on its part to the buyer (leasing company) to
respond for hidden defects. Consequently, once again the lessor disappears as an
intermediary and relations are established directly between supplier and lessee.34
Regarding possible disturbances that the lessee may suffer and that make it
difficult for him to use the property peacefully, a distinction must be made in
general terms between the simple de facto disturbance, against which and within
the general rules of the lease contract he would have In any case, the lessee must
face the defense of the goods, from the disturbance of law by a third party, that
is, the claim that the goods belong to him or that there is a right in his head with
which the tenant's tenure. In this case, the lessor could attempt to move towards
the supplier, when the legal arguments invoked by the third party derive from a
pre-existing relationship between it and the seller of the machinery. But apart
from this hypothesis, it would not seem reasonable for leasing companies to
relieve themselves of their obligation to defend themselves in court against legal
claims from third parties, since in the world of law they are owners of the
assets.35 Finally, and in relation With the taxes that would correspond to the
lessor, there is also the inclination to transfer them to the lessee, so that he
assumes them as if his position were that of a true owner, without including, of
course, those settled on the profits of the contract.
We have said that this displacement occurs almost integrally in the case of
financial leasing because when it comes to operational leasing or renting, the
same economic purpose sought by the parties does not exist. The circumstance
that the property can be returned before the expiration of the contract to be
replaced by another or the lack of a purchase option means that the maintenance
obligation is preserved by the lessor to the point that, reversing the terms, the
lessee is inhibited from making any repairs, forcing them all to be made by the
landlord, even though at his expense in most cases. And this is explained because
in cases of operational leasing, but especially renting, the leasing companies
work with highly specialized equipment such as computers or machinery for
reproducing documents, to cite two examples and when faced with the decision
not to transfer ownership of the asset. , are the first interested in preserving it
according to standards of the highest technical level, with their own experts and
using their spare parts, generally subject to rigorous quality controls.
7.3.3. Hire insurance
Another obligation of the lessee aimed at responding for the conservation of the
assets that have been received consists of insuring them against all types of risks,
especially against damages that they may suffer even when they come from force
majeure or unforeseeable circumstances. Of course, there is the possibility that
the insurance is contracted directly by the leasing company, in which case the
costs will be included in the lease price, so that they can be recovered by the
lessor. 36
7.3.4. Return the good
As in any leasing contract, and as soon as the lessee does not exercise the option
to purchase the equipment at the end of the non-modifiable period, or does not
extend the contract under new conditions, the lessee is obliged to return the
property in good condition, unless the natural deterioration that it could have
suffered due to its use. Otherwise, you must compensate the landlord for the
damages, an obligation that is usually covered, as we saw in the previous point,
by taking out insurance.
8. OBLIGATIONS OF THE LESSOR COMPANY
In close accordance with what has been said, seeking to finance the acquisition of
an asset rather than acquiring the owner's own risks, the obligations of the leasing
company are usually simplified as much as possible. Also remember that the
lessee assumes the industrial or technical risks, while the leasing company only
intends to assume the financial risks.
8.1. PURCHASE THE GOODS FROM THE SUPPLIER

If any obligation must be assumed fully and totally by the leasing company, it is
to proceed to acquire the goods that have been chosen by the lessee, since that is
the fundamental purpose that leads the parties to contract. In this regard, it is
natural that the client provides complete information to the lessor to be able to
evaluate the nature of the purchase and know the conditions of the equipment.
But once the contract is concluded, the logical consequence is to acquire the
goods, either under the conditions established between the supplier and the future
lessee, or under the economic conditions that the leasing company reserves with
respect to the supplier and which may include price reductions, obtaining
financing terms, etc.
It is clear, of course, that, in that state of the business, he could no longer, under
the pretext of not finding satisfactory financial conditions, refuse to make the
purchase. From compliance with this obligation, a legal relationship arises,
autonomous in principle, between the leasing company and the supplier that is
regulated by the provisions of the purchase and sale contract. And we say
autonomous, in principle, because as we have seen, the supplier can be linked to
the leasing contract by virtue of the process of shifting the leasing company's
obligations, so that it assumes certain obligational burdens towards the lessee.
Given that leasing companies are not always credit establishments and, on the
contrary, in some countries they are prohibited from raising funds from the
public, they have had to resort to mechanisms of a different nature to expand
their operational capacity. Among others, obtaining credit from the supplier to
purchase the goods in installments or purchasing them in cash but owing part of
the price to a third party. Or to different forms of syndication under which it
enters into the contract with other leasing companies or simply carries out the
contract in its own name but later transfers part of its interest in it to other
interested companies.37
8.2. DELIVER THE GOODS

Since the leasing company is the supplier's creditor, empowered to demand
delivery and is in turn obliged to the lessee to do the same, the tendency is to
remove itself from that role of bridge to link the supplier and the lessee, with the
former committing to do delivery directly to it, as we already saw.
8.3. GUARANTEE THE ENJOYMENT OF THE GOOD AND ITS INTRINSIC

CONDITIONS
The same as in the previous case, as it says with the guarantee in favor of the
lessee and especially the conditions of the materials, this is an obligation that is
transferred to the supplier, who in any case had it as a seller before the company.
leasing. Gone is the reservation regarding disturbances of law, when they are not
based on pre-existing relationships between the third party and the supplier.
9. POWERS OF THE LESSEE
We have said and summarized it here for the purposes of the logical presentation
of the topic, that at the end of the unmodifiable period and in the case of financial
leasing, an option is usually established for the lessee consisting of extending the
lease or acquiring the asset. Of course, if you do not use any of the possibilities in
your favor, you only have to return the good that is the object of the contract.38
9.1. CONTINUE LEASING
The extension of the lease term is characterized because the economic conditions
must vary substantially. In effect, if the price is a result of the amortization costs
of the machinery, the general expenses and the profits of the leasing company
and if, on the other hand, at the end of the unchangeable period it is assumed that
such amortization has been carried out in its totality, we then find ourselves with
machinery and equipment that has barely a residual value for the lessor.
Consequently, one of the most important elements of the lease price disappears:
the amortization fee. This being the case and within a healthy balance of the
contract, its extension implies the setting of a new price lower than the initial one
that will only look at the eventual recovery of the residual value and, of course, at
the returns expected by the leasing company. 39
Although the theory seems simple, it is worth noting the convenience that the
new price or the conditions or reference points for it be established in the clearest
way at the time of entering into the contract to avoid difficulties regarding its
fixation. For this reason and for the benefit of the parties, precise provisions on
this matter are usually advantageous.
In any case and to the extent that the option is enshrined in the contract, we are
faced with a true unilateral promise to lease.4o
9.2. PURCHASE THE GOODS FROM THE LESSOR
The other end of the option is constituted by acquiring the good or goods that are
the object of the contract. The same situation arises here as the one we have just
pointed out because if the unequivocal reference point is the residual value of the
machinery or equipment, nothing is more reassuring for the lessee than having
defined from the beginning what the price should be or how it can be determined.
, to avoid the risk that in the event of a possible commercial value higher than the
residual, the leasing company, although it agrees to fulfill its obligation to sell,
demands conditions so onerous that at a given moment they make the possibility
of acquiring null and void for the lessee.
In essence, a legal problem arises and that is to know if one can speak of a
purchase option, when the price or the form of purchase has not been set, if it
must mention the essential requirements of the purchase and sale contract: thing
and price. In the countries where this is established, it is obvious that there will
be no question of an option in the proposed hypothesis. It should be noted,
however, that in commercial matters some legislation establishes that the receipt
of the good by the buyer - here it is already in his possession - without having set
the price leads to applying the medium in the market. It would remain to be
resolved, then, whether the commercial value of the good or the residual value is
applied, as the nature of the contract studied would suggest. We think, without a
doubt, that the latter, for which the lessee-buyer could invoke the customs in this
matter and the intention of the parties to the contract.
In relation to both points, continuation of the lease or purchase of the goods, it is

necessary to note that in some contracts the lessee is obliged from the beginning
to do one thing or another, in which case we can no longer speak of an option in
his favor but rather of an alternative obligation at his expense. And this is done
when it comes to goods of great cost or scarcity in the market; specialized
machinery or equipment that is only used in certain industries or that has been
specifically built to meet the needs of a specific industry, since in this case, in the
event of the eventual return of the property by the lessee, the leasing company
would be in trouble. an embarrassing situation because it would be very difficult
to place it on the market.
In any case, the importance of the purchase option, resulting from the unilateral
promise made by the lessor, is significant in our opinion and in that of numerous
authors. Furthermore, although the recent Uniform Convention on International
Leasing, already mentioned, does not consider this element essential, something
different happens with most of the legislation that, either referring to it
specifically or to different options that must be enshrined, They want to make a
substantial difference with the simple rental contract, in which it would be
enough for the lessee to return the property received at the end of the contract.41
9.3.
PARTICIPATE IN YOUR SALE PRICE
Highlighting the importance for the lessee of being able to purchase the property
at the end of the mandatory period, some legislation has established that, in the
event of the sale of the goods to a third party, the lessee would have the right to
participate in a part of that price. , presumably in all or part of the excess
compared to its residual value that, in any case, the lessor would have the right to
receive. Likewise, it may be foreseen that the excess over the estimated price will
be paid to the lessee, while the defect is assumed by him1.42
10. DURATION AND TERMINATION OF THE CONTRACT
10.1. SPECIAL IMPORTANCE OF THE DEADLINE
Leasing is one of the contracts in which the term plays a fundamental role since
its determination consults and obeys the interest of both parties. For the lessor it
means the existence of a minimum period essential for the tax depreciation of the
equipment and materials and for the lessee the time necessary to make adequate
use of the assets, in their industrial exploitation. A different time, shorter than the
amortization period, would clearly be inconvenient for the lessor or would result
in an unfavorable increase in the price for the lessee and a period that is too short
for the latter, in addition to the increase in the price, would not consult neither its
production programs nor its financial capacity, placing it prematurely before the
need to opt. For this reason, a term frequently used in leasing contracts for capital
goods ranges around 5 years, a term that in much of the legislation is accepted as
sufficient for the amortization of movable assets.43
10.2. DOUBLE TERM

Strictly speaking, there is no double term, but we want to indicate that the option,
enshrined in favor of the tenant, to extend the contract under new economic
conditions for a certain period of time, translates in practice into the existence of
two temporally defined moments. The first, unchangeable by the lessee and
intended for the depreciation of the assets and the second, optional to allow him
to continue with the machinery if it is still useful. From
. Then, the double term is potential because, unless otherwise agreed, or unless it
is excluded from the terminal options, admissible in some legislations, the client
can return the equipment if, for example, they appear obsolete, since it would be
uneconomical to maintain them compared to models more expensive but more
productive.
10.3. ANTICIPATED TERMINATION
10.3.1. Causes attributable only to the tenant
If in almost all financial leasing contracts the lessor transfers its obligations to the
lessee or supplier, we can affirm that the causes of termination attributable to any
of the parties will only be borne by the lessee. In effect, once the primary
obligation to acquire the good has been fulfilled and having delivered it through
the supplier, from that moment and within the most advantageous possibility for
the lessor, the latter is relieved of compliance with any other obligation.
Consequently, the causes linked to non-compliance will only refer in principle to
the behavior of the lessee and not to that of the leasing company.
10.3.2.
Destruction of the thing
It may happen that the contract ends due to the destruction of the thing, since
from that moment on, due to theft of material, it is impossible to continue using
the goods received. Of course, if the thing perishes in the hands of the lessee, he
ordinarily must respond to the lessor. The loss caused by force majeure or
fortuitous event will be covered by the insurance that we study at the time.44
10.3.3. Material obsolescence
Possibility reserved for some forms of leasing, specifically operational leasing,

where not always, but frequently, the power is established for the lessee to
request the termination of the contract so that the goods and equipment are
replaced and a new agreement is concluded. . It is also common in renting
operations.
This cause for early termination does not exist in the financial leasing contract
where the obsolescence of the material will be a risk for the lessee that he
assumes from the moment he chooses the goods and equipment.
Outside of these causes, there are all those specific to bilateral contracts,
including mutual consent, withdrawal - if agreed -, bankruptcy of the debtor, etc.
-------------------------------------------------------------------------------
24. ORTUZ SOLAR, Antonio. "The leasing contract." Ed. Legal of Chile. Chile,
1990.
25. Mexico, art. 30, LGOAAC.
26. CUL! Not only does it point out, among the characteristics, that according to
which "the lessee selects the equipment and the supplier without decisively
resorting to the lessor's competence", art. 10, number. 2. a, but rather, which
establishes that the lessor will be exonerated from liability towards the lessee
with respect to the equipment "except to the extent that the lessee has suffered
damages as a result of having resorted to the jurisdiction of the lessor and the
intervention of the latter in the selection of the equipment, its characteristics or
the supplier", art. 80.
27. Mexico, establishes that "the lessee must select the supplier, manufacturer or
builder and authorize the terms, conditions and specifications contained in the
order or purchase order, identifying and describing the goods to be acquired. The
financial lessors will not be responsible for any error or omission in the
description of the goods subject to the lease contained in the order or purchase
order. The tenant's signature on any of the latter documents implies, among other
effects, his agreement with the terms, conditions, descriptions and specifications
contained therein", art. 30, LGOAAC.
28. Colombia. When it comes to acquiring used goods to lease them, an appraisal
is required that determines, among other things, the commercial value, the
estimated useful life, the degree or risk of technological obsolescence, its
possibilities of relocation if necessary and the other elements that support the
investment to be made (CE 007/96, S.B. T. 111, Ch. Third, 1.3).
29. Ecuador seems to conceive it this way by requiring "that the rent to be paid
during the mandatory period, plus the price indicated for the purchase option
discussed below, exceed the price at which the lessor acquired the property..." ,
art. 1 C.
30.V. Supra. Chap. X, 7.3. Mexico, art. 34 LGOAAC.
31. eUL!. Regulates the issue of possible non-compliance by the lessee by
requiring the lessor, as a prerequisite for terminating the contract or applying
acceleration clauses, to formulate a prior requirement to the lessee to catch up on
compliance with its obligations, to the extent that this is possible. . Likewise, and
with respect to the application of the acceleration clause, Article 13 requires a
substantial non-compliance that could only be measured with respect to the
number of outstanding installments, in our opinion.
32. Colombia enshrines an interesting provision regarding forward sales with
reservation of title, which is still suggestive, given the similarities highlighted by
the doctrine between both contracts. To this end, it establishes that "when the
price of the sale under reservation of ownership has been agreed to be paid
through installments, the non-payment of one or more facilities that do not
collectively exceed one-eighth of the total price of the thing , will only give rise
to the collection of the unpaid installment or installments and default interest,
with the buyer retaining the benefit of the term with respect to successive
installments...", C. Co., art. 962.
33. Ecuador, art. 6°, Mexico, arts. 31 and 32, LGOACC. COILLOT, op. cit., pp.
167 and 168. CUU, art. 109.
34. Colombia. In financial leasing, the lessor is expressly prohibited from
assuming the maintenance of the assets as well as the manufacture or
construction of movable or immovable property (D. 913/93, art 3. B).
35. Mexico, art. 32, LGOAAC, CUU, art. 8°.
36. Mexico, arts. 34 and 35, LGOAAC. Colombia. When the insurance includes
the interest of the lessee as insured, which justifies his obligation to assume the
cost of the premium, the insurance taken out by the lessor will have the quality of
third-party insurance (CE 007/96, T. 111, Ch. Third, 2).
37. Colombia. It prohibited leasing companies from massively attracting
resources from the public. d. 2920/82, art 26. Today the situation is different
because they must be in the form of commercial financing companies, they are
credit intermediaries and can, therefore, capture. Mexico does not allow it, art.
24, LGOAAC.
38. Mexico. Establishes as an obligation, upon expiration of the term, that the
lessee adopt one of the following terminal options: "1. The purchase of goods at a
price lower than their acquisition value, which will be established in the contract.
If it has not been set, the price must be lower than the market value on the date of
purchase, in accordance with the bases established in the contract; eleven. To
extend the term to continue with the temporary use or enjoyment, paying a lower
rent than the periodic payments that had been made, in accordance with the bases
established in the contract; and 111. To participate with the financial lessor in the
price of the sale of the goods to a third party, in the proportions and terms agreed
upon in the contract." Likewise, the contract may provide that, in advance, the
lessee adopts one of these options, art. 27, LGOAAC.
39. Mexico requires that "an income lower than the periodic payments it had
been making" be paid, art. 23, 11, LGOAAC; Ecuador, that "the income must be
lower than that originally agreed upon", art. 1st, e, 2.
40. Ecuador also provides for the possibility of "receiving a substitute asset as a
commercial lease", art. 1st, e, 4.
41. Colombia. Art. 1, 3. The Council of State has considered the existence, in
favor of the tenant, of the purchase option as essential. Administrative Litigation
Chamber Fourth Section. Dec. 14 of 1988, Speaker Councilor Dr. José Ignacio
Narváez García. OLlVERA GARCíA, Ricardo, op, cit., p. 41, maintains that it is
not essential.
42. Ecuador, art. 1st, e, 3; Mexico, art. 27, LGOAAC.
43. Ecuador requires this mandatory period as a minimum, art. 2nd; Mexico
mandates that the deadline be mandatory, art. 25, LGOAAC.
44. ARRUBLA PAUCAR, Jaime Alberto, op. cit., p. 39, notes, rightly, how in
the Colombian case the loss of the property attributable to the tenant would give
rise to the application of article 2003 of the Civil Code, by virtue of which he
would be obliged to pay the rent for the time remaining until the due date. of the
agreed period. Now, we add, this positive law solution highlights that if the term
has been established based on the useful life of the asset, normally the fiscally
accepted one as such, and the price has been technically defined so that it
includes the amortization installments of its value, the application of the
aforementioned rule will lead to the payment of the value of the good, except, of
course, the residual cost.
Fourth part
Contracts that precede the realization of the
main neutral operations
Chapter XVIII
DEPOSIT
1. NOTION
1.1. LOCATION
From the beginning of the second part of the book we announced the study of the
deposit, a contract of secondary importance in relation to the other so-called
irregular deposit modalities and through which banks raise most of their
resources from the public. 1 We have warned since then, and we repeat it now,
that in the simple deposit, also called regular, there is no credit operation since
the deposited goods are not transferred as property to the bank but rather the
latter acquires the obligation to return them in kind. Consequently, it is a contract
that precedes the execution of a neutral, accessory or complementary operation,
because it does not meet the requirements of the credit operation already studied.
For this reason, the arguments of some authors in the sense that the registration
of the appeal translates into a passive accounting entry are not enough, since,
even if this were the case, this is not the only criterion, nor certainly the one with
the greatest validity for determine whether an operation is active or passive.2 But
if we were to stay with the simple accounting aspect, leaving aside the most
important thing which is to know whether or not a credit operation exists, we
would have that the statement is not valid in universal terms either because in In
many systems, the accounts that derive from the execution of this type of contract
do not appear properly in the liabilities, but in the so-called "memorandum
accounts".3 Their study in this part is therefore consistent with the theses that we
have presented throughout. from the book.
1.2.
CONTEXT AND DEFINITION
Let us remember here the classic definition of deposit, which corresponds to the
topic of this chapter, in whose words it is the contract by which a person delivers
a movable thing to another so that the latter keeps it in their possession and
returns it to them when the latter requires it. . In accordance with this definition
and unlike what happens with so-called irregular deposits, in the classic deposit
the depositary is a mere holder on behalf of and in the name of the depositor. As
a consequence, you must return the goods received in the same condition and
even with the fruits or products that have enriched them during the period of
deposit. While the civil deposit is naturally free, the commercial deposit is
naturally remunerated, since the depositor must pay a sum to the depositary as
consideration for the service provided.
It is also worth remembering, as we did at the time, the difference between
regular deposits, studied in this chapter, and so-called irregular deposits, in terms
of remuneration. In effect, in the latter the remuneration is paid in favor of the
depositor since, by transferring the ownership of the goods to the depositary, he
can enjoy and dispose of them without restriction. In effect, with what the banks
receive in money they make the loans that their clients require. Its similarities
with the mutual explain how within the bilateral relationship it is understood that
there is a preponderant benefit in favor of the depositary and a clear sacrifice for
the depositor during a certain time. On the contrary, in the classic deposit, simple
or regular deposit, the reason for the contract is to obtain the custody and
conservation of assets, counting on the security that the seriousness of the bank
and its precautionary systems provide to the depositor. Consequently, in this case
the remuneration is paid in favor of the depositary since the depositor is the first
beneficiary of the operation.
1.3. MERCHANTlITY OF THE DEPOSIT

In all those contracts that appear regulated by Civil and Commercial Law, it is
necessary to take into account that their distinction arises from the existence of
some assumptions indicated by the respective legislations. And although the
great conceptual support is provided by the provisions of the civil contract, its
classification as commercial is important because it allows certain exceptional
characteristics to be predicated of it in relation to its archetype. The notes that
distinguish the commercial warehouse are different depending on the country,
but we could say that, in summary, they have to do with the condition of one of
the parties, such as when it is established in the hands of a commercial
warehouse such as general deposit warehouses or banking establishments; or
with the very purpose of the deposit, when the things deposited are objects of
commerce, or, lastly, the deposit results from a commercial operation.
Legislation, of course, uses one or more criteria at the same time and may even
add different ones.4
2. LEGAL NATURE
Regarding the legal nature of the deposit, it is enough for us to observe that it lies
in the non-transferable delivery of movable property which, as we saw in the
previous point, by definition prevents the depositary from using or disposing of
the goods received and generates an obligation. of certain species or body.
It is a main contract, perfect in itself and without dependence on another, even

though it may be a consequence of another legal relationship that makes it
accessory, as we will see when studying the guarantee deposit. It is real, that is, it
is perfected by the delivery of the thing. In this regard, it is necessary to observe
some doctrinal tendency, which even has legislative consecrations and which
covers all real contracts, in the sense of making them consensual, perfectable by
the simple agreement of the parties.5 It is bilateral, unlike what happens with
civil deposit, especially because the existence of remuneration payable by the
depositor causes obligations to arise for both parties. It is, finally, onerous,
commutative and successive, as soon as the depositary's obligation is fulfilled or
throughout the entire time in which the assets are in his possession and the
principal of the depositor usually translates into periodic payments of the agreed
remuneration.
4.
PURPOSE AND MODALITIES
It is said, first of all, that warehouses can be open or closed, depending on
whether the goods are received individually as such or are left covered or packed
in an envelope, box or closed bags. But for the rest, because of the very purpose
of the deposit and because with respect to each group there are significant
differences, regular deposits are usually distinguished between deposits of
movable property in general, deposits of money and deposits of securities. Let's
study them right away.
4.1.
MOVABLE PROPERTY DEPOSITS
It refers to the receipt of movable property in general such as metals or precious
objects; goods, of course, not fungible. There is little to add in relation to this
possibility, which is the most generic and covers all movable property that can be
delivered in deposit.
4.2. MONEY DEPOSITS
Regarding money, a fungible good par excellence, the possibility of constituting

a regular deposit is usually linked to the existence of one of two circumstances.
Firstly, there will be regular deposit when the coins are received with their exact
specification, which would result from their specific numbering in the case of
paper money. And secondly, when such money is delivered in a box, envelope or
closed bags, it is not a transfer deposit and the bank is obliged, by exception, in
relation to what normally happens with the deposit of money, to return exactly
the same pieces received.6 And
We say that it is an exceptional solution because the nature of money, as a

fungible good, plays better with the irregular deposit in which the depositary
becomes the owner of the sum received, only obligating himself to return the
same amount.
It is correctly observed, however, in relation to the last hypothesis, that the
deposit in an envelope, box or closed bags would not properly be a deposit of
money, since what the bank is obliged to guard, preserve and return is the
container itself. without any fracture of its seals or security measures. Rather than
guarding the content, money, the depositary is obliged to guard the container,
where the deposit would rather be a closed bag, envelope or box containing some
heritage asset considered to be a heritage item.7
4.3.
SECURITIES DEPOSITS
In relation to securities, the possibility of simple deposit in custody is recognized,
with the generic obligations of the contract, but also two modalities consisting of
deposit in administration and deposit in guarantee.8
4.3.1.
In administration
Insofar as this deposit imposes additional obligations on the depositary beyond
those of ordinary custody and conservation, it is usually the result of an express
agreement on the matter. As a consequence of this and what is mandated by law,
the deposit of securities in administration imposes a set of obligations related to
the maintenance of the rights derived from the title and, of course, the integrity of
the documents in question. 9 Among other additional obligations derived from
this type of deposit we can mention that of collecting interest or dividends; attend
meetings, if such power is derived from the title; Paying taxes; revalidate titles;
make the payments that arise from its possession, etc. This set of obligations
usually derives in some countries from fiduciary assignments in relation to the
titles whose content would be to carry out the entire set of acts and procedures
aimed at their proper economic use, on the one hand, and the maintenance of
their effectiveness and legal prerogatives, on the other. the other. 10
4.3.2.
In warranty
First of all, note that this modality is not exclusive to securities. It may arise in
relation to another deposited object and, specifically, money. Remember, also,
that the guarantee deposit is linked to a main transaction to which it agrees and
that, therefore, the assets that constitute it are intended to respond for its eventual
non-compliance.
Here a difficulty arises regarding the prohibition of enshrining "commissionary
agreements" that allow the creditor to directly dispose of the assets received as
pledge in the event of non-compliance. It seeks to protect the debtor so that the
assets are valued in a judicial process and sold to the highest bidder, making
them liquid and avoiding the inequitable solution of the creditor appropriating
them, for a debt whose value is lower than that of the assets given. in warranty.
What happens, then, when it comes to securities and, specifically, when they
have credit content? That their endorsement as a guarantee ordinarily authorizes
the creditor to present them for payment, protest them, if applicable, and collect
them, in which case the titles are replaced by the corresponding sum, which
begins to fulfill the function of guarantee that until then they performed.
This being the case, it is asked whether it would be necessary to initiate a judicial
process so that the money obtained could be awarded in payment of a main
obligation. First of all, note, although it may seem obvious, that there is nothing
to transform into cash through an auction, as would have to be done, for example,
with different movable property, received as a pledge, since the money is already
available, nor is there anything, consequently, that would have to be the subject
of an appraisal. It does not seem, then, logical due to procedural economy, nor
would it imply effective protection of the debtor against the possible abuse of his
creditor since the quantitative precision about the main obligation and the
guarantee allows the unequivocal determination of the balance in charge of one
of the two , as a consequence of applying the respective sum to the total or partial
cancellation of the obligation. Legally, in addition, a compensation would be
produced that would extinguish the reciprocal obligations until the lowest sum is
met, making the solution indisputable, as long as both debts are due at that
moment, or naturally when this occurs. For this reason, some legislation
expressly establishes that the deposit of a sum of money as collateral will
empower the depositary to directly apply the sum to the obligation, with the
commitment, only, to return the excess over the amount of the debt, a solution to
all seems reasonable and
Of course, when it is not a deposit of money as collateral, nor a deposit of
securities that, due to the powers granted to the depositary, allows the guarantee
to be reduced to a sum of money, that is, when it involves corporate securities or
real or representative titles of merchandise, which usually have their own
liquidation mechanisms and as long as they do not transform them into money, it
will be necessary to request the judge to auction or award the property, in order
to apply its value to debt repayment.
Finally, it may happen that guarantee deposits are constituted in the interest of a
third party and not of the depositary, in which case the property cannot be
returned except as soon as the third party consents. 12
We will study the main obligations of the bank within the simplest form of
regular deposit, leaving out those in administration or guarantee, for which
additional obligations can be deduced without difficulty from the study of the
previous point.
5.1. GUARD
The doctrine refers to this first obligation as that of physical conservation, that is,
guarding the property in terms of maintaining its integrity and the ilUments it
may produce. As a consequence of this obligation, the depositary cannot use the
assets in his possession, nor leave them in deposit in the hands of third parties,
unless he receives express authorization from the depositor or the laws provide
for the possibility of doing so, in cases of urgency or as otherwise required.
indicate custom.13 The deposit of fungible things can lead, by exception, to a
form of irregular deposit in which, as we know, the depositary becomes the
owner of the things and is only obliged to return an equivalent amount.14
5.2. KEEP
Obligation that could be confused with the previous one, but that the doctrinaires
reserve for legal custody and that includes the obligation to defend the assets
received against the attacks they suffer from third parties, communicating to the
depositor the imminent risks and making the necessary expenses. are necessary to
preserve said assets. This would occur against a third party who claims as owner
to claim the goods received in deposit or invokes the existence of other rights.
You might wonder what difference exists between this obligation and those
arising from the deposit in administration, which we mentioned in the previous
point. It lies in the fact that conservation forces the assets to be defended against
external threats, while the administration also imposes positive behavior, such as
exercising accessory rights, paying taxes, etc., as the owner himself would do
within the careful management of his assets.
Regarding the obligations of custody and conservation, the custodian is liable for
fraud or fault on his part and is only exonerated in case of force majeure or
fortuitous event.15
5.3. RETURN
We have already said that the depositary must return the same goods received as
a consequence of having contracted an obligation of a kind and if the contract is
not transfer. Said return must occur upon expiration of the stipulated period or
when the depositor requests it, since in this contract the initiative of the depositor
is sufficient to ignore the effectiveness of the period, unless it has been concluded
for the benefit of the depositary. In turn, the depositary can return early and
immediately when there is a just cause, in accordance with some legislation, in
which case, we add, he must reimburse the difference between the remuneration
received and that caused by the period in which the goods were in his power or
limit himself to collecting said proportional part, if he had received nothing until
then. If there is no specific term or there is no just cause, the depositary may, in
any case, terminate the contract by giving prior notice to the depositor. 16
The return, of course, also involves the return of its fruits and products.
6. OBLIGATIONS OF THE DEPOSITOR
6.1. PAY THE PRICE OR COMMISSION
One of the most notable characteristics of the commercial deposit is that it is

inherently remunerated, which means that, unless otherwise agreed, there is the
obligation to recognize a sum as consideration for the service. Which leads in
many laws to the fact that, in the absence of a specific stipulation, the choice is to
apply the usual remuneration in the place or, ultimately, and this seems to be
general, the one indicated by the judge, if it is necessary to sue through the
courts. its fixation.17 In bank deposits the remuneration is usually a commission
consisting of a percentage or a thousand of the declared value of the goods
received and payable according to the duration of the deposit.
6.2. REIMBURSE EXPENSES

Since in carrying out his obligation to preserve, the depositary may be
constrained to make some essential expenses, it is the depositor's obligation to
reimburse them at the time of requesting the return of the goods that are the
subject of the deposit.
7.1. RETAIN
The main power enjoyed by the bank in its capacity as custodian is to retain the
goods that are the subject of the contract to guarantee the payment of the sums
owed to it, either as remuneration for its services, or as a consequence of having
incurred expenses. Of course, unless retention is enshrined in the respective
legislation as a general principle in favor of all creditors who have assets of the
defaulted debtor in their possession, such power must be specifically enshrined in
the contract or in the rules on deposit. , which will happen most of the time, since
it is logical from the point of view of the legal-economic structure of the
contract.18
Like any bilateral contract, its grounds for termination are applicable. Let us
mention again the unilateral decision of any of the parties.
8.1. DEPOSITOR'S DECISION
This possibility is important in the deposit contract and differentiates it from the
mutual and irregular deposit because here it is clear that the term has been
established in favor of the depositor (unless expressly agreed otherwise) and that,
consequently, he can, at any time , request the return of the goods in the hands of
the depositary. Although legislation does not usually regulate this aspect, it is
likely that contractual regulations provide that, in this hypothesis, the depositor
will lose to the depositary the sums he has paid as remuneration, corresponding
to a longer period.
8.2. DECISION OF THE DEPOSITORY
This may apply, as we also saw, in the event of a just cause, as stated in some
legislations, or in the absence of a deadline, through prior notice to which we
refer.19 In this case, it will be the depositary who returns the unpaid
commissions.
-------------------------------------------------------------------------------
1.V. Supra. Chapter, IV.
2.V. Supra, Chap. 11, e, BAUCHE, op. cit., p, 166 warns that while J.
RODRÍGUEZ classifies them as "passive" operations, MESSINEO includes
them among the "accessory" ones,
3. Such is the case of Costa Rica where it is expressly established by law, art. 57
LOSBN (L. 1644).
4. El Salvador; The deposit is commercial: 1) In general stores, 2) That which
hoteliers and similar companies receive from their clients and 3) That of money
or securities made in a banking establishment, art. 1098 C. Co. Costa Rica: it is
considered commercial: 1) If the things deposited are objects of commerce and 2)
If it is done as a result of a commercial operation, art. 521 C. Co. In the same
sense Mexico, art. 332 C. Co.; Ecuador, art. 568 C. Co.; Brazil, art 280 C. Co.;
Argentina, art. 572 C. CO.
5. As consensual it is enshrined in art. 2516 of the Mexican Civil Code for the
District and the Federal Territories.
6. El Salvador, art. 1267 C. AC.; Costa Rica, art. 524 C. AC.; Mexico, art. 268
LGTOC; Honduras, art. 1031 C. AC.; Panama, art. 835 C. AC.
7. RODRIGUEZ, RJ "Banking Law". pp. 320/1V. Supra, Chap. V, 4.1.5.
8.V. Supra. Chap. 111, 3.11 on Centralized Securities Deposits.
9. El Salvador, art. 1268 C. Co.; Mexico, art. 278 LGTOC; Honduras, art. 1032
C. Co.; Paraguay, art. 1408 C. c.
10. V, infra, Chap. XXII, 4.13.1.
13. El Salvador, art. 1099 C. Co.; Colombia, art 1172 C. Co.; Costa Rica, art 523
C. Co.; Peru, art. 1820 C. C.; Ecuador, art 567 C. Co.; Panama, art 832 C. Co.;
Argentina, art. 575 C. Co.; Panama, art 832 C. Co.
14.V. Supra, Chap. IV, 2.2.
15. Colombia. The depositary will be liable even for "slight fault", art. 1171 C.
CO. Costa Rica: Responds for fault or fraud, art. 525 C. CO., same in Peru, art.
1824 C. c.
16. El Salvador: 30 days notice, art. 1101 C. AC. Costa Rica: 15 days, art. 524 C.
AC. Colombia: with "prudential advance notice", art. 1174 C. AC.
17. Costa Rica, art. 522 C. AC. Colombia, art. 1170 C. AC. Peru, art. 1818 C. C.;
Panama, art. 834 C. AC. Brazil, art. 282 C. AC. Argentina, art. 573 C. Ca.,
Ecuador, art. 565 C.Ca.
18. Costa Rica, art. 522 C. Co. Colombia, art. 1177 C. Co.
19.V. npp 16 of this chapter.
Chapter XIX
MANDATE
1. NOTION
It can be stated that the mandate is a contract in accordance with which one party
undertakes with another to carry out one or more legal transactions for the benefit
of the person who confers the order.] This usually involves, within the classic
molds of Civil Law , which not only acts on behalf of the principal but also in his
name, which means, as a general rule, that representation is linked to the
mandate, without the two figures being able to be confused. In this way, the third
parties who contract with the agent know that this is an intermediary in charge of
carrying out the business by the real interested party.
From the definition, the fundamental object of the contract arises from carrying
out a legal transaction, which excludes its content from being the execution of
material works. They are left to the development of other types of contracts, such
as the provision of services, the employment relationship, etc. Thus limited, the
mandate tends for the agent to express his will in order to achieve a certain legal
effect and for it to be established directly, in principle, in the head of the
principal, it is, therefore, the carrying out of a business through intermediary.
person, who is empowered and obliged, at the same time, to carry it out.
1.2.
MERCANTILITY OF THE MANDATE
/'
The so-called commercial mandate constitutes, ultimately, nothing more than a
modality of its civil archetype, characterized by some notes that distinguish it,
but largely coinciding with the general principles of the former and with the legal
consequences that are predicated on its celebration. The commercial nature of the
contract derives from different circumstances depending on the legislation, but it
is linked to the agent being a merchant, in some cases, and, in particular, to the
fact that the object of the mandate is constituted by the performance of a
commercial legal act. mandate can be classified as commercial, legal
consequences arise, especially with regard to the obligations of the parties, linked
to a high degree to the onerous nature of the commercial contract. That is, unlike
the civil mandate, which may or may not be remunerated and is naturally free,
the commercial mandate is in itself remunerated in favor of the agent, as
consideration for the services provided.
2.
LEGAL NATURE
2.1.
THE MANDATE and THE COMMISSION
The study of the nature of the mandate fundamentally deals with the way in
which the effects of the legal transaction concluded fall on the head of the
principal, although it is possible that this does not happen. That is, in the analysis
of the figure it is necessary to study the two main modalities that are presented in
relation to this aspect: the mandate with representation, a more peculiar form, and
the mandate without representation, usually classified as a commission. The point
has been hotly discussed, especially in the case of the civil mandate, which for
many legislations and a good part of the doctrine is invariably representative,
even though it cannot be stated that it is the trend in commercial matters. In this
case, the thesis seems to prevail according to which it may or may not be and, in
any case, it is reserved for a type of mandate, as a typical element, there, non-
representation, that is, the action of the agent on behalf of the principal, but in his
own name. It has been argued by some that even in this hypothesis the mandate
would be representative because although the agent acts in his own name against
the third party, he is always responsible for the obligation to transfer or transfer
to the principal the effects of the legal transaction that he has concluded and to
To distinguish both assumptions, they have spoken of the fact that in one case
there is direct representation, while in the latter there is an assumption of indirect
representation, but always representation.3
The truth is that, from a practical-legal point of view, it seems more important to
specify the effects vis-à-vis third parties, because if the agreement between the
parties always obligatorily binds them, the interest in whether or not there is
representation is translated, first of all, , in the legal position of the agent vis-à-
vis third parties with whom he contracts. For this aspect, it would be necessary to
accept that a form of mandate implies representation, because in it someone acts
on their own behalf. of another, it does so at the same time in its name and in that
capacity it negotiates with third parties, while in the second hypothesis, although
the action is carried out on behalf and in the interest of the principal, vis-à-vis
third parties the position is that of direct contractor, non-representative, and the
effects are usually filed directly with the head, the agent, who, in turn, will have
to subsequently transfer them to his principal.
From the fact that the mandate is not representative, that is, that we are facing a
commission, within the majority thesis in the field of Commercial Law, it can be
concluded that the principal lacks direct action against the third party with which
his agent hired, that is, his commission agent.4
2.2. THE MANDATE AND REPRESENTATION
Although the commission, as a type of mandate, is non-representative in most

countries, it must be recognized that the mandate in its first form is, on the other
hand, representative since the agent acts on behalf of his principal. Likewise, it
must be specified that mandate and representation are different concepts since
this can be conferred in different contracts, as would be the case of a service
lease in which the lessee had, in addition to his or her current rights and
obligations, the representation of the lessor. 5 Finally, it seems necessary to
distinguish between the mandate itself, as a contract, and the power, which is
nothing other than the externalization of the authorization to carry out a business
in another's name.
For a better study of the figure of representation, it is worth remembering that
various modalities can be predicated of it.
2.2.1. Legal or voluntary representation
It is said that there is legal representation when the powers to act derive directly
from the law, as is the case with the father of a family in relation to his children
or with the manager or representative of a company that acts on his behalf, as a
body empowered to such effect. It is therefore, thanks to the legal provision, that
in both cases we can speak of a representation. On the other hand, there is
voluntary representation when, by a unilateral act, a capable person grants power
to another to act on his or her behalf; unilateral decision that may translate into a
bilateral business as soon as the agent accepts the performance of his assignment,
as happens, specifically in the mandate contract.
2.2.2. Express or implied representation
The first is said to exist when one party explicitly grants another party the
authorization to represent it, while in the second such representation arises from
unequivocal statements about the will to confer the power of one party, or to
carry out the assignment. of the other. In relation to this last assumption and to
talk about the hypothesis where there is already an agreement between the
parties, let us imagine that when a power is granted the principal, although he
does not respond expressly, acts consequently in a way that produces the effects
sought by the principal.
2.2.3. Presumptive representation

It can be stated that presumptive representation is simply a modality of legal
representation, only that it does not respond to the existence of general
institutions in which the existence of a representation must be inferred in legal
logic, as we already saw in the case of the father of the family. or the
representative of a company, but for certain cases in which, usually having to
have a special power, the law presumes in certain cases the authorization to
conclude certain legal transactions. Such would be the case of the legal
representatives of a company and the factors, who are considered authorized, by
the mere fact of their appointment, to subscribe securities on behalf of the
companies or establishments that they manage.6 It is, therefore, a presumption
established to conclude business that, in itself, would require special power or
statutory consecration in favor of the aforementioned persons.
2.2.4.
Apparent representation
He is one of the most interesting figures recognized by modern Commercial Law.
In effect, this modality of representation is based on recognizing that in
relationships between individuals the legal appearance, that is, the externalization
of certain behaviors supported by certain circumstances of plausibility, can lead
to one person being considered the representative of another, as well as There is
no legal or conventional authorization that empowers it to act as such. The
typical example is also found in the study of the regulations on securities, since
they enshrine provisions in accordance with which whoever has given rise to the
belief that a person is acting on his or her behalf, through acts or omissions, will
be bound as if she were truly his representative.7 Consider the case of a merchant
who draws bills of exchange in charge of a company and they are accepted by an
employee who is not a representative, nor a factor, nor does he ultimately hold
any title that would empowers to engage society. And let us also assume that on
successive occasions such bills have been honored upon maturity by the debtor
company.
Well, it would not be admissible then, in accordance with the stated principle, for
the company to propose as a defense at a given time the circumstance of having
accepted the title by a person lacking representation or power, since the positive
facts consisting of the payments made previously or serious omissions derived
from not having warned the drawer that the acceptor was not authorized to do so
and, in any case, the appearance created through repeated occasions, in the sense
that the instrument was properly drawn and accepted, They will necessarily lead
to such an exception not being successful. That is, the legal appearance produces
effects in law by having as a representative someone who was not really one.
3.
In relation to the mandate, we can affirm that it is a main and typical contract,
consensual, ordinarily, since it is formed by the simple agreement of the wills of
the parties, without, furthermore, requiring any formality. However, it should be
noted that in certain cases the power, that is, the externalization of the granting of
the power to represent, may be subject to certain formalities. Such would be the
case of the general power granted to represent a person in relation to all acts and
contracts, if it must be recorded by public deed or that which is granted for
judicial representation which, as a general rule, has to be presented before the
recipient judge. of the same, etc.8 But if any formality is appropriate in relation
to the power and for certain hypotheses, and if, in any case, practice seems to
recommend that it be recorded in writing, so that the parties and third parties can
specify in given moment its content and scope, the affirmation that the mandate
contract, as such, is perfected by the simple agreement of the wills does not lose
value. The contract in Commercial Law is bilateral, as it is inherently
remunerated. It is, furthermore, onerous, and within this general modality,
commutative, since the parties know ab initio the remuneration or property
advantages that they reciprocally expect to obtain. Some authors note that in
certain types of mandate, such as that held for the provision of professional
lawyer services, one could speak of a random contract when the attorney's
remuneration is settled based on the results of the trial, through the formula
known as quota. lititis.
4. OBLIGATIONS OF THE MANAGER (BANK)
The first thing that must be observed about the obligations of the agent is that in
matters of Commercial Law there is a tendency to make acceptance mandatory
or, at least, to enshrine a set of provisions aimed at ensuring that the recipient of
the order cannot, simply and simply, refuse to accept, but must assume some
burdens that we could call pre-contractual or, perhaps better, para-contractual,
since it is assumed that, ultimately, the contract will not be carried out. The
principle in this matter is that the recipient must state whether he accepts or not
and in case of silence, he presumes his agreement with the proposed order. The
previous predicate is more universal when it comes to commission, since the
commission is conferred on someone who publicly holds the profession or
commercial activity of commission agent.9 As a consequence of the above, the
agent is obliged to preserve and safeguard the goods received, when That is the
case, while the principal provides the appointment of whoever replaced him. If
you do not notify in a timely manner, but, in particular, if you do not take the
necessary measures for the adequate conservation of the assets, you will be liable
to the proponent for any damages that may be caused.
Having made this preliminary note, let us move on to study the obligations of the
agent once, through his express or tacit acceptance, the contract has been
perfected.
4.1. FULFILL THE ASSIGNMENT IN ACCORDANCE WITH THE ORDERS

AND INSTRUCTIONS OF THE PRINCIPAL
As it is not difficult to understand, this is the primary obligation of the president;

Its realization constitutes the efficient cause that led the principal to contract and
the success of the contractual business ultimately depends on the result of its
management.
The proper fulfillment of his assignment requires the agent to strictly adhere to
the orders and instructions given by the principal, so that his excessive action
translates, first of all, into the agent being exclusively and directly obligated with
respect to the consequences derived from it. Of course, and as long as the third
party cannot know the specific content of the limitations, said consequence will
be predicated on the relations between the agent and the principal, without
affecting the position of the contracting third party.
In the event of insufficiency in the instructions or circumstances arise that could

not be foreseen at the time they were given, the agent must consult with his
principal in order to obtain the necessary details and fully adjust to his wishes.
However, when it is impossible to inform the principal of the new circumstances
or in case of urgency that imposes on the agent the need to act, under penalty of
causing serious harm to the principal or, lastly, if he is empowered to act at his
discretion , the agent may do so diligently, following sound principles of logic
and in such a way that it could be assumed, in reasonable terms, that the agent
had given you his approval. 10 This may be one of the most interesting cases of
an example in which the law assigns effects to the president's silence.
You must also notify the principal of any new facts or circumstances that could
lead you to modify or revoke the mandate. You must do the same thing once the
order has been completed, so that the commander can express his agreement or
disagreement with the terms of the execution.
4.2. ACT IN THE INTEREST OF THE PRINCIPAL
This obligation, logical in light of the contract, translates into the search for the
best economic results for the principal and is enshrined in some provisions,
varying depending on the country, among which we could mention that all prizes,
interests or benefits related to The business must benefit the principal or client,
who must also look for the best market prices when it comes to purchasing a
good or paying remuneration as consideration for some service and may even
have to respond for defects. of the goods or titles that are acquired on behalf of
the interested party.12 For professionals, this expected behavior is part of the
generic obligation of loyalty, which we analyzed at the time. \3
4.3. CUSTODY THE ASSETS
The obligation has a double possibility, the first is pre-contractual, we could say,
or outside the contract, which we mentioned at the beginning of this point and
which refers to the conservation of the goods when the order is not accepted and
while the principal proceeds to appoint another person in his place and the
second one that we are dealing with now and that results from the conclusion of
the agreement. The obligation also translates into different assumptions that may
begin with the need to record the state in which things are, whether they have
been received from the principal, or whether they are received from third parties
as a consequence of the execution of the order, so penalty that, by not making the
corresponding reservations, you will have to respond for damages or defects of
the goods. As a consequence of this obligation, numerous laws establish that the
agent or commission agent will be liable for the effects received or the sums of
money delivered, in a particularly severe manner.14
4.4.
SECURE THE GOODS
Especially when it comes to a commission for the transportation or shipment of
merchandise, the agent is obliged, if he has the resources to do so, to insure the
merchandise or to demand from the principal a sufficient provision for this
purpose. Obligation preceded, in this case, by those of the sender of goods, which
commit him to supervise the proper dispatch and prepare the
. documents, fulfill the customs or consular requirements, when applicable and,
in any case, those specific to the transport contract that guarantee the good result
of the corresponding shipment. 15
4.5. RESPOND FOR OBLIGATIONS OF THIRD PARTIES
In this case, it is not an obligation that arises naturally from the execution of the
mandate contract, not even in its specific form of commission, but rather an
exceptional possibility that arises when the agent or the commission agent
undertakes to guarantee the fulfillment of the obligation assumed by the third
party which, as we know, in the first case is contracted directly with the
principal, and in the second with the commission agent, but with the latter being
responsible for later transferring the goods or services to the principal. acquired
rights. As soon as this type of guarantee exists, which is known as star del
credere, the agent or the commission agent become, in practice, guarantors of the
third party with whom they contracted, in favor of their principal or principal.
4.6.
COLLECT CREDITS
Yo
When the object of the assignment consists of the collection of a loan - and we
highlight it here because of the frequency with which this type of task is assumed
by banks - the agent undertakes peculiar obligations, among which, the most
important, is to take the measures or carry out the procedures that, in accordance
with the law, are necessary for the exercise of the actions derived from the
respective credit or for their maintenance, when the law requires some for their
subsistence. Obligation that we highlight for the above, but that would be part of
the more general obligation to safeguard the assets, in the sense of legal
conservation or custody, rather than physical, which does not imply anything
else, in essence, taking the provisions that we have just mentioned. to cite as an
example.16
4.7.
TO BE ACCOUNTABLE
Accountability is, in a certain way, the culmination of a process in which, after
receiving the order and obtaining the funds to carry it out, the pertinent
notifications and consultations are made and the business for which it was carried
out is concluded. the contract, the agent or the commission agent, as the case may
be, proceed to report the results and return the balances, deliver the goods or
titles, prepare the documents or deeds that are necessary, verify the endorsements
or assignments, etc. For professionals such as banks, and in general for external
business managers who have made this activity their profession, accounting
reports, both periodic, throughout the execution of the assignment, and the final
one, are part of the generic obligation to inform.17 It is then, as we noted, the
completion of the business and is usually coupled with compliance with the
fundamental obligation consisting of transferring the assets or rights in question,
in the case of commission.18
5.
OBLIGATIONS OF THE PRINCIPAL
As in the previous case and mixing a little the generic situation of the mandate
with the specific situation of the commission, we will cite below the main
obligations of the person requesting the assignment.
5.1.
REMUNERATE THE MANAGER
We have said, from the beginning, how the commercial mandate is usually
distinguished from the civil mandate, in that naturally the former is remunerated
while the latter is free. This happens in the commercial mandate in general, and
with more emphasis on the commission, since the commission agent is a
professional merchant dedicated to receiving and carrying out this type of orders.
It is, therefore, the first obligation borne by the principal and legislation
frequently defers to local customs or uses.
determination, when the remuneration has not been established in the contract
. respective.19
The remuneration systems are diverse and can consist of a fixed sum or a
commission settled on the global amount of the operation, with some limitations
such as the prohibition enshrined in various legislations, which we have already
seen, for the commission agent or agent to benefit. of the discounts, prizes, etc.,
obtained in the business carried out. In banking practice, it is usual to charge a
commission that takes into account the amount of the order, but if the fixed sum
is chosen in any case, which is ultimately secondary, it seems more important to
highlight that in most cases There is an authorization to debit its value from a
current account, when such a relationship exists between the parties, either
because it has been agreed upon, or because it is a generic power consecrated in
favor of the bank by law. 20
5.2. PROVIDE IT WITH FUNDS OR REIMBURSE THOSE USED
It is no longer a question of remunerating the personal activity of the agent, but

of providing him with the essential resources to be able to carry out his
assignment or reimbursing those that, because they have been agreed upon or
result from the voluntary collaboration of the agent, he has provided from his
own money. In other words, the recognition of remuneration makes the contract
qualify as onerous, while the provision of funds affects the possibility of the
agent carrying out his assignment adequately.
It is not unnecessary to make a quick note here regarding the influence of the
provision of funds on the qualification of the banking operation and of course the
contract, since if the principal delivers the necessary resources for the entrusted
business to be carried out, it can be properly stated. of the exclusive carrying out
of a neutral operation, while if such provision does not occur or is insufficient,
and in both cases the bank has to provide its own resources to carry out the
business, a credit concession will be added with the effects that we study at talk
about mutual.21
The most important rules regarding this obligation are that if the agent is not
provided with sufficient funds, he may refuse to execute the order or suspend it,
if the shortage of funds occurs in the course of execution, unless the agent has
obliged to provide them from their own resources. Given the silence of the
parties on this matter, legislation usually establishes that the reimbursement of
the sums used in carrying out the order and of all expenses that may have arisen
for this reason must be made immediately and that, as a consequence, such sums
and from then on the principal may be obliged to recognize the payment of
interest; principle that, in the opposite sense, also applies when there are balances
in favor of the principal and in charge of the agent.22
5.3. ASSUME THE OBLIGATIONS DERIVED FROM THE ACTION OF THE

MANAGER
We have seen that the first obligation of the agent is to carry out the order in the
terms and following the instructions of his principal, which, as a general rule,
frees him from liability. Well, in turn, the principal is obliged to assume the legal
consequences of the businesses carried out on his behalf, in his name or in the
name of his agent, when it is a commission agent. These obligations will arise
directly in his head and in front of the third party with whom the agent
contracted, in the first case, or will involve, as a general rule, the conclusion of a
new business between commission agent and principal, in the second, so that the
agent transfers the assets or rights acquired in carrying out the entrusted legal
business. Assuming the first and lending oneself to carrying out the business, in
the second case, constitute a consequence of the conclusion of the contract.23
6.
POWERS OF THE MANAGER
6.1.
RETAIN
Perhaps the most important power in practice for the agent is to be able to retain
both the assets received from his principal that are still in his possession and
those received from a third party in the development of the business, to ensure
compliance with the fundamental obligations. of the principal and, especially,
those of re
or compensate him and reimburse him for the funds he has used in the
management. The retention produces different effects depending on whether it is
enshrined in the legislation in general, conferring a lien right over the assets,
effective against third parties, or a power against the other party, a simple de
facto guarantee, so to speak, but without the is relevant to third parties. And in
the first case, the question arises as to whether the direct application of such
assets to the satisfaction of the debt would be possible.
The answer will be negative in all those legislations that prohibit the
commissioner agreement, which we studied at the time, but it could recognize an
exception linked to the security retention of sums in cash or securities that can be
collected by the withholding agent, since in this In the event of the existence of
liquid and homogeneous reciprocal debts, the phenomenon of compensation
would operate, if both are payable, making it unnecessary to use ordinary
procedures to demand the auction and adjudication of the assets.
In any case, the vast majority of legislation usually refers to this form of
guarantee for the agent which is intended, as we said, to cover him against
possible non-compliance on the part of his principal.24
6.2.
SELL THE GOODS RECEIVED
Legislation sometimes establishes this power, which does not correspond to the
case in which the order consists of selling, but rather to hypotheses in which it is
assumed that the factual circumstances or the conduct of the principal authorize
proceeding in this way. Such would be the case in which the price of the goods
itself was not sufficient to pay the costs of transportation and storage or when the
agent having stated that he does not accept, the principal does not designate his
substitute within the deadlines established by law or within of prudential periods
that advise the uses of the market or sound logic or, lastly, when, for reasons
beyond the control of the agent, such alterations occur in the products that, if they
were not sold, it would not be possible to save even a part of the price. . In these
and similar cases, the agent may, by exception, sell the merchandise received,
placing the resulting money in favor of the principal, except, of course, for his
right of retention.25
-------------------------------------------------------------------------------
1. RUGGIERO defines it as follows: "Assignment given to a person to carry out
on our behalf and in our name one or more legal transactions, so that the effects
of the transaction carried out are linked to our person as if we ourselves had
carried it out", transcribed by the "Dictionary of Private Law", p. 2583.
MARTINS, Fran. Op. cit. p. 247 And ff.
2. Colombia, art. 1262 C. AC.; Argentina, arl. 223 C. AC.; Panama, art 580 C.
AC.
3. BONIVENTO, José Alejandro, "The Main Civil Contracts." Ed. Stella,
Bogotá, 1973, pp. 276 And ff.
4. Guatemala, arts. 306/7 C. Co.; Panama, art. 640 C. Co.; Ecuador, art. 376 C.
Co,; Chile, art. 257/8 C. Co.; Argentina, art. 233 C. Co.; Paraguay, art. 901 C. c.
5. ROCCO, Alfredo. "Principles of Commercial Law." General part. Translation
by Joaquín Garrigues. Ed. National. Mexico, 1966, p. 282.
6. Colombia, art. 641 C. Co.; Intal, art. 23.
7. Colombia, arts. 640 and 842 C. Co.; Intal, art. 22.
8. Guatemala. It may even be verbal, but the principal must ratify it in writing,
art. 305 C. Co. Colombia: The power to enter into a business that must be
recorded in a public deed must be conferred in this form or in an authentic
writing, art. 836 C. Co. Colombia and Panama: Representatives must justify their
powers, if required by third parties, arts. 837 and 592, respectively.
9. Mexico, art. 277 C. AC.; Panama, art. 584 C. AC.; Guatemala, art. 308 C.
AC.; Colombia, art. 1287 C. AC.; Honduras, art. 804 C. AC.; Ecuador, art. 378
C. AC.; Chile, art. 243 C. AC.; Argentina, art. 235 C. AC.; Paraguay, art. 881 C.
c.
10. Colombia, art. 1266 C. AC.; Guatemala, art 311 C. AC.; Chile, art 269 C.
AC.; Ecuador, art. 385 C. AC.; Honduras, art. 807 C. AC.; Peru, art 248 C. AC.;
Panama, art. 588 C. AC; Argentina, art. 225 and 226 C. AC.
11. Colombia, arts. 1269/70 C. AC.; Panama, arts. 589/90 C. AC.; Guatemala,
art. 314 C. AC.; Argentina, art. 229 C. AC.
12. Argentina, art 227 C. AC.; Panama, art. 594 C. AC.
13.V. Supra. Chap. 111, 2.3.
14. Ecuador, arts. 382/3 C. AC.; Honduras, arts. 813/4 C. AC.; Peru, art. 250 C.
AC.; Chile, art. 246 C. AC.; Argentina, art. 227 C. AC.; Paraguay, art. 893/4 CC;
Panama, art. 585/6 C. AC.
15. Colombia, art. 1295 C. Co.; Honduras, art. 815 C. AC.; Panama, art. 586 C.
AC.
16. Honduras, art 821 C. AC.; Peru, art. 267 C. AC.
17.V. Supra. Chap. 111, 2.3.2.2.
18. Honduras, art. 820 C. AC.; Argentina, art. 277 C. AC.; Colombia, art. 1299
C. AC.; Panama, art. 601 C. AC.; Peru, art. 257 C. AC.; Paraguay, art. 891 e) C.
c.
19. Mexico, art. 304 C. Co.; Panama, art. 582 C. Co.; Honduras, art, 822 C. Co.;
specifically in the Commission Agreement; Argentina, art. 274 C. Co.; Chili,
arts. 239 and 275 C. Co.
20.V. Supra. Chap. V, 6.1.
21.V. Supra, Chap. x.
22. Guatemala, arts. 312 and 329 C. AC.; Panama, art. 593 C. AC.; Colombia,
art. 1288 C. AC.; Honduras, arts. 808/9 C. AC.; Ecuador, art. 381 C. AC.;
Argentina, art. 276 C. Co.; Paraguay, art. 898 C. c.
23. Mexico, arts. 286 et seq. c. AC.
24. Mexico, art. 306 C. AC.; Guatemala, art. 330 C. AC.; Honduras, art. 824 C.
AC.; Dominican Republic, art. 95 C. AC.; Ecuador, arls. 393/4 C. AC.; Chile,
arls. 284 and 287 C. AC.; Colombia, art. 1277 C. AC.; Argentina, arl. 279 C. AC.
25. Guatemala, art. 310 C. AC.; Panama, art. 584 C. AC.; Honduras, art. 806 C.
AC.; Colombia, arls. 1273 and 1290 C. Co.
7. PROHIBITIONS ON THE MANAGER
If it has some powers, it must also endure prohibitions, of which we mention

some as examples.
7.1. TAKE ADVANTAGE OF THE THINGS RECEIVED
If he has received certain goods to fulfill the order or such thing has happened as
a consequence of the business concluded with a third party, the agent is
absolutely prohibited from using them for his own benefit by disposing of them
or delaying their delivery to the third party or to his principal or principal. That is
why many laws even provide that, in the event of improper use, not only must
you pay interest on the value of the assets but you may be subject to criminal
sanctions. This generic prohibition ordinarily extends to any form of use of the
goods, such as giving them as security for one's own obligations or those of third
parties other than the principal or outside the provisions of the order.26 Except
for the interesting case that we could classify as an irregular commission, in
relation to the goods that are the object of the order, where the commission agent
becomes "owner of the money and bearer effects received on behalf of his
client...".27 In this exceptional case, it is evident that The commission agent can
use the money or effects received in his capacity as owner for his own benefit,
assuming only a general obligation, that is, to return to his principal or transfer an
equivalent amount to third parties, as happens in all obligations. of this class.
7.2. CONTRACT WITH YOURSELF
It covers all those cases in which there are coincident interests between the
principal and the agent, so that, ultimately, it can be stated that he contracts with
himself, or holds a double position in which he represents
- two or more parties with exclusive or opposing interests sit at the same time.
This is how legislation usually prohibits a person acting as an agent from buying
for himself or for a third party, whom he simultaneously represents, the goods
that he has been obliged to sell or vice versa. He could only do so, as is obvious,
with the express authorization of his principal.28
This is an attractive example of the possible legal management of conflicts of
interest, which arise when the manager must decide but finds himself with
options under which he could carry out the business or activity for himself or for
a third party other than the client. in whose interest or on whose account he is
acting. It is evident that due to the generic application of the obligation of good
faith, inherent in every contract, and the particular manifestations of the principle
of loyalty that, in particular, is predicated on professionals, their decision must be
made based exclusively on the interests of his client, so it would be unthinkable
that he could, by himself and before himself, negotiate with himself. And it
would have to define fundamental aspects, including, for example, the price and
the method of payment, with antagonistic interests on the table between the
highest and cash price, implicitly expected by its client, and the lowest and most
affordable comfortable, that any buyer would look for.
But the conflict disappears if the situation is put on the table in a way that the
consent of the principal is obtained. It is worth noting, then, that in practice, the
first way to defuse a real or potential conflict of interest is to externalize the
causes that generate it. In other words, what often makes conflict management
difficult is the client's ignorance of the situation that generates it, so, frequently,
if it is made explicit, it is not difficult to obtain their agreement.
7.3.
ALTER BRANDS
Special provision for commission agents is not to alter the brands of the goods
they have purchased or sold in the development of their order. Nor will they be
able to maintain goods from different clients and identical brands without
countermarks or passwords, which unequivocally indicate who they belong to.29
Except in the case of general goods, such as when several clients have been
obliged to buy wheat of the same species and quality. .
7.4. REPLACE THE ASSIGNMENT WITH ANOTHER
Unless there is express authorization from the principal and without prejudice to
using the assistance of the auxiliaries and dependents required to carry out any of
these tasks, the agent cannot delegate the execution of the business to a third
party, and if he does so it will be under your absolute responsibility. Indeed, the
reason for this prohibition rests on the circumstance that the mandate contract is
normally intuitu personae and, consequently, it is in response to the personal or
professional qualities of the agent or commission agent that the principal or
principal proceeds to point out one person and not another. 3D
7.5.
SELL ON CREDIT
If the agent or commission agent is not authorized to do so, he is prevented from
selling on time. Even if the respective authorization exists, legislation usually
establishes special charges regarding the study of the buyer's solvency and its
commercial morality, as well as the development of relationships that allow the
client to be known unequivocally, who has been the beneficiary of the credit
resulting from the sale to term.31
8.
TERMINATION OF THE CONTRACT
8.1.
EXECUTION OF THE ASSIGNMENT
The normal way to terminate the contract consists of the due execution of the
order by the agent, since in this way the purpose intended by the parties when
contracting is achieved.
8.2. UNILATERAL TERMINATION
We could maintain that the general principle in this matter is that even if
unilateral termination is possible, that which is unjustified may give rise to
compensation payable by whoever terminates the contract, without prejudice to
the annotation that we will make below.
8.2.1. Revocation
The announced comment says with the circumstance that in principle in the
mandate, and particularly in the civil one, revocation is understood as a natural
faculty of the principal, since if he has commissioned a third party to carry out a
legal transaction on his own account and in his name , may at any time consider
that such an order is not convenient and expressed in this way, rendering the
order initially issued null and void. In this sense, there are several laws that
establish that the principal can revoke, reform or modify the contract at any time,
assuming, of course, the consequences that have occurred as a result of the partial
execution of the order.32
This last consequence must be translated, ordinarily, into the obligation of the
principal to remunerate the agent in proportion to the partial execution that has
been carried out.
In any case, there are laws that, despite the general principle taken from civil law,
consider that in commercial matters the principal cannot capriciously revoke his
order. Therefore, if his decision is unjustified, he must compensate the
corresponding damages.33 To which is added even the refusal or prohibition to
revoke in cases in which the execution interests the commission agent or a third
party, since in this case it is no longer This is a management linked exclusively to
the patrimonial interests of the principal but rather with those of other people,
commission agents or third parties.34
The revocation can be express or tacit. It will be express to the extent that the
principal so indicates, that is, he explicitly and categorically expresses to the
agent his willingness to terminate the assignment. On the other hand, it will be
tacit when it arises unequivocally from the conduct of the principal, such as
when, having conferred power on one person to carry out an order, it is later
conferred on another to do exactly the same.
8.2.2. Resignation
There are also differences in resignation, at least in tendency, depending on

whether it occurs in the development of a civil or commercial mandate. In the
first case, since the contract is free, resignation is more easily accepted than in
the second, where precisely the agent has received remuneration to carry out his
task. However, some legislations allow the resignation to take place at any time,
notifying the principal and being liable for any damages that may be caused, if
such resignation is not supported by a just cause.35 On this matter, there are laws
that even establish non-termination. of the mandate by resignation, when
irreparable harm is caused to the principal.36
8.3.
DEATH, INTERDICTION OR BANKRUPTCY
At this point some distinctions must be made. Death is usually a cause for
termination when it is that of the commission agent due to the intuitu personae
character that the contract ordinarily has. And, on the contrary, the death of the
principal is not always an automatic cause for termination, even when his
representatives or heirs can terminate the contract. This does not prevent some
legislation from establishing the death of any of the parties as a cause for
termination. . 38
Termination attributable to any of the parties occurs, however, in general terms,
when it involves interdiction or bankruptcy of the principal or agent.39 In both
cases, the supervening incapacity or the existence of a universal judgment, in
relation to one or the other , seem to justify that the contract
- can't continue.
9.
APPLICATIONS OF THE MANDATE IN BANKING OPERATIONS
If we have studied, in general terms, the commercial mandate contract and
presented in a schematic and integrated form the specific provisions for this
contract and for the commission as a specific manifestation, it is because it serves
as support in many cases for the provision or realization of certain banking
operations. The principles set forth will then be applicable, from a legal point of
view, to all those hypotheses of service provision in which the conceptual
antecedent is constituted by the execution of a mandate contract. Let us now see
some manifestations of said contract, which occur mainly in the intermediation of
payments and collections.
9.1.
INTERMEDIATION IN PAYMENTS
Given the dynamics with which business develops in the modern world,
individuals, merchants or not, are forced to make numerous payments to meet the
assumption of obligations, especially contracted in installments, or derived from
obtaining current and essential services. to live in society. Consequently, all the
orders that the bank receives aimed at paying a third party a certain sum of
money correspond to this first group and in relation to them we will mention, for
illustration, some examples of relative frequency.
It can be stated that the modern trend regarding the role of banks has led to not
only the provision of services gaining in importance compared to financial
intermediation, but also that those that we will soon see have developed rapidly
thanks to the technological support that allows attend to its massive provision in
conditions of efficiency not previously known, as we explained when presenting
the topic of "electronic banking".40
9.1.1. cashier service
Among the services that the bank can provide to its clientele, the so-called cash
service occupies an important place, or the possibility for the client to use the
credit establishment to attend to payments related to its activities, such as those
of its employee payroll, its creditors. current payments, etc., for which it could be
said that the interested party "domiciles" the debt in the bank and informs the
beneficiaries that they must contact him to obtain the corresponding payments.41
The usual thing will be for the bank to require from its client lists and specific
orders against which the payments made can be justified, assuming responsibility
in the event of non-compliance or excess in the exercise of their powers.
"
Of course, the possibility for the client to make payments to third parties not only
arises from his initiative, as we have just mentioned, but may also correspond to
the initiative of his creditors, who have agreed with the banks on the possibility
of their debtors , bank customers, can pay at their tills. Such is the case of the
payment of public services, where the possibility of payment carried out in a
bank does not derive from the client having notified the public service company
that he will cancel his debts through it, but, on the contrary, , it is the companies
providing the service that establish the power to use the cashiers of the credit
establishments to cancel the periodic invoices issued for the services. The same
occurs when establishments with large volumes of installment sales establish the
possibility or require their debtors to make payments in a bank. In both cases,
however, whether the payment arises from the debtor's initiative, after
notification to his creditors or results from the creditor's decision authorizing the
debtors, we are faced with intermediation by the bank in the payments made by
your client to third parties or by them to your client.
9.1.2.
Money orders or transfers
In this case, the expression used of money orders has the particular meaning of
money transfers from one place to another, through the issuance of the
corresponding payment orders by the same bank and are not, then, payment
orders issued by the clients. by the bank that translate into an acceptance on its
part, but, rather, a provision of funds intended for them to be placed in a different
place and in favor of the same constituent or a third party. In other words, while
in the business, with the meaning that corresponds to the mechanics of securities,
its obligation arises from acceptance, in this case the obligation to carry out the
order is not exchange rate and arises only from the existence of a provision
intended to be transferred under the terms of the agreement.
Technically, a difference can be made between drafts and transfers, to limit the
latter expression to the transfer that results from an internal accounting operation
registered by the bank that receives the request, with one of its offices or with
that of a correspondent bank, by virtue of the which he or she undertakes with his
or her originator, parent company or correspondent, to make a payment to a
specific person.
That is, in the transfer with this restricted meaning, the bank that receives the
request and has the provision is limited to communicating it through specific
channels to the other banking offices and by preparing the notes or accounting
records usual in this type of transfer. operations, without the petitioner or the
third party being given a title that documents, at least autonomously, the right to
receive that sum. Which means in practice that, although the person requesting
the service keeps a record, paper or electronic, a copy or record of which
authorizes the bank to debit the account, if he or she is its client, or is issued a
receipt as proof of Having delivered the resources, when it comes to a third party
not linked to the bank, it is not essential to present the proof or the receipt so that
the beneficiary, usually located in a different location, can demand payment. It
will be enough for him to identify himself, giving some information about the
amount of the sum he expects, the payer, etc., so that the bank can proceed to
make the payment. It is possible, of course, that when the transfer is made, the
recipient's account has been indicated, in which case the payment will be made
by credit to it.
On the other hand, the expression of transfer is usually limited to the hypothesis
in which, there is also a request to pay the same payer or a third party, in that or
another place, a document is issued that will serve as proof to prove the condition
of beneficiary of the respective sum.42 When you want to implement a security,
with the advantages and prerogatives that this implies and with the risks that
naturally entails, the bank frequently uses the system of issuing a cashier's or
cashier's check, or that is, a check at its own expense, when the payment must be
made through one of its offices or the issuance of a check made out by a
correspondent bank with which it has an account, when the recipient location
does not have its own office. This check can be made to the order of the
applicant, as would happen when you plan to travel to another place and prefer to
take it instead of cash, or in favor of a third party, in which case the giver of the
order receives the check and sends it to its beneficiary, so that he can proceed to
collect it in the free space.43
9.2.
INTERMEDIATION IN COLLECTIONS
We could say that it is presented in relation to the beneficiary party of the
aforementioned payments. Indeed, when a client instructs the bank to make a
payment, there is a beneficiary who collects it and from this point of view we
could say that there is an intermediation in that sense. However, the possibility
must be limited more precisely to the case in which the collection is made as a
result of an order from the creditor, a client of the bank, in that sense. Which
would lead us, to clarify the expressions somewhat, to affirm that there is
intermediation in payments when the order results from the initiative of the
debtor and in collections, when from the initiative of the creditor.
In any case, in practice, this type of intermediation has two very specific
modalities: the simple receipt of the respective sum, which would correspond to
several of the examples studied in the previous point or the collection of
securities or credits, in relation with which special diligence is required for the
bank that is not limited to reminding the debtors of the existence of the credit and
the maturity date, for example, but also involves carrying out the necessary
diligence to maintain the actions derived from the securities. or credits.
Consequently, and especially in the case of securities, the bank is obliged to
present the title, protest it if it is not paid and demanded and, in general, take all
measures to preserve the rights of its client, so penalty of having to respond for
non-compliance with the order and the damages caused.
Now, it is possible that the title is "domiciled" from the beginning in that bank, a
very common practice in some countries, a situation in which the debtor knows
that the payment must be made there and, consequently, it is he who You must
appear to pay without the bank having to come to your home to make the
respective presentation. In this event, of course, the bank will limit itself to
sending the usual reminder notes in these cases. And in relation to the protest, it
may happen that the country's legislation allows the notarial protest to be
replaced, at a given time, by a certificate from the bank commissioned for
collection, in which case it will be enough to note it on the title with the
requirements provided by the law.44
Another possibility, undoubtedly the most interesting, results from the fact that
the bill has been "domiciled" in the debtor's bank and that the presentation of the
securities through interbank clearing is possible, since, in that case, the indorsing
bank collection it will be enough to present it to that person and be paid that way.
As for the way in which the order is conferred, in some cases the existence of a
power of attorney authorizing the bank to carry it out will be necessary, while, in
the case of securities, the endorsement for collection or procurement will suffice,
in the vast majority. of the countries.
9.3. FIDUCIARY OR TRUST ASSIGNMENTS
The mention made in this chapter should not be confused with the topic that will
be seen in space in the last chapter when talking about the trust or commercial
fiducia, since there, without ceasing to mention it, we will, however, emphasize
the legal business in which There is a transfer of property by the trustor to the
trustee (bank) to fulfill a certain purpose. On the other hand, here we are referring
to the so-called fiduciary or trust assignments carried out in some countries by
the fiduciary or mandate sections of banks, a good part of which, although
unnamed, can be supported by the existence of the mandate contract.
It should be noted in this regard that, even in these legislations, the possibility of
banks being agents of their clients is specifically mentioned within such
assignments.45 A series of assignments are also mentioned, such as the
intervention of banks as representatives of the holders in the issuance of bonds,
debentures or debentures, many of whose aspects could be explained through a
mandate relationship, as we saw at the time.46 The same can happen with those
cases in which the bank acts as administrator , to the extent that, by virtue of the
law or the content of the assignment, it has to carry out legal business on behalf
of the interested party.
In these, and in general in all examples, in which the bank is entrusted with
carrying out a legal transaction by its client, whether it involves intermediation in
payments, or in collections, or which does not refer to any Of the two, we will
have that it can be explained, in principle, in light of the general provisions of the
commercial mandate contract. Of course, it must be taken into account that some
possibilities would not correspond to this contract, but would have to be
supported by others or result from orders from judicial or administrative
authorities, in which, rather than agents, they can sometimes act as auxiliaries of
the justice and, in others, as representatives of the incapable. By way of
illustration, we cite some powers taken from the respective legislations: being
depositaries, sequestrators, company liquidators, guardians, executors, with or
without possession of assets, administrators of assets of incapacitated persons,
real estate administrators, tax or transfer agents, agents from insurance
companies, etc.
It could be said, in summary, that any legitimate assignment is susceptible

to being accepted by the banks in their fiduciary or mandate sections or carried
out by the trust companies and that a good part of them will be legally based on
the execution of this contract.47
------------------------------------------------------------------------------
26. Chile, art. 251/2 C. AC.; Honduras, art. 812 C. AC.; Peru, art. 258 C. AC.;
Panama, art. 591 C. AC.; Colombia, art. 1271 C. AC.; Paraguay, art. 893 C. C.;
Argentina, art. 269 C. AC.
27. Ecuador, art. 384 C. AC.
28. Guatemala, art. 324 C. AC.; Chile, art. 271 C. AC.; Peru, art. 261 C. AC.;
Colombia, art. 1274 C. AC.; Argentina, art. 262 C. Co.
29. Colombia, art. 1296 C. AC.; Honduras, art. 817 C. AC.; Chile, art. 247 C.
AC.; Peru, art. 261/2 C. AC.; Argentina, art. 265/6 C. AC.
30. Guatemala, art. 311 C. AC.; Honduras, art. 807 C. AC.; Ecuador, art. 387 C.
AC.; 261 C. AC.; Peru, art. 255 C. AC.; Paraguay, art. 904 et seq. c. C.;
Colombia, the commission agent requires express authorization to delegate, art.
1291 C. Co.; The agent, on the other hand, can do it if he has not been prohibited,
art. 2,161 C. c.
31 Colombia, art. 1298 C. Co.; Chile, art. 253 C. Co.; Peru, art. 264 C. Co.
32. Guatemala, art. 323 C. AC.; Venezuela, art. 406 C. AC.; 33. Colombia, art.
1282 C. AC. Panama, art. 599 C. AC.; Paraguay, art. 916 C. c.
34. Chile, art. 241 C. AC.; Paraguay, art. 916 C. c.
35. Argentina, art. 224 C. Co.; Colombia establishes in this regard that "if the
mandate has been agreed in the interest of the principal or a third party, only the
agent may renounce it for just cause, under penalty of compensating for the
damages that the resignation causes to the principal or the third party", art. 1283
C. Co. In the same sense, Paraguay, art. 918 C. C.; Panama, art. 599 C. Co. The
conditional with which it begins seems illogical since we do not conceive of a
mandate that is not conferred, at least, in the interest of the principal, from which,
in all cases, the resignation would only be acceptable to me
give a just cause.
36. Chile, art. 242 C. Co.
37. Guatemala, art. 331 C. Co.; Honduras, art. 825 C. Co.; Peru, art. 274 C. Co.;
Chile, art. 240 C. Co.
38. Panama, art. 602 C. Co.; Paraguay, art. 909 C. c.
39. Colombia. The trend in recent years has been to replace the traditional
bankruptcy regime with administrative liquidations, for supervised entities and to
incorporate other figures that, in the event of the debtor's insolvency, tend to
prevent the state of bankruptcy, such as concordatory processes and business
restructuring processes. .
40.V. Supra. Chap. 111, 3.
41. El Salvador, art. 1266 C. Co, It is clear that the client's decision is not
obligatory for his creditors when, in accordance with the law or the contract,
there is a designated place for payment, which they prefer to avail themselves of.
42. El Salvador uses the expression "drafts" for nominative, non-negotiable
documents that are not considered securities, art. 1264 C. Co. In the same sense
Honduras, art. 1027 C. Co.
43.V. Supra. Chap. V, 7.2.6.
44. Intal, art. 97; Colombia, art. 708 C. Co.
45. Chile, art. 86 General Banking Law; Peru, art. 275, 14) Banking Law.
46.V. supra, Chap. VIII.
47.V. Infra, Chap. XXII, 1.1.4.
Chapter XX
BUY AND SELL
1. NOTION
The purchase and sale contract constitutes one of the best achieved archetypes of
Private Law, long decanted through the centuries and with a structure that,
founded on traditional principles of Civil Law, is enriched in some aspects, when
its study is carried out within the specific context of Commercial Law. Very
prominent authors have considered that it even allows us to define the very
content of this branch of Law.1
Our presentation will be simple and schematic compared to what the contract
itself would require to have a complete and in-depth knowledge of it. We will try,
in return, to provide a clear and panoramic vision that allows us to establish the
most important concepts around its structure, which must be sufficient since, as
we will see, its importance as a background for banking operations is lower than
that of other contracts. at least with respect to the possibility of the credit
institution appearing as one of the ends of the contractual relationship on its own
behalf. Furthermore, it must be taken into account that in typical banking
contracts the characteristic notes coincide for the most part in different countries.
Buying and selling, despite its evolution or perhaps because of it, presents a
significant number of small variants and modalities that make universal
systematization very difficult. That is why at many points, rather than reaching a
conclusion, we will point out the various known possibilities or, at least, the most
notable ones.
Buying and selling allows you to exchange things for money and as such it is an
instrument used by all kinds of people in the daily process of acquiring goods. It
can be defined, in general, as the contract in accordance with which a person
undertakes to give or transfer something to another through the payment, by the
latter, of its price expressed in money. It is, then, the agreement by virtue of
which someone who has available assets disposes of them in favor of someone
who, in need of them, has the resources to acquire them.
1.2. MERCANTILITY OF THE PURCHASE AND SALE
As is the case with all contracts, which ultimately constitute nothing more than
an extension of their civil archetypes, the commercial sale results from the
presence of one or more characteristic notes that distinguish it and allow it to be
classified as such. They are, among others, taking into account that the
legislations use one or more to give the contract the commercial character, that
the agreement falls on commercial things; is celebrated between merchants; has
as its object furniture or real estate, acquired for speculative purposes, that is,
with the intention of reworking it or not, but always with the intention of
reselling or renting it, deriving an economic benefit from such possibilities; or
that falls on elements necessary for the operation of a commercial company. That
is, for some aspects a subjective criterion will prevail, the presence of merchants,
or an objective criterion, which falls on commercial things or assets, such as
securities or commercial companies, brands, notices, etc., or which, due to their
consideration finalist, acquisition to obtain a lucrative purpose, can be considered
as such. 2
It should be noted, however, that subjective criteria alone are generally not
sufficient. Rather, a presumption tends to arise when the sale is carried out
between merchants that can be refuted if it is proven that it does not meet any of
the other requirements.3
Just as legislative systems classify a sale as commercial due to the presence of

one or more requirements such as those mentioned, they also usually establish in
which cases, exhaustive or by way of example, there is no place for it to be
considered commercial and it is governed by the provisions of civil laws. Such
would be the cases in which the contract relates to goods for the use or
consumption of the purchaser or his family; or the sale of the fruits of a harvest
or the livestock of a farm; and even the remains of the supplies made by a person
for his own consumption, which are excessive at a given time and which,
consequently, the owner decides to sell. There is, of course, no identical position
in all legislations and some still preserve the principle that, by definition, the sale
and purchase of real estate is not commercial. Or that although the sale of the rest
of the supplies made by a person for consumption is not commercial in itself, it
can acquire this classification as a consequence of the part sold being greater than
that which was actually consumed.4
1.3. LIMITATION ON BANKING OPERATIONS
First of all, note that there is a conceptual difficulty in classifying the purchase
and sale contract as a precursor to an active or neutral operation, although we
have opted for the latter possibility. Indeed, it is evident that the purchase and
sale carried out by the bank in its capacity as buyer is a way of allocating part of
its resources and in that sense the product of the same is recorded in the assets of
the balance sheet. Now, it happens in practice that not
- the conclusion of the contract always turns the bank into a creditor, which
means that in essence a credit contract has not been made with the meaning
already seen and that it implies a transfer of the property with the charge for the
purchaser to return it later. 5 It could even be argued that the possibility that a
credit operation exists in the background is exceptional, as we will see later in
this chapter. To which it should be added that when the sale is carried out in
fulfillment of an order entrusted by a client, this possibility disappears
completely and there is no doubt about the existence of an order of those
mentioned in the previous chapter. For these reasons we have chosen to study it
within the fourth part of the book as a typical background for carrying out a
neutral operation.
Added to the above is the circumstance that the purchase and sale operation,
especially the one in which the bank appears as the buyer, is usually exceptional
in light of the same structure of the financial entities, since except in the case of
investment banks or Of the commercials that are authorized in a certain country
to also be investment, the usual thing is that the so-called short-term deposits find
severe limitations in the legislation with respect to their immobilizations or
unproductive assets and, consequently, the purchases are found They are
restricted to furniture and real estate necessary for the ordinary performance of its
functions, which do not correspond, moreover, to the development of its
corporate purpose. The possibilities are reduced, then, to currency purchase and
sale operations and investment in certain types of securities or documents. In the
latter case, the faculty is more properly linked to the management of its treasury
surpluses or to compliance with certain provisions that require it to make the
investment, than to the provision of services to its clientele.
With the exception of the purchase and sale of credits which, as we saw, seem to
constitute the most characteristic feature in the formation of the Factoring or
Factoring contract and in which the bank fulfills an indirect function of
intermediation, since it acquires the credit of its client but to recover it. of the
transferred debtor.6 Or in the sale of credit securities, in which the exchange
obligation of return is kept in its head or there is a repurchase agreement, as in
the repo, since in this case it constitutes a mechanism for obtaining resources.7
2.
LEGAL NATURE
The inclusion of this point within the study of the different contracts is largely
explained when it comes to novel figures arising from the development of
banking activity and regulated in the general regulations or contracts entered into
by the banks with their clientele, before arriving to be classified by commercial
law. Therefore, in relation to them, it is convenient to compare them with known
structures to determine at a given moment if the new contract can be subsumed in
them or if, on the contrary, given its peculiarities, it should be recognized with its
own legal nature, which is worth both like saying a set of notes that cannot be
accommodated within traditional schemes.
. This does not happen, as is obvious, in the case of the purchase and sale
contract and with respect to it it would only be necessary to announce the
discussion on the effects of the contract in relation to its potential to be
transferable or, better, on the scope of the fundamental obligation of the seller to
make delivery that for some must necessarily be transferable, while for others it
does not have to be. We will spend more time on this matter when studying the
seller's obligations.
It is a main contract, typical, bilateral, of immediate execution and ordinarily

commutative and consensual, since, in relation to the latter, it is perfected by the
simple agreement of the wills of the parties. However, some notes must be made
because with respect to the sale and purchase of certain types of property,
especially real estate, legislation usually requires compliance with certain
solemnities without which the birth of the contract is not conceivable and it turns
out to be non-existent or affected by absolute nullity, according to the adopted
systems.8 To which it could be added that some legislations make specific
mention of the evidence through which its celebration can be accredited, without
this being of course sufficient to distort its consensual nature. 9 We said that in
addition, it is ordinarily commutative because it can be random when the contract
is about a future good and it appears that chance is purchased.
Given the importance and complexity of the respective regulations, it is not

unnecessary, before beginning to study the obligations of the parties, who
constitute the subjective element of the contract, to make an analysis of the
objective elements or, in another way, of the object of the legal transaction. ,
constituted by the things or goods that are sold, on the one hand, and the price
recognized for them, on the other.
4.1. BODY OR INCORPORAL THINGS
In principle it can be stated that all things or more precisely all goods can be sold,
except those that are expressly excepted by legislation.
These are the so-called very personal rights, such as the right to receive food; or
those excluded by their nature as common property; such as air, sun, etc.; or the
so-called goods of public use or common use that can be enjoyed and used by all
individuals, such as streets, parks, public buildings; or finally, those that by virtue
of judicial decisions have been stolen from commerce, as happens with seized
goods. In any case, it can be affirmed that the alienability of the goods or their
possibility of being the subject of the purchase and sale contract constitutes the
general principle, while the exclusion is exceptional. In any case, things must
meet some requirements to be the subject of the contract. Let's see them right
away.
4.1.1. Existing in nature
A first requirement concerns the current or future existence of the things that are
the subject of the contract, in the latter case on certain particular considerations.
Since things must exist so that we can speak of a real object, contracting about
future things is subject in legislation to compliance with a set of requirements or
limitations, as it does with the effects of the contract. A first, says that the sale
thus carried out is understood to be conditional, that is, subject to the suspensive
condition that the good exists at the time of delivery or in the sense that the
tradition will only occur as soon as the thing exists. 10 The exception would be
the hypothesis in which the contrary will of the parties clearly appears or it
results from the terms of the contract that the buyer wants to acquire the property,
a case in which, of course, we could not speak of a commutative contract. If the
thing comes to exist only in part, the most general solution seems to lean towards
allowing the buyer to withdraw from the contract or persevere in it, through an
appraisal carried out by experts who determine the value proportional to their
charge.
The other big problem that affects the existence of the object is related to the sale
of other people's things; goods that are not the property of the seller who sells
them. At this point the discussion has been heated and the systems adopted by the
legislation have been different, according to the theses accepted on the effects of
delivery, which we will see again later. If the delivery must be transferable, it
seems debatable whether the sale of another's property can be recognized as
valid, since there would be an absolute impossibility of fulfilling the fundamental
obligation borne by the seller. If, on the contrary, the delivery is not necessarily
transferable, but merely constitutes the physical-legal procedure to place the
good that is the object of the contract in the hands of the buyer and guarantee its
peaceful possession by different means, the validity of the sale of another's
property is reasonable, all without prejudice to the rights of the true owner.l!
It should be noted, however, that in commercial matters, although the sale of

another's property is usually valid in a good number of laws, it generates an
obligation for the seller to acquire the respective thing, from which the delivery
carried out of the same will be by definition translaticia. If you do not do so, of
course, you must compensate for the damages caused by your actions.
4.1.2. Determined or determinable
If things must exist or be expected to exist, they must also be determined, as, in
general, the object must be. Consequently, there must be a precision either for
their genus, common notes and quantity, or for their species, that is, for their
individuality, which allows them not to be confused with others.12
4.2. PRICE
The other objective element of the contract is the price, that is, the consideration
that the buyer pays for the acquisition of the goods object of the sale. Price that,
first of all, must be serious and real, that is, imply, in truth, a consideration that
makes the contract onerous and commutative, which is why ridiculous prices are
rejected where there is no relationship between them and the real value of the
good received in exchange. 13
The price must consist of and be expressed in money, that is, in monetary
species, national or foreign, in the latter case, of course, subject to the exchange
provisions that allow an obligation contracted in the country to be agreed in
foreign currencies or, on the other hand, and above all to pay in them since it may
happen that by application of the principle of the liberating power of the national
currency, it must or can, as the case may be, pay the counterpart of the value in
foreign currency that has been agreed upon. But in any case, and what is more
usual, the agreement in national currency implies the existence of a price in the
terms required in the different countries, regarding which it is necessary to make
some observations. First of all, legislation usually admits the possibility that it is
only in part, that is, that it can be paid for a complex price constituted, partly by
money and partly by goods.
The simplest criterion, but apparently the best, consists of determining which of
the two components of the price is predominant, to conclude that, if the value of
the good turns out to be greater than the part paid in money, the contract is
considered an exchange and Otherwise, that is, when the sum in money is
greater, it is truly considered a sale. But, in addition, without being given the
currency content of the merchants with liberating effects, to determine whether it
is a sale or exchange, the legislations usually admit that the delivery of securities
with credit content is equated, for these purposes, with cash.14
If it is common for the price to be set by the contracting parties, they may defer
its determination to other means, such as the indication by a third party, or
reference to national or foreign markets in which the goods have a price that
allows it to be established. When the determination has been left in the hands of a
third party, failure to fix it may lead to the non-existence of the contract, due to
the lack of an essential element or to the use of an alternative means of the third
party's decision, such as the average price. that the good had on the day of
delivery.15 This principle of the average price, moreover, is frequently received
in commercial matters for the regulation of the sale and can be applied, both to
the case in which the parties have referred to the value of things in national or
foreign markets, as in the case in which, without having determined the price, the
buyer receives the thing, in which it is presumed by some legislation that he
accepts the average price that the thing had on the day on which was received.16
In relation to the price, it is interesting to study the figure called deposits,

understood as the sums given as a pledge or security of the seriousness of the
contract, which, if, ultimately, are going to form part of the price, are subject to a
distinction by part of the doctrine. In effect, it is said that there are confirmatory
deposits, when the advance sum reiterates the decision to enter into the contract
and forms, from the beginning, part of the price, so that the contract is
understood to be perfect from that moment, with charge to the buyer of pay the
difference in time. On the other hand, we speak of retractatory deposits when
they authorize the parties to retract them, with the person who has delivered them
losing them or the person who has received them returning them doubled. Within
this double possibility it can be said that in some legislations the principle is that
all deposits are confirmatory, unless otherwise established, while in others the
principle is that they are retractatory, unless otherwise stipulated by the
contracting parties.17
Another aspect that we already had the opportunity to study when talking about
contracts is that of the enormous injury.18 We saw there that the injury could be
subjective, taking into account the conditions of defenselessness of one of the
parties, or objective, deduced from a mathematical relationship that certifies an
imbalance in reciprocal benefits. And we also noted that it could exist generally
or be limited to certain contracts. Well, in general terms, the injury has tended to
be consecrated to real estate contracts and, consequently, in the legislations in
which this happens and in which the commercial sale must have movable
property as its object, the injury is excluded. However, if nothing is established to
the contrary by law, the enormous injury would be applicable for sales of both
types of goods.
5. OBLIGATIONS OF THE SELLER
5.1. DELIVERY THE GOOD
In this particular it is necessary to insist that the different solutions obey two
different conceptions of the sales contract, depending on whether it is considered
simultaneously title and mode, or whether it only plays the role of the former. In
simple terms we could say that the title is the mediate cause of acquiring a right,
while the manner constitutes the immediate cause. In this order of ideas, we
would have that in systems in which the purchase and sale contract is a simple
title, it must be complemented with the method, consistent with tradition, that is,
in delivery with the aim of transferring ownership. In systems in which the
contract is at the same time title and manner, it is transfer and delivery only
consists of placing the good in the hands of the acquiring owner, without such
behavior adding anything, from the legal point of view, to the circumstance
already produced of the acquisition of the good.
But what is more, even within the double principle of title and mode in whose
application the contract plays the role of the first, there is no unanimity in the
doctrine on the precise meaning and legal scope of the obligation to deliver. For
some, delivery in conditions of conferring possession of the property is
sufficient, which, accompanied by the seller's other obligations, especially the
guarantee obligation, which we will see below, are sufficient to fulfill the
purpose provided for in the contract. For others, however, this delivery must be
transferable so that the buyer can, through it, acquire the good that is the object
of the contract.19 The predominant position in commercial matters is the latter
and imposes on the seller the obligation to deliver and transfer the domain, so
that it is truly transferable.
It should be noted, on the other hand, that when it comes to international sales, it
is necessary to take into account two important manifestations of the unifying
efforts made both as a consequence of the adoption in Vienna of the so-called
United Nations Convention on the International Sale of Goods, in 1980, as well
as the permanent work of the International Chamber of Commerce Cc.c.!.)
which, under the name of Incoterms, has been compiling and publishing the most
recognized terms on the modalities that international sales and sales can entail,
the application of which It is directly linked to the delivery of the goods and,
particularly, defines the moment in which the buyer assumes the risks regarding
the thing sold, which we refer to in more detail in the previous chapter.20
5.1.1. Conservation and custody
As long as there is a period between the moment of the conclusion of the contract
and the time in which the seller fulfills his obligation to deliver, he is responsible
for the custody and conservation of the good or goods negotiated and,
consequently, he must assume the damages or losses that things suffer because of
them. Some legislations even establish that during that time the seller acquires
the obligations of a depositary. This consequence is consistent with the study of
the theory of risks that we already saw in general terms when talking about the
ways of extinguishing obligations. 22 In general it can be said that in matters of
sale and in the case of certain things or bodies, the risks are borne by the buyer-
owner in systems in which the contract is at the same time title and mode and by
virtue of the application of the principle res perit dominum or simple creditor in
countries in which the contract is just a title and as a result of the res perit
creditoris principle.
We saw that a notable exception is presented in the event that there is fault of the
debtor, seller, or is in default, but it will be applicable in other events such as in
cases of loss or destruction of the thing, due to force majeure or fortuitous event,
23 and of course, in the event that the property is in the possession of the seller,
but due to delay attributable to the buyer, because he has not agreed to receive
the property. On the other hand, the risk is borne by the seller when the object of
the contract is constituted by goods of goods, a hypothesis in which the principle
that "goods do not perish" is applied and, as a consequence, if the thing is lost, it
must be replaced by equivalent of the same species and quality.
An interesting modality that can be predicated of the goods owed in the hands of
the seller, is that although with respect to them he has the obligation to preserve
and safeguard them, on the other hand, some legislations confer a form of
guarantee on them to respond for payment. of the sums owed by the buyer. In
this way, even if the sale were transferable, it would result that the seller would
have a security right over the goods with beneficial consequences against the
buyer and against third parties and the natural privileged position or preferential
creditor position against others. creditors.
5.1.2. Delivery methods
Civil legislation has regulated numerous cases in which it is understood that there
is delivery that we could summarize, to show the most important, as follows:
Firstly, the so-called actual delivery, that is, the physical and effective delivery of
the goods purchased by the buyer; secondly, what we could call symbolic
delivery, through a series of figures such as the delivery of the keys to the barn,
chest or container where the goods are located; thirdly, what could be described
as presumed delivery, when in relation to the goods the buyer exercises acts of
lord and owner such as the imposition of his trademarks; and finally, the so-
called possessory constitution from Roman Law that exists when an asset is sold
to someone who is already in possession of it, as will happen with the purchase
of a property by someone who lives in it as a tenant. In any case, the delivery
must practically allow the buyer to access the goods in such a way that he can use
them for the purpose he had in mind when acquiring them.
In addition to the delivery of the good and especially in commercial matters, it is

common for the buyer to be entitled to demand from the seller the delivery of an
invoice stating the details of the merchandise sold and the circumstance of
whether or not the price set by the seller has been paid. she.24
5.1.3. Time and place
In this matter we can say that the general principles consist of that if there is no
different period for delivery, the seller is obliged to make the things available to
the buyer immediately, or in any case, within a very short period, indicated by
some legislation in the following twenty-four hours.25 Regarding the place of
delivery there are different solutions; Some establish that the true body must be
delivered to the place where it was located at the time of the conclusion of the
contract, while if it is goods they must be delivered to the debtor's home. 26
Others establish, in matters of commercial sales, that delivery must be made at
the seller's establishment or, failing that, at his home.27
Finally, it seems convenient to note that when it comes to sales in which the
seller has agreed to deliver the thing in a specific place, the sale is considered in
some systems to be subject to a condition precedent that the thing be delivered
complete, safe and sound. , to the buyer.28 In most cases, of course, the rules
regarding the time and place of delivery are supplementary, that is, they only
apply when the parties are silent on the matter.
5.1.4. Accessories
The obligation to deliver includes not only that of the goods that are the subject
of the contract, but also that of all accessories or fruits thereof, produced between
the moment of the conclusion of the contract and the moment in which the
delivery is carried out. In other words, if, as a consequence of the conclusion of
the contract, the buyer becomes a creditor of the thing, from then on and, in
principle, the assets or deterioration of the thing are at his expense, with the
exception mentioned. further back, in the sense that the obligation to preserve
and safeguard by the seller of certain body translates in some cases, in which the
risks due to force majeure or fortuitous event are borne by the seller, unlike what
It usually occurs in civil sales. 29
5.1.5.
Delivery costs
Ordinarily, the delivery costs correspond to the seller, which seems logical if it is
noted that they are those that must be incurred in order to comply with their
fundamental obligation1.3o The expenses originated, however, in the execution
of the contract, are usually borne by equal shares among the interested parties.
5.2.
GUARANTEE THE GOOD
The warranty obligation says, in general terms, with the obligation contracted by
the seller in the sense that the buyer can enjoy them in a quiet and peaceful
manner and use them appropriately and reasonably for the natural purpose that
corresponds to them and for which they have been been acquired. Therefore, it
translates into two obligations known as the need to clean up the eviction and the
redhibitory defects of the goods that are the subject of the contract.
5.2.1.
Sanitation by eviction
This figure touches on the possible existence of a disturbance by a third party,
who, alleging the existence of rights prior to the conclusion of the contract and
subsisting at that time, intends to dispute the buyer's position as owner. It is,
therefore, a disturbance of law and not of fact, that is, a claim by a third party that
is based on a real or supposed right, existing in its favor prior to the conclusion of
the contract.
In relation to this possibility, there is an option for the buyer that, in the first
extreme, at least, usually gives rise to an obligation for him at the same time.
Indeed, in the face of the disturbance caused by the third party, the buyer must
exercise a defense action aimed at ensuring that the seller is present, in order to
support his legal position and oppose the alleged rights asserted by the disturber.
But we say that it entails an obligation for him because in most legislations, if the
buyer does not exercise the defense action by calling the seller and notifying him
of the legal circumstances invoked by the third party and the disturbance
produced, he loses the possibility of subsequent claims. That is, given its
negligent position, it runs, directly and without the possibility of later turning
against the seller, with the risks inherent to the dispute between the third party. If
the defense action does not succeed, because the arguments of the called seller
are not sufficient to refute those provided by the third party or if the seller simply
refrains from intervening, the buyer can then demand the termination of the
contract with compensation for damages. 31
5.2.2.
Sanitation for redhibitory vices
It is said that there are redhibitory defects, in relation to the object of the contract,
when they have arisen prior to the conclusion of the same and subsist at that
moment in such a way that, being unknown to the buyer, they prevent the normal
use of the thing or the vitiated by such imperfection that the buyer would not
have purchased it or if he had, he would have paid a lower price for it. That is,
pre-existence, affectation of the thing and concealment are required. In this case,
in order not to protect the negligence of the buyer, since if the defects were
obvious and could be known at the time of the celebration, such a circumstance
would prevent the possibility of later requesting this form of insurance.
. neement.
The existence of redhibitory defects generally confers an option to the buyer, to
request the termination of the contract with compensation for damages or to insist
on it, but demanding a reduction that will frequently be the result of the
determination of the new price made by experts. and which is known as actio
quanti minoris. Actions aimed at obtaining relief for redhibitory defects, through
the aforementioned option, are usually subject to a short term, shorter, in the case
of commercial sales, than that usually indicated for civil sales.32
Commercial legislation establishes other forms of guarantee that could be studied

at that point or have been analyzed in relation to the obligation to deliver the
good that is the object of the contract. Such is the case of things that have defects
in quality or quantity, a case in which, within a very short period of time from
receipt, the buyer must declare them so that, in the event that they are not
accepted by the seller, the differences are submitted to the decision of experts.33
The possibility will disappear if the buyer has had the opportunity to examine the
goods at the time of delivery and has received them to his satisfaction, without
making any reservation.34
A final form says with the regular functioning of the goods sold with a guarantee
during a certain period, in which case any malfunction presented within the
coverage period must be notified immediately to the seller or within short
supplementary periods indicated by law. . 35
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1. RODRÍGUEZ, Joaquín. "Commercial Law". T. 11, p. 3.
3. Honduras, art. 763 C, Ca.; Mexico, art. 75 C. AC.; Argentina, art. 451 C. AC.
4. Argentina, art. 452 C. AC.
5.V. Supra, Chap. 11, 3.
6.V. Supra, Chap. XVII, 2.
7.V. Supra. Chap. XVI.
8.V. Supra. Chap. 1, 5.2.2.4.
9. Dominican Republic, art. 109 C. AC.
10. Honduras, art. 765 C. AC.; Colombia, art. 917 C. AC.; Costa Rica, art 441 C.
AC.; Peru, art. 1534 C. c.
11. It is void in countries like France, art. 1599 C. Co, and Mexico, art. 2792 C.
c. and art. 2270 C. Co. It is valid, among others, in Colombia, arls. 1871 C. c. and
907 C.Co.; Venezuela, art. 133 C. Co.; Ecuador, art. 169 C. Co.; Argentina, art.
453 C. Co.; Panama, arl. 740 C. Co.; Peru, art. 1539 C. c.
12.V. supra, Chap. 1, 5.2.3.
13. Colombia, arls. 872 and 920 C. Co.; Mexico, art. 2272 C. Co.
15. Chile, art. 140 C. AC.; Panama, art. 750 C. AC.; Argentina, art. 459 C. AC.
16. Honduras, art. 766 C. AC.; Argentina, art. 458 C. AC.; Chile, art. 139 C.
AC.; Co
lombia, art. 920 C. AC.; Peru, art. 1544/5 C. c.
17. San apparently canfirmatarios, in principle, in Argentina, art. 475 C. AC.;
Honduras, art. 767 C. AC. and Panama, art. 755 C. AC.. San retractarias in
Colombia, art. 866 C. AC.
18.V. Supra, Chap. 1, 5.3.2.2.
19. BONIVENTO, op. cit., pp. 9 And ff.
20.V. Supra. Chap. XII, 5.3.6.1.
21. Argentina, art. 467 C. Co.; Mexico, art. 335 C. Co. Panama, art. 764 C. Co.;
Bolivia, art. 837 C. Co.
22.V. supra, Chap. 1, 4.5.
23. Colombia. It enshrines the reverse solution by saying that "in the sale of a
'certain body', the risk of loss due to force majeure or fortuitous event occurring
before its delivery will correspond to the seller, unless the buyer is in default of
receiving it and that force majeure or fortuitous event would not have destroyed
it without the buyer's default. In the latter case, the buyer will owe the full price
of the thing", art. 929 C. Co.
24. Argentina, art. 474 C. AC.; Colombia, art. 944 C. AC.; Costa Rica, art. 448
C. C.; Chile, art.160 C. AC.; Panama, art. 776 C. AC.; Venezuela, art. 147 C.
AC.; Bolivia, art. 834 C. AC.
25. Chile, art. 144 C. Co.; Colombia, art. 924 C. Co.; 26. Argentina, art. 464 C.
Co.; Costa Rica, art. 465 C. Co.; Panama, art. 758 C. Co. It must be delivered
"immediately" after the contract is concluded in Peru, art. 1552 C. C.. Within a
period of forty-eight hours from the completion of the contract, Bolivia, art. 843
C. Co,
27. Argentina, art. 461 C. Co.; Chile, art. 144 C. Co.; 28. Paraguay, art. 752 C, C.
Honduras, art, 774 C. Co.
Colombia, art. 915 C. Co,
29. Colombia, arts. 928/9 C. Co. V. note 24 of this chapter.
30. Mexico, art. 382 C. Co.; Argentina, art. 460 C. Co.; Bolivia, art. 844 C. Co.
31. Colombia, art. 940 C. AC.; Honduras, art. 773 C. AC.
Mexico, art. 384 C. AC.; Argentina, art. 437 C. AC.; 32. Colombia, art. 938 C.
AC.; Panama, art. 770 C. AC.
6. OBLIGATIONS OF THE BUYER
The buyer's obligations are basically reduced to paying the price and receiving
the thing.
6.1. PAY THE PRICE

Main and essential obligation of the contract, since, as we have seen, without a
price one cannot truly speak of its existence. Ordinarily, payment must be made
at the domicile of the creditor (seller) in commercial sales, unlike what occurs in
much of the legislation with civil sales, where payment must be made at the
domicile of the debtor (buyer). It must be done immediately, as the goods must
be delivered by
part of the seller, unless the law grants a grace period at this point.36 When the
price must be paid in installments, it can be in a single installment or in
installments. In the latter case, legislation usually authorizes so-called
acceleration clauses, aimed at establishing that in the event that the debtor fails to
pay any of them and due to that circumstance alone, the seller can make the
entire debt payable.37
6.2.
RECEIVE THE THING
It must be received at the agreed place and time, in principle, immediately, to the
point that in the event of the buyer's refusal or delay in receiving it, some
legislation authorizes the seller to deposit the goods in the name of the buyer and
even to proceed to its forced sale on its behalf and to pay the contract price first.
All of this without prejudice to the action to terminate the contract, typical of
bilateral legal transactions.38
Just as the seller is responsible for the expenses necessary to carry out the
delivery, the buyer is responsible for those necessary to receive it, which cover
the hypothesis in which the goods are delivered in a place other than that in
which they were sold. .
7. BREACH OF CONTRACT
In this matter we only want to remember that, as happens in all bilateral

contracts, there is the principle of the tacit resolutory condition, in accordance
with which, in the event of non-compliance by one of the parties, the other can
choose to terminate the contract or demand its compliance. , in both cases with
compensation for damages. Perhaps it is worth adding that in the contract of sale
there are some hypotheses in which the buyer can withdraw from the contract, as
would happen in relation to the sale of future things that only partially come to
exist or that of certain bodies that are assumed to exist. , but a considerable part
of which is missing at the time of the contract. This withdrawal is different from
the action aimed at resolving or enforcing the contract, since it occurs by
operation of law and by the simple statement of the buyer, without having to go
to the judges for a declaration for this purpose.39
8.
ACCESSORY COVENANTS
Since the possibilities established by legislation in this regard are very broad, we
will mention those that, being classified, turn out to be the most important.
8.1.
DOMAIN RESERVATION AGREEMENT
In principle, it is possible to agree that, despite there being an agreement on the
thing and the price and it having been delivered, ownership is reserved in the
hands of the seller as long as the price has not been paid in full. This is a form of
guarantee in favor of the seller that means that the delivery is not transferable
and, consequently, the buyer does not go beyond being a mere holder of the good
as long as he has not fully paid the price. Its effectiveness against third parties is
linked to the existence of advertising mechanisms that allow them to assert the
existence of the aforementioned reservation.4o In sales with a reservation of
ownership agreement, the risks are usually borne by the buyer from the date of
delivery of the good.
8.2. RETURN AGREEMENT
It consists of the seller reserving the right to repurchase the object sold, by
recognizing a certain amount or the same amount that was paid at the conclusion
of the contract and, of course, within a certain period set by the parties or the
law.41
8.3.
BEST BUYER AGREEMENT
Also known as a pact addio in diem, this consists of the agreement entered into
between the parties in accordance with which, if during a certain period, counted
from the conclusion of the contract, a buyer appears who is willing to pay a
greater sum, the The original contract is terminated if, in turn, the first buyer is
not willing to improve the price and place itself on equal terms with the new
offeror.42
9.
BUY SPECIAL SALES
We will only mention the three modalities that we consider most interesting from
a commercial point of view.
9.1.
SOaRE SAMPLES OR QUALITIES
Even though we have already marginally touched on the topic, it can be stated
that in that
}sales that are made without having the objects in sight but by simple reference
to a sample or quality, the sale will be perfected in the ordinary way, but subject
to the resolutory condition that the goods actually correspond to the samples or
qualities offered. Which implies that, from the point of view of determining the
object, the indication of the sample is sufficient, but that for the transfer of
ownership it is necessary to have individualization, once the buyer has verified
that the goods are corresponding to the sample or quality offered. The normal
thing is that, as in other similar cases, the differences are submitted to the
decision of an expert.43
9.2. TO TEST OR TEST

This is, unlike the previous case, an eminently subjective assessment for those
things that, due to the customs of commerce, or as a result of the contract, are
purchased under the condition that they like it or work or fulfill the intended
purpose in the buyer's opinion. . It is then, also in contrast to the previous case, a
sale subject to a suspensive condition, that is, it will only be perfected as soon as
the buyer expresses his agreement with the goods received. The declaration is
usually subject to very short periods, after which, if the buyer who has received
the merchandise to his satisfaction or on trial, does not express his objections, the
contract is understood to be perfected.44
9.3.
AGAINST DOCUMENTS
In sales held against documents in which ownership of the goods has been
incorporated into a security, the seller will fulfill his obligation by delivering the
documents representing the goods or merchandise and the buyer must proceed to
pay the price immediately.
10.
APPLICATIONS OF PURCHASE AND SALE IN BANKING OPERATIONS
Even though we warned from the introduction of the book, saying that it is not a
technical work in the sense that we stop to analyze banking operations, we
consider it interesting, as we did in the previous contract, to make a brief
indicative reference to a series of operations carried out by banks, the support of
which can be found in the purchase and sale contract. With the additional note
made at the beginning of the chapter that the application, in the case of
commercial banks, is restricted and that, strictly speaking, it is about studying
those operations supported by contracts within which the bank is in a end of the
relationship and its client at the other, that is, where the bank buys or sells its
client and does not do so on behalf of its client with third parties, since there it
would be more appropriately the fulfillment of a fiduciary trust. or the execution
of a mandate contract, the purpose of which would be to carry out a sale.
10.1.
PURCHASE OF GOLD AND PRECIOUS METALS
In some countries, banks are allowed to buy and sell gold and precious metals,
either to keep them in their possession or to transfer them to the Central Bank in
order to strengthen the country's reserves, with the bank earning the difference
between the exchange rate or price of purchase and sale to the Central Bank. Just
remember in this regard that, despite the existence of a monetary standard, the
universal tendency consists of the elimination of convertibility, that is, the
possibility of exchanging paper money for the equivalent of the corresponding
monetary reserve. From this point of view, therefore, the possibility of banks
keeping the gold and metals acquired as part of their assets is not justified either.
To which exchange rate considerations could be added.
10.2.
PURCHASE OF FOREIGN CURRENCY
A traditional operation of banks, since ancient times, being a money changer
seems to develop with the increasingly dynamic exchange between people and
the frequent circulation of different currencies. The purchase and sale of coins,
which generates a profit due to price differences, depending on the position
. of the bank in the operation, constitutes traditional power of commercial
banking. However, and especially in times of difficulties, this possibility is
sometimes restricted by exchange regulations, which in some cases prohibit
banks from maintaining their own position in foreign currency, having to serve as
simple intermediaries between the clientele and the Central Bank to which they
must sell the existing balances at the end of each period.
Another type of restriction would consist of establishing that in no case can

banks put them into circulation, but rather that sales operations must be aimed at
their export or departure from the country.45
In any case, and apart from the purchase and sale operations that we could call
cash transactions, linked, for example, to tourist services, banks handle foreign
exchange generated or required by foreign trade operations of their clientele, so
they normally buy them when they carry out their exports and sell them to them
when they require them to pay for imports, or they finance them in foreign
currency, against their own position or against lines of credit established with
their correspondents.
10.3.
PURCHASE OF TITLES
This possibility, generally quite dynamic in commercial banks, is however linked
to some possibilities restricted by the same legislation and constitutes, from a
technical point of view, the instrument to comply with the mandatory investment
modality, when they are the higher provisions that impel them to buy certain
securities or voluntary, when it comes to optional investments in accordance with
the law.
The purchase of documents is usually restricted to bills, checks, promissory
notes, bonds, bonds and, in general, all types of securities issued by individuals
or some of them and, preferably, by the State. When it comes to the purchase or
sale of securities, the general rules that we have had the opportunity to study are
practically superfluous, since their negotiation is governed by much more agile
laws, within which numerous hypotheses seen appear discarded ab initio due to
subtraction of matter and where their transfers result from expeditious
mechanisms that range from the most complex, in the case of nominative titles,
of endorsement, delivery and registration in the books of the issuing entity, to the
simplest in the titles to the bearer, simple delivery, going through the negotiation
of titles to order, endorsement and delivery. In all cases with a set of prerogatives
and exceptions in relation to the position of the parties, what is said with their
autonomy, the guarantee of the debtor's solvency, the no need for notification,
etc., which confer upon them certain peculiar characteristics, where not only are
the rules of the sales contract not applied, but the rules on assignment of credits
are not even acceptable.
Within these purchase possibilities, it is interesting to mention the so-called

portfolio purchase carried out between peer banks with the aim of alleviating
their temporary treasury needs and which, although it simply consists of the
acquisition of a certain number of promissory notes for a certain value, has some
advantages in practice, especially in light of the provisions of the monetary
authorities and what it says with the agility of the operation. For this last aspect,
because the bank selling its portfolio can limit itself to constituting a fiduciary
deposit in custody in favor of the purchasing bank, limiting itself, consequently,
to sending it the custody title and thereby avoiding the physical movement of the
titles, with all the disadvantages and inconveniences that this represents. And for
the first aspect, because carrying out the operation in this way, the resources
obtained imply a simple movement in the asset lines of the selling bank and
consequently, by not affecting its demands, they are not subject to the provisions
on reserve requirements or technical reserve. of commercial banks.46
Of course, the physical handling of documents between financial entities and
with their clientele has been substantially transformed, when it has been replaced
by the records or certificates issued by the Centralized Securities Depository, as
we saw in the chapter on "electronic banking".47
Finally, it must be insisted that, when the portfolio purchase from clients is made
firmly, it constitutes the execution of the so-called factoring or factoring contract,
which we have studied among the active operations, understanding that it is a
form of indirect credit, as soon as the bank acquires the portfolio and disburses a
sum to its client to recover it from the transferred debtor, which is why a typical
credit intermediation function is recognized.48
10.4.
STOCKS BUYSELLING
We have said repeatedly that commercial banks do not have, in themselves, a
vocation to be investors or shareholders of companies and that, therefore
- Therefore, in most countries this possibility is only established in a restricted
way, especially to allow them to participate in some other financial entities in
relation to which the link allows establishing permanent, reciprocal and
complementary collaboration, with better efficiency in the service and better
attention to its clients, as could happen with banks authorized to make
investments in financial companies or in general deposit warehouses. In any case,
the provisions on this matter usually limit participation even in these entities,
both from the point of view of not exceeding a percentage of the capital and
reserve of the latter, and of not being able to allocate more than a certain
percentage. of its resources for this purpose.
This scheme has been strengthened in countries whose banking is organized

around the recognition of financial groups, since in them and by definition
investments are made in financial services subsidiaries. It is unnecessary,
however, when the dominant form is multibanking, since there the support of
related entities is not required. What is less frequent, in any case, is that under
this last scheme, investment in shares in the real sector is allowed without limits.
49
10.5.
PURCHASE AND SALE OF REAL ESTATE AND OTHER ASSETS
This operation would not properly correspond to a banking contract, with the
meaning that we indicated from the introduction of the book, since it does not
imply the provision of a service to its clientele in the development of its
corporate purpose. If we mention it it is only to remember that, also in this
particular, banks have severe restrictions that in general terms can be expressed
by saying that they can only acquire the goods essential for the establishment of
their own offices and the provision of services to their clientele.
10.6. SALE OF CHECK BOOKS and OTHER FORMS
To conclude, we would like to mention the sale that banks usually make of their
skeleton checks or checkbooks, which, if in some countries they are provided
free of charge, in others, especially due to the high printing costs and the need to
provide them with certain measures security features such as special papers,
fugitive inks, etc., justify charging a fee to its clientele. Here, then, it would be
about the sale of checks that banks have to deliver to their clientele so that they
can access the existing balances in their current account, through the most
frequently used file. 50
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37. Honduras, art. 779 C. Co.; Costa Rica, art. 456 C. Co.; El Salvador, art. 1025
C. Co.; Colombia establishes a restriction when the price through installments
has been agreed upon for sale under reservation of ownership, since in that case
"the non-payment of one or more facilities that do not exceed in total one eighth
of the total price of the thing will only give rise to the collection of the unpaid
installment or installments and default interest, with the buyer retaining the
benefit of the term with respect to successive installments. Any stipulation to
the contrary will be considered unwritten", art. 962 C. Co.
38. Chile, art. 153 C. Co.; Venezuela, art 142 C. Co.; Panama, art. 754 C.Co.
39. Colombia, arts. 917/8 e. ea.
40. Colombia, arts. 952 and 962 e. ea.; Honduras, art. 781 e. ea.; Bolivia, art. 839
e. ea.; Paraguay, art. 780 e. and.; Peru, art. 1583 et seq. and. and.
41. Colombia, arts. 1939 ff. and. and.; Peru, art 1586 e. and. It is prohibited in
Paraguay, art. 770 e. and.
42. Paraguay, art. 774 e. and.; Peru, art. 1582 e. and.
43. Peru, art. 1572 e. and.; Argentina, arts. 455/6 e. ea.; Honduras, art. 778 e. ea.;
Colombia, art. 913 e. ea.; Paraguay, art. 769 e. and.
44. Ecuador, art.172 C. AC.; Panama, art. 743 C. AC.; Argentina, art. 455 C.
AC.; Chile, arts. 131/2 C. AC.; Honduras, arts. 776/7 C. AC.; Colombia, art. 912;
Bolivia, art. 835 C. AC.; Peru, art. 1571 C. C.; Paraguay, art. 768 C. c.
45. Venezuela, art. 29 LGBOIF.
46. Colombia has restricted the use of this mechanism when the operation
involves a resale agreement because, in practice, it translates into a means of
raising resources, and has required that a reserve requirement be settled on the
corresponding items. Circo OS 126/80 S. b. Additionally and as we saw in Chap.
XVI, the Cir. 038/88 drastically regulated repo operations, under which the
portfolio purchase is made with a resale agreement or vice versa. Subsequently,
the regulation has been completed with O. 2360/93 and the EC 100/95,58/96 and
75/00.
47.V. Supra, Chap. 111, 3.7.
48.V. Supra, Chap. XV.
49. MARTINEZ NEIRA, Néstor Humberto. Op. cit.
50.V. Supra, Chap. V, 4.2.
Chapter XXI
SAFETY BOXES
1. NOTION
1.1. OPERATION DESCRIPTION
This service consists of making available to its clientele individual safes, with
security locks, located within a closed area, which is subject to special protection
measures, both against certain known risks and against free access. of strangers.
Its use allows clients to store all types of assets, especially securities, valuable
documents and money, confidentially and in terms of the highest security. In
addition to receiving a key that allows the opening of the box within the
modalities that we will see later, in some systems the client also receives a
password or identification card to have access to the premises where they are
located.1 An interesting feature, What is a notable note to determine its legal
nature is that the bank does not receive goods but simply authorizes the client to
keep them in his box.
Even though there are numerous antecedents cited by the authors, it seems
interesting to bring into account, due to its novelty and the time, the service
provided by the order of the Templars, who, having specially protected facilities,
could offer individuals the deposit of their goods. of value in closed safes, which
they were obliged to guard and in relation to which the characteristic was
presented that the user received a duplicate of the key kept by the Templars,
which constitutes a striking antecedent of the contemporary modality established
for the opening.
1.2.
CONCEPT AND DEFINITION
Thus, we have that the safe deposit box contract, not qualified from now on in
any way, is one by virtue of which the bank undertakes, against the payment of
remuneration, to make a safe deposit box or safe deposit box available to its
client. chest for him to store his goods, having the necessary security measures to
guarantee the inviolability of the boxes and the non-access to the premises by
third parties.2
2.
LEGAL NATURE
In this contract, unlike what happens with the previous one, there are many
theories that have been presented to try to adjust it to known archetypes, as we
will see shortly.
2.1.
DEPOSIT THEORY
It has been considered, in light of the supposed historical evolution of the figure,
that the safe deposit box service corresponds to a form of closed deposit, through
which clients obtain custody and conservation of their assets. As both notes
constitute fundamental obligations in the deposit contract, it can be concluded,
therefore, that the legal nature of the contract is that of a closed deposit.
Furthermore, it is noted that it would not be direct custody since it is not
exercised over the goods deposited in the box, but rather indirect, through
security measures aimed at guarding the premises in general and preventing
access to the same from unauthorized persons.3
Against this theory, however, different arguments have been put forward, the
validity of which seems to indicate that it is currently ruled out by doctrine. In
fact, it has been observed, first of all, that the contract is consensual, it is
perfected by the simple agreement of the parties and there is no delivery since the
bank receives nothing from its client. Consequently, the lack of delivery, an
essential element in the deposit contract, constitutes an insurmountable obstacle
to qualifying it as such. And even if it were maintained that it is a closed-cash
deposit, the truth is that the bank does not receive any cash and, even more, does
not know, not even by unilateral declaration of its client, that is, without
verification by it, which be the supposed content, which, as if that were not
enough, is changeable by virtue of the nature of the contract. Added is the
observation that the contract exists even if nothing has been deposited and
inserted in the box and that the object of the contract is not a movable property,
as it would have to be if it were a deposit. From all of this it is concluded that the
deposit theory cannot prosper in light of the arguments presented.4
2.2.
LEASE THEORY
Defining the lease as the contract by virtue of which one party undertakes to
grant another the enjoyment of a thing or provide a service and, the other, to pay
a certain price in return, a good part of the doctrine has leaned towards maintain
that there really is a lease of a thing, with the provision of additional services,
constituting the other obligations of the bank not derived from the lease contract.
In fact, if one observes the
- mechanics of the contract can easily verify that, by paying the price, the client
has the right to use and dispose of the property, as a lessee would do, that is,
using it for the agreed purpose of storing removable goods at any time and that
There is a generic obligation for the bank (lessor) to maintain the user (lessee) in
the peaceful enjoyment of the property that is the object of the contract.5
It responds by saying that on the part of the bank there must be active
surveillance of the premises and the boxes contained therein, conduct that does
not correspond in ownership to that of the lessor and that, on the other hand,
there is no delivery of the property that is the object of the lease, since such
cannot be considered the delivery of the keys, which could be a form of symbolic
delivery.6 We do not share the objections because, on the one hand, and in
relation to the first, we believe that we can speak of the leasing of a thing, which
due to its peculiar security conditions serves adequately and precisely for the
purpose sought by the user. Consequently, the bank's activity would barely
guarantee the existence of the specific conditions sought by the user to take the
box. But in addition, the thesis of symbolic delivery seems suggestive because in
truth, although it is true that the tenant will need the help of the bank, it is no less
true that by handing over the key he can enjoy and use the property within the
contractual modalities, which he knows from the beginning and whose existence
does not disfigure his fundamental power to do so. We note, then, that we lean
towards the leasing thesis, admitting that some obligations assumed by the bank
can complement the peculiar ones arising from it.
2.3.
MIXED THEORIES
Some authors maintain that it is a mixed contract, where elements and
obligations typical of the deposit and the lease and even of these two and the
provision of services are presented. Which in truth represents only a difference in
nuance with respect to the previous thesis, since we have said that, in our
opinion, it is a rental contract, to which some accessory elements are added that
make the use of the box, due to its safety conditions. In this case it happens that
the obligations are placed by the doctrine in terms of equality, stating how
important is for the client the obligation to deliver the enjoyment of the thing,
typical of the lessor, as well as the one that would be peculiar to the depositary to
guard and preserve it. . Having, yes, to resort to a subtle argument in the sense
that such conservation and custody would not, in any case, be of the goods
deposited in the good that is the object of the contract (box), but of the container
itself and the enclosure within the which is found.7 It can be stated, without a
doubt, that there can never be talk of deposit in relation to the goods placed in the
box and that, consequently, we believe that the obligations of conservation and
custody of the premises are accessory or secondary, with respect to those arising
from the lease contract.8
2.4.
UNITARY CONTRACT THEORY
It has also been argued, finally, that despite the existence of different obligations
that could correspond to different contracts, the truth is that, taking into account
the final organization of the contract, it must be maintained that it is unitary, as a
consequence of clients seeking a guarantee of maximum security against the risk
of loss of things and within the conditions of greatest confidentiality.9
3.
From the above we can affirm that it is a main, bilateral, onerous and
commutative contract, of successive and consensual tract. It is typical in some
legislations that establish it and atypical in all those countries in which its
regulation results from the contracts entered into between the bank and its
clientele. 10

4.1. DELIVERY THE KEY AND MAINTAIN FREE ACCESS
The delivery of the key, which we have described as symbolic, allows the user to
use the box by opening it, although in a very interesting way. This consists of the
fact that, as a general rule, each box has a double lock that operates, one with the
key given to the client, an individual key, and the other with a generic or master
key that is used for all boxes, but so that they cannot be opened except with the
collaboration of both. In this sense, remember the observation that the client does
not have real availability or enjoyment of the thing, since it always requires the
bank's help. However, we think that it would be the bank's compliance with the
obligation of every lessor that the thing that is the subject of the contract serves
the purpose for which it has been leased.
But at the same time as the delivery of the key, we mention the obligation to
maintain for the user or his representative free access to the areas where the
boxes are located, within the hours indicated for the provision of the service and
on the days the stores are open. banks to the public.
These two manifestations of the same obligation constitute, in our opinion, the
way in which the bank allows the normal use and enjoyment of the thing.
4.2. PROHIBIT THE ENTRY OF STRANGERS
Closely linked to the previous one, the prohibition of the entry of strangers
guarantees the holder of the box that only other users and employees of the
establishment who use the general key can have access to the premises, by
completing the requirements established by each regulation. and that they will
surely impose full identification and registration of each person's entry into the
vaults. We already saw how, in some countries, this identification is achieved by
presenting a previously issued credential.
This obligation is expressly enshrined in some legislation establishing that only
users or their representatives will have access to the premises and, of course, the
employees and dependents of the bank, in the latter case under the responsibility
of the establishment.11 Others require the inclusion in the contract includes
clauses that indicate the requirements for the entry of strangers, of the users
themselves and even of the people who must act on their behalf in case of illness
or temporary incapacity of the latter.12
4.3. KEEP A DUPLICATE OF THE KEY
This obligation may seem curious because in some countries the internal
regulations or the provisions of the control entities may rather prohibit the
keeping of a duplicate of the client's key, to prevent the bank from having both
the master key and the individual key of each box. However, where the
obligation is established as a burden for the credit institution, it is fulfilled by
depositing the duplicate in the hands of a third party, generally, another credit
institution or the Superintendency of Banks or control entity itself. They want to
foresee cases of loss or misplacement of the key in which, and at the request of
the client, the duplicate may be delivered, after the latter leaves a record of such
circumstances and is obliged to respond to the bank and third parties for any
damage that may arise. of the appearance of the original. But the duplicate can
also be used by the same bank in certain cases in which the law authorizes it to
proceed unilaterally to open the box. In all these cases, the existence of the
duplicate avoids the need to use force to violate the individual security measures
enjoyed by the box.13
4.4. BE RESPONSIBLE FOR THE INTEGRITY AND SUITABILITY OF THE

BOXES
It is about complying with the lessor's own obligation to maintain the lessee in
the peaceful enjoyment of the leased thing, which must serve throughout the
duration of the contract for the purposes that were taken into account when it was
concluded. Even though we must warn that some authors who do not accept the
theory of leasing, consider that this obligation is stronger or exceeds that which
would be typical of the lessor. 14 It could be divided into the study of several
points.
4.4.1. Custody and conservation of the box
Load in relation to the integrity of the box itself, to prevent it from being opened
or exposed to damage or factors that could alter and eventually affect its contents.
4.4.2. Custody and security of the premises
Obligation that concerns general security measures, such as alarm systems in

case of fire, imposition of metal plates to reinforce the parts, establishment of
ventilation and humidity control mechanisms, etc., to which is added the
existence of a set of security measures designed to prevent the entry of strangers,
either by force, through the use of security doors, alarms, etc., or using the
registrations, identifications and controls that we mentioned above.
4.4.3. Assumption of exceptional conduct in case of risk
The obligation to respond for the integrity and suitability of the boxes directly or
by guarding the premises, ultimately seeks to protect the goods and objects
placed inside them. For this reason, some legislation establishes effective
procedures aimed at guaranteeing, through the making of certain decisions, the
conservation of said content. Such would be the case that the bank has news
about the existence of circumstances that may endanger the security of the boxes,
in which case it may be obliged to take the necessary and urgent measures so that
the users proceed to vacate them, giving them notice in in a timely manner and
that if the risk is imminent it can take the necessary measures, including
emptying the boxes, in order to try to save their contents, and must carry out a
notarial inventory of the contents of each of them as soon as possible. , if at that
moment the pressure of time prevents you from doing so.15
4.5. BE RESPONSIBLE FOR DAMAGES SUFFERED BY CUSTOMERS
In this case, it is a very peculiar obligation, because it is clear that if damage

occurs to the things placed in the boxes that can be attributed to the fault of the
bank or they disappear, it is necessary to establish a responsibility in its charge
consisting of the need to compensate its clients for the equivalent of the damages
caused.
Some authors have even maintained that the bank's obligation is not one of
means but of results, and that, therefore, it guarantees its clients the conservation
and custody of assets in optimal safety conditions, so that eventual damages
suffered imply a breach of its obligation.16 Such damages may occur due to
violence or improper opening or as a result of an incident that compromises the
premises and as a consequence of which there is deterioration or destruction of
existing assets.17
Now, the problem that scholars and surely jurisprudence in different countries
encounter, is that even when a liability is established by the bank, from which it
can only be exonerated if it proves the existence of force majeure or a unforeseen
event, the irresistible act of a third party or the fault of the client, the client is
obliged, in any case, to prove the occurrence of the damage. To do this, it must
prove the pre-existence of certain assets and values in the box, which in practice
is difficult considering that there is no deposit contract and, consequently, the
bank never receives any property from its client, nor is imposed from the
contents of the boxes.
Therefore, it is necessary to distinguish two hypotheses. If it is an incident that
affects the boxes, such as a fire or flood that occurred in the premises, and it
cannot be proven that they were due to force majeure or a fortuitous event, it is
possible that as a result of the incident, traces of their contents will remain in the
boxes. , because securities, money or documents appear, partially incinerated or
jewelry or other semi-destroyed goods, but always in conditions of being able to
establish unequivocally that they were there and have suffered damage that must
be compensated. On the other hand, when, for example, it involves the theft
resulting from the opening of the box by an unauthorized third party, it will in
practice be almost impossible to demonstrate what goods were in it and,
consequently, the banks' responsibility for The damages that have occurred
cannot be specified in a specific compensation. 18
5.1. PAY THE AGREED AMOUNT
Whether the contract is considered a lease, whether it is treated as a deposit, or

whether a different theory is accepted, the truth is that as a commercial contract
there is a fundamental obligation borne by the user: to pay the established
remuneration that, ordinarily, as occur in all successive contracts, it is settled in
relation to the duration of the business. Failure to comply with this obligation
may result in the termination of the contract and the opening of the box in certain
circumstances.
5.2. USE THE BOX IN ACCORDANCE WITH THE REGULATIONS

This obligation, which is somewhat secondary, refers to the set of requirements
established by the banks in their regulations and which establish the hours, the
days of service provision, the identification instruments, the way of accessing the
premises, the prohibitions, etc
5.3. REFRAIN FROM STORING PROPERTY THAT PUT THE BOX IN

DANGER
It consists of the impossibility of storing goods that, due to their conditions,

could endanger the cash register or the security of the establishment. In our
opinion, it corresponds to the general obligation of the tenant to use the property
as a good father of a family and therefore implies the impossibility of storing
explosives, flammable materials and other risky materials or devices.19 If the
bank realizes in any way about The existence of such circumstances could open
the box to ensure general security and some legislation even establishes that it
could proceed to sell the goods to pay for the damages caused and the opening
expenses with the proceeds. 20
5.4. RETURN THE KEY AT THE TERMINATION OF THE CONTRACT
It says as much, in practice, as symbolically returning the box, putting the bank
in the position on its own and in ordinary conditions of having both the master
key and the private key to the box. This obligation allows us to mention at the
same time the obligation to notify the bank about its loss in the event of loss,
assuming in this case the expenses required for the opening, if there is a single
copy, or the preparation of another unit if there is a duplicate in the hands of a
third.21
6. PLURALITY OF OWNERS
It may happen that there are several owners jointly obliged to use the
box or empowered to do so each one separately, hypothesis in which. They
would be joint creditors of the rights arising from the contract.
In the event of death, disability or bankruptcy of any of the owners, there are two
solutions that have a logical relationship, depending on the systems. If it was a
right to be exercised jointly, the reasonable provision would be for the bank to
refrain from facilitating the opening of the box to the surviving holder or holders.
If, on the other hand, it was about active solidarity, the logical thing would seem
to be that the survivors could, any of them, demand opening. However, in order
to protect the rights of third parties and those of the treasury, some legislation
establishes an interesting solution according to which the opening can be done,
but with the presence of a notary in order to inventory the assets and empowering
the surviving owner to remove those that do not clearly appear to be the property
of the deceased. These will be held by the bank in the name of the heirs or at the
disposal of the estate or in favor of the legal representative of the incapacitated
person, depending on the case.22
7.1. DURATION
The contract can be concluded for a fixed term or for an indefinite term, in which
case any of the parties may terminate it by means of the prior notice established
by law or the contract. In particular, if the bank proceeds to do so, it will be
logical for it to return the proportional part of the unearned income, if it has been
paid in advance in relation to a longer period.23
7.2. T ACIT A EXTENSION OF THE CONTRACT
The tacit extension of the contract will occur when it is established that if the key
is not returned upon expiration, the establishment may have it extended for an
equal period or if after the end of the term, the bank proceeds to receive the sum
corresponding to a new period.24
7.3. OPENING BY THE BANK
The opening by the bank can take place in various hypotheses, but those that
involve the termination of the contract itself are normally linked.
given to the debtor's default.
In effect, if advance notice has been given for its termination and the client does
not return the key or if he is in default by not paying the established fees, the
bank must be authorized to open the box under penalty of being condemned to
remain bound by a relationship within a bilateral contract in which the other
party has breached, which would be clearly unfair. That is why legislation
usually establishes that in the event of a user's default the bank sends a
communication to his registered address, in order for him to proceed to cancel the
debt and if after a certain period this does not happen, he can open the box. .25
There is a peculiar legislative regulation in which this eviction system is

structured on double notification. The first is aimed at demanding payment of the
rents owed, which will result in the termination of the contract if this does not
occur after a certain time. And at that moment, once the contract has ended,
which could also apply to the case of the simple passage of time, a second
communication requesting the delivery of the key and the return of the box, in
which case a new period expires may, then yes, proceed to open the box by
making an inventory of the goods before a notary and keeping them in a simple
deposit or placing them at the user's orders in accordance with the general rules
of procedure.26 Finally, it may happen that the simple passage of time After the
contract has expired, it authorizes the bank to open the box with the formalities
of the inventory and the participation of a competent official.27
7.4. OPENING IN CASE OF LIQUIDATION OF THE BANK
In the case of occupation or takeover of the banking establishment by the control

entity, in some of the cases provided for by law, it may also occur that, if a
certain time passes after the official sends the communication to the clientele,
asking you to vacate and that does not happen, proceed with the opening. In this
case, and that is why we mention it separately, the sending of the communication
is not due to termination of the contract due to expiration of the term or delay in
the payment of remuneration, but rather to a relatively remote hypothesis, but one
that is usually enshrined in legislation. banking.
-------------------------------------------------------------------------------
1. ALDRIGHETTI, op. cit., p. 136; GARRIGUES, Joaquín. "Banking
Contracts". Ed. Silverio Aguirre. Madrid, 1958, p. 454.
2. El Salvador, art. 1269 C. Co.; Colombia, art. 1416 C. Co.; Honduras, art. 1063
C. Co.
3. GARRIGUES, op. cit., p. 456.
4. MURATI, ap. cit., pp. 201/2;
5. GARRIGUES, ap. cit., pp. 455/6. Colombia, abstains from doing so, art. 1416
C. AC.
6. CERVANTES, ap, cit., pp. 300/1.
7. RODRÍGUEZ, Joaquín. "Commercial Law". T. 11, p. 130; MESSINEO, cited
by
BAUCHE, p. 342.
8. Colombia, the C. Co., refrains from qualifying the contract, art. 1416. Ecuador
speaks in art. 51 LGISF to "receive and keep movable objects, securities and
documents in deposit for safekeeping and rent lockers or safe deposit boxes for
securities deposits."
9. CERVANTES, op. cit., p. 301.
10. It is typified, among others, in Colombia, art. 1416 et seq. Co.; El Salvador,
art. 1269 et seq. c. Co.; Ecuador, arts. 204 et seq. LGISF; Honduras, arts. 1063 et
seq. c. Co.; Bolivia, art. 1428 et seq. c. Co.
11. Colombia, art. 1418 C. AC.; Bolivia, art. 1428 C. AC.
12. El Salvador, art. 1271, 1, 11, C. Co.
13. Colombia, art. 1424 C. Co. The Banking Superintendence has established
that the duplicate must be left in the hands of the Banco de la República (Central
Bank) and in cities where it does not have an office, in the hands of other public
law entities such as the Banco Popular or the Caja Agraria. . R. 3859 of 1989.
17. El Salvador, art. 1269 C. Co.; Bolivia, art. 1428 C. Co.
18. The difference between the decision made based on the legal conclusion and
that managerial one that takes into account other considerations, in particular, the
image of the bank, can be illustrated with an interesting "business case" that
occurred a few years ago on the French Riviera, during a busy summer and on
one of the most important benches in the square. During a weekend, seasoned
criminals entered through a tunnel, after deactivating very complex security
systems, and looted a large number of chests, whose users were part, as is not
difficult to imagine, of the most important international clients of the bank. Well,
if the contractual rule was applied, the bank could be immune from the
impossibility of proving what was in the coffers. But this, in fact, compromised
the bank's image among its best clients. It was then decided, apparently, to
contact the insurers and design an emergency strategy, by virtue of which a
selected group of senior officials immediately contacted the affected clients and,
without news about what had happened, invited them to fill out a form. form
containing basic and confidential information,
required, supposedly, for the renewal of the bank's insurance. Among the
questions were included some to find out the maximum value that customers had
had in their boxes, at any time, and the amount assigned to the goods they
currently had and, based on such statements, they were compensated based on the
last sum. A costly decision, clearly, but an excellent managerial decision, in the
opinion of those who made it, due to the renewed confidence with which clients
continued to be linked to the institution.
19. El Salvador, art. 1273 C. Co.; Bolivia, art. 1433 C. Co.
20. 21. Honduras, art. 1066 C. Co.
22. MURATTI, ap, cit., p. 361; Colombia, art. 1423 C. AC. Colombia, art 1418
C. AC.; Bolivia, art. 1435 C. AC.
23. Colombia, art. 1419 C. AC.; Bolivia, art. 1432 C. AC. 24. Bolivia, art. 1436
C. AC.
27. Ecuador, art. 204 LGISF.
Chapter XXII
ESCROW
The study of the chapter on the trust or commercial fiducia has suggested to us
the convenience of making some preliminary remarks in order to specify the
content and scope of this contract that constitutes an adequate version, in the
legislations that are inspired by European continental law, of the Anglo-Saxon
figure known as trust. For this reason, we want to distinguish from the beginning
several figures more or less linked to each other and named in a similar way.
- similar. And study against the two contemporary concepts - the fiduciary
business and the trust - the historical origins in Roman and Anglo-Saxon Law, so
that the subject of our study can be better located with this set of references.
1.1. DISTINCTION BETWEEN VARIOUS FIGURES
1.1.1. Trust property
As a manifestation of trust businesses, inspired by Roman Law, we have to begin

with a form of property limitation known as fiduciary property. Since we will not
return to it, we must make some notes about it. Fiduciary property, in this
specific meaning of limitation on property, is understood to be property that is
subject to the burden of passing to another person upon verification of a
condition.1 In light of this definition, the owner has a right subject to a resolutive
condition. It can be established by an inter vivos act or by will, in the latter case
implying a double liberality, first to the trustee who receives the limited property
and then, to the trustee, the person or persons called upon to acquire it upon the
occurrence of the condition.
In order not to dwell on the complex regulation of the figure, it is enough for us
to highlight some characteristic notes that will allow us to affirm that it is an
institution whose essential elements do not correspond to the trust or commercial
trust that we are going to study. In effect, the trustee acquires the property in such
a way that it forms part of his assets, it can be sold with the tax to which it is
subject and the fruits or products of the thing benefit him directly, except in
exceptional cases. You may become full owner of the goods received in the event
that the condition becomes impossible or is not fulfilled within the term indicated
in the contract or in the law. This possibility of becoming an owner, which, in the
case of fiduciary property under Civil Law, is perfectly logical, is categorically
ruled out by most of the commercial legislation to which we will refer later. In
them, as a general rule, neither the trustee can become the owner nor do the fruits
benefit him because they are intended to fulfill a certain purpose.
Finally, to make a distinction with respect to the trust business, there is no

disproportion between means and end, since it is an instrument intended to
produce the effects that are its own, that is, to benefit two or more people where
it does not exist. Only there is no disproportion but the effects produced are those
sought by the parties through the use of the appropriate instruments to achieve
them. In other words, although the fiduciary property that appears in some civil
codes is inspired in some way by the trust businesses of Roman Law, it does not
correspond to the figure that in current legal institutions is known as trust in
Anglo-Saxon Law and in our systems as trust or mercanti fiduciaI.2
1.1.2. Fiduciary executorship
This figure, which is part of the succession regime, allows the testator to make a
secret order for the fulfillment of a lawful but unknown purpose, with part of the
portion of his assets that he can freely dispose of, so that, as we will see later,
these are what some sector of the doctrine would call "pure" fiduciary businesses,
to indicate that they are based exclusively and totally on trust, to the point that, in
the legislation that establishes it, "the fiduciary executor does not will be obliged,
in no case, to reveal the object of the secret order, nor to give an account of its
administration".3
1.1.3. Trust
We will see, in this chapter, how the trust corresponds to a peculiar historical
evolution of English Law and is explained and operates within a peculiar
structure not existing in Latin systems, according to which the existence of two
can be predicated in relation to the same asset. owners, one legal and the other
beneficiary.
1.1.4. Trust business
Under this section we will study the fiduciary business, which, although it
corresponds to the logical structure that could explain the manifestations of
Roman Law, can also be suitable for all those hypotheses in which there is a
purpose seriously desired by the parties for which a means is used. excessive
legal, in the sense that it produces greater effects than those that would be
necessary to obtain said purpose. If you like, it is about the legal context that
explains the disproportion between means and end and allows us to specify that
the trust is not a pure fiduciary business with the content and scope of this figure.
1.1.5. Fiduciary or trust assignments
We said when talking about the mandate contract that it can explain a good
number of the so-called trust assignments, introduced in some of our banking
legislation around the twenties of the last century, as a result of the visit made to
several countries by the mission of North American experts. directed by Mr.
KEMMERER. Such assignments include for the bank, among others, acting as
trustee - more precisely it should be said fiduciary - under any mortgage or bonds
issued by an entity, a topic already studied in the chapter on the issuance of
bonds and other obligations. Act as fiduciary of assets of incapable persons, as
testamentary fiduciary, be executor, administrator, registrar of shares and bonds,
agent with the very wide possibilities that this means, depositary, trustee,
insurance agent, etc. Enumeration of these and other powers that the wide
possibilities that exist in Anglo-Saxon countries in relation to the figure of the
trust and the powers of the trustee wanted to introduce into our banking systems.
The bad thing, as we said on another occasion, is that these laws had the defect of
enshrining the function, establishing by way of illustration the number of services
or contracts that could be carried out and determining the competent body, that
is, the fiduciary sections or of mandate of commercial banks, without at the same
time introducing, as would have been logical, the conceptual structure of "trust
assignments". The simple mention of some powers was not enough for them to
be exercised, if the technical innovation sought implied a legal structure that did
not exist in our countries and was explainable, fundamentally, in the light of the
peculiar Anglo-Saxon legal organization. For this reason, as we will see, it was
only until Latin American countries introduced the concept of fiducia,
approaching that of the Anglo-Saxon trust and, especially, adapting it to the rest
of private legislation, so that it could operate within a logical context and not
constitute an insular piece, one could speak of a development in this activity,
limited until then to carrying out commissions in development of well-known
contractual figures, such as that of the mandate.
1.1.6. Trusts or commercial trust
We arrive at the proper object of our study, that is, the contract, taking on the one
hand the conceptual background that could result from the historical evolution in
Roman Law, recognizing the logical value of fiduciary businesses, but, above all,
assimilating the rich dynamics of the trust, has come to be reflected in a new
commercial contract, identified with characteristic notes that distinguish it from
any of its predecessors and with very interesting innovations from the point of
view of the patrimonial effects of its conclusion and the various obligations of
the parts around him.
1.2. TRUST BUSINESSES

1.2.1. Historical origins: Roman Law
We intend, at this point, to refer to two well-defined frameworks, which can

constitute the best starting points for understanding the modern trust contract. We
will mention both some examples taken from the manifestations of trust
businesses in Roman Law, and, in the next point, the most notable circumstances
that explain the birth of the trust in Anglo-Saxon Law.
Roman Law presented numerous cases or modalities of trust businesses that in an
evolutionary process, apparently general in all countries, went from what we will
call pure trust businesses to those known as impure trust businesses, regulated by
law or protected in its most important effects for it. We will mention the two
most prominent examples.
1.2.1.1. Fideicommisum
The jideicommisum seems to have had its origins in the multiple inabilities to
inherit that Roman Law enshrined and in the need to be able to carry out the will
of the testator through a figure who, overcoming legal inconveniences, could
make his last will effective. Basically, it consisted of one person transferring one
or more assets to another, by will, with the aim that the latter, appearing
externally as the owner, would use them for the benefit of another or other third
parties to whom, later on, if was possible, the assets had to be transferred. The
special existence of trust in the first stage was evident, since the acquirer by
testamentary means, owner for all purposes, could abuse his position by refusing
to transfer the assets to the beneficiary, keeping for himself the fruits produced
by them and even alienating them. to a third party, thus frustrating the will of the
deceased. That is why at this stage we can speak of a pure fiduciary business,
where trust is absolute and translates into the possibility of abuse by the
fiduciary.
The evolution reduced the purity of the fiduciary assignment as controls were
created aimed, above all, at achieving due compliance with the assignment. The
figure of the praetor in charge of carrying out this task was even known.
Numerous senate-consultations were issued regarding the regulation of the
various hypotheses that could be presented, among which the Treveliano
consulting senate stands out, which established that once the transfer of the assets
to the trustee was made, it was understood that the rights and actions
corresponded to the trustee who, on the other hand, had to bear the burdens
inherent to his status as such, thus protecting the trustee from attacks directed by
the creditors of the succession. Likewise, the Pegasian senate-consultation was
issued, which granted the fiduciary heir a remuneration consisting of a quarter of
the inheritance or of the transferred assets, a remuneration known as the "fourth
falcidia".
Roman Law knew different forms of fideicommisum such as pure or simple,

conditional, particular or universal and gradual. We simply mention the latter to
explain that the transfer was made at the expense of the trustee or beneficiary of
transmitting the assets to one or more other persons, who were obligated in the
same way to do so later. In the time of Justinian the right of the testator to impose
the obligation was limited only up to the fourth degree.
This last form was a direct antecedent of the so-called "trust substitutions" used
to preserve assets linked to a single family, producing a clear concentration of
wealth. For this reason they came to disappear, in practice, with the French
Revolution.
1.2.1.2. Pactum fiduciae
Unlike the fideicommisum, which consisted of a transfer due to death, the

pactum fiduciae involved an inter vivos agreement with the obligation for the
acquirer to retransmit the assets under certain circumstances.
The pactumfiduciae took two main forms: the so-called fiduciae cum creditore
and the so-called fiduciae cum amico.
The fiduciae cum creditore represented the form of guarantee consisting of the
debtor, required by his creditor to provide real security, transferred by mancipatio
or inJure cessio the ownership of an asset with the expectation that it would be
retransmitted to him once the obligation was satisfied. This implied, at first, that
the creditor appeared as full owner without the debtor enjoying any action in case
of non-compliance on the part of the creditor, which contrasted with the
advantages obtained by the creditor.
However, and as in the previous case, instruments were soon appearing designed
to protect the position of the parties and, especially, that of the trustor or
transferor. The first defense consisted of the recognition of the actio fiduciae,
direct in favor of the trustor and contrary in favor of the trustee. Two hypotheses
served as the main budget for the exercise of direct action. The alienation by the
creditor of the asset or assets received, before the expiration of the period
established for the satisfaction of the main obligation, in which case the actio
fiduciae was directed to achieve compensation or return of the values received by
the trustee. The other was the transfer made by the trustee once the term had
expired without having breached the obligation. At first it seems clear that the
debtor lacked any action, since his failure to comply generated the right for the
trustee to dispose of the assets received at his discretion. However, with the
passage of time, the possible difference, sometimes important, between the value
of the property received and that of the debt was taken into account and, then,
and to protect the debtor, action was granted aimed at achieving repayment. of
such difference, after satisfying the obligation in favor of the creditor.
Although it can be recognized that the pactum fiduciae cum creditore played an
important role before the modern forms of guarantee contracts were known, it
essentially presented two serious disadvantages: when the creditor, abusing his
position, alienated the asset, the debtor was placed in a difficult situation, since,
lacking real action, he could not pursue the property in the hands of third parties
and had to limit himself to exercising a personal action against his creditor, who
could become insolvent or fall into a bad business situation. On the other hand,
the debtor did not have the possibility of preserving the asset on a precarious
basis, since if such a possibility was established over time, the creditor could
always demand the delivery of the respective asset.4
The pactum fiduciae cum amico, for its part, was concluded in the interest of the
trustor and not of the trustee, as in the previous case, and sought to transfer the
assets so that he could dispose of them and exercise the powers inherent to the
owner as administered. , enter into contracts around them, defend them against
attack by third parties, etc. It was used, then, when someone, counting on a
person they completely trusted, had, for example, to be absent for a long time and
instead of leaving the property in the hands of their friend through a contract that
conferred simple possession , used this file so that it enjoyed the broadest
powers, making its protection more effective.
As for drawbacks, what has been said regarding the pactum fiduciae cum
creditore is valid as pertinent, due to the clear possibility of abuse by the
acquirer.
We are referring to the business whose fulfillment depends only on the personal
obligation of the fiduciary, which has as its antecedent the Roman trust and
which some authors call pure, as opposed to those in which there is a legal
regulation that allows the parties to exercise specific actions to protect their
rights. In other words, pure fiduciary businesses, arising from the autonomy of
private will and based on exclusive trust between the parties, cease to be and are
classified as impure, as soon as the legislative regulation recognizes them and
confers rights and defenses in around its celebration. Process that turns out to be
a constant within the evolution, explainable when the special position of the
fiduciary leads to the commission of abuses with respect to the trustor, the
beneficiary or third parties.5
Thus, we have that the authors polarize their sympathies in the definitions given
by Regelsberger and Grassetti, respectively. The first maintains that a fiduciary
business is one that is "seriously desired, whose characteristic consists in the
incongruity or heterogeneity between the purpose contemplated by the parties
and the legal means used to achieve it." In such a way that the legal expedient
used would allow greater results to be achieved than those actually obtained or,
in other words, the intended purpose could be achieved without resorting to the
means used by the parties. The second, for its part, states that "by fiduciary
business we understand a manifestation of will with which a right ownership is
attributed to another in one's own name but in the interest, or also in the interest
of the transferor or a third party." The attribution to the acquirer is full, but he
assumes a mandatory link in order to the destination or use of the assets of the
patrimonial entity. 6
From the transcription of both definitions, the inconsistency between means and
end, on the one hand, and trust, on the other, regarding the possibility of abuse by
the fiduciary, emerge as elements inherent to each of them. From the acceptance
of both theses, a reasonable explanation of the fiduciary business arises, in which
the trust placed in the fiduciary appears as a characteristic, in the foreground,
which, unlike that which exists in almost all legal transactions, is very special
and has a degree higher than normal, precisely because the fiduciary has the
possibility of abusing his position as if the mandatory burden did not exist, which
is unenforceable by or against third parties. But it is obvious that the possibility
of abuse, implicit in any management business, increases because the legal
powers that the fiduciary has exceed in their possibilities the economic purpose
sought when concluding the business and, from this point of view, the
disproportion between those and this as a characteristic of it.
1.2.3. Items
From the above we have that in the fiduciary business there are, as structural
elements, a full transfer of rights (real element) limited, in practice, by the
obligations enshrined in charge of the fiduciary (personal element).
1.2.3.1. Real
The real element lies in the full transfer of rights, whether real, such as property,
or personal, such as the ownership of a credit by the trustor to the trustee, in the
form of constituting it against third parties as owner or holder without any
limitation and against himself, only with those that arise from the obligatory pact
that we will refer to later.
On this matter, there does not seem to be a unanimous position on the part of the
doctrine and there are those who maintain that the transfer is limited from the
beginning by the fulfillment of the purpose proposed by the trustor and that,
therefore, it does not modify the essence of the right of property, constituting just
one modality of it. They do not admit, in this order of ideas, the concept of so-
called "fiduciary property." Others think, for their part, that there is a full transfer
and that the property acquired is absolute, and can also be called "fiduciary." 7
Regarding the first problem, we are inclined to accept that the real right acquired
by the fiduciary has no limitations and that those that could be predicated of its
exercise, result from the obligatory agreement whose effects are produced only
"interpartes" and that, being Failure to comply only generates personal actions
against the trustor, without being able to initiate proprietary actions. In another
way, it being obvious that the right of ownership can only be subject to real
limitations with effects against third parties, the personal limitations that the
owner bears in its exercise do not affect the right nor are they enforceable against
persons outside the contract from which they derive. From what it says with the
recognition of a "fiduciary property" we consider that it should be restricted to
businesses of such a nature called impure, since only through its legislative
recognition and the regulation of rights and duties of the parties, can they be The
characteristics that justify the distinction appear and that allow the recognition of
a new type of real right.
All of the above, of course, in the theoretical analysis of the concept of trust
business because, as we will see, given that the trust or commercial trust
constitutes a manifestation of a regulated legal business, the limitations that are
enshrined in it or those that arise from the precision on the established purpose,
will ordinarily be known by third parties and enforceable against them. Usually,
in addition, control mechanisms will be established at the disposal of the
different participants to ensure compliance with the purpose and prevent abuses
or obtain the compensation that is imposed, if they are committed.
1.2.3.2. Personal or obligatory
This element consists of the agreement by which the trustee limits his or her
power as owner, in order to fulfill the purpose intended by the trustor. Generally,
there are several obligations in charge of the fiduciary and they relate both to his
powers and to the destination of the assets and the manner of their return when
applicable.
1.2.3.3. Relations
Various explanations have been given on the matter, the extremes of which are:
these are two autonomous businesses, the obligatory one being subordinated to
the real, on the one hand, and it is a single business, on the other.
The first maintains that since the real and personal relationship can be
distinguished as constitutive and autonomous parts, there is a contrast between
the two, with the positive real business predominating, which is only limited by
the negative obligation. The obligatory business appears, then, subordinated by
the real one.
We do not fully share the explanation because we believe that, given the
mechanics of the influence provided by the trustor, it is precisely the real one that
is limited in its possibilities by the conditioning terms of the obligatory one, in
such a way that it would be subordinate to it and not on the contrary. The
foregoing without prejudice to the possibility of abuse by the fiduciary,
. which the trustor assumes as a risk, since the obligatory relationship does not
produce but personal effects. But note that, as soon as one can speak of abuse in
the exercise of a real right, with respect to a power that would naturally
correspond to the owner, it is being admitted that said exercise was limited,
functionally subordinated to the terms of the obligation acquired with the owner.
trustor, even if it may be breached.
The second defends the existence of a single business substantially forming a

unit, in which although there is a real side and a mandatory side, their effects
influence each other. That is to say, not only is there a unilateral influence of the
mandatory on the real, by limiting its effects, but the latter acts on the former by
imposing itself in that way against third parties. We believe that this thesis is
only valid in the case of legislation in which the business as such is enshrined,
with its own perfectly defined characteristics and effects, as we already
expressed.
1.2.4. Location
To try to locate the trust business, the authors have studied its relationship with
some other modalities.
1.2.4.1.
Causal or abstract
In a simple way, let's say that the doctrine has understood by "causal businesses"
those that in their own statement or in the legal form adopted to concretize them
carry their cause and as "abstract businesses" those that are manifested and
carried out without revealing the particular function they provide and justifies
them. In the latter it is possible to distinguish between those in which there is no
express cause in any other relationship of the contracting parties but only in their
internal forum, that is, there would be an absolute abstraction, from those in
which, although the cause does not appear from the contract itself, can be found
in another relationship between the parties, thus forming a relative abstraction. A
typical example of absolute abstraction could be found in securities issued to
order or bearer where the exercise of the rights by the owner not only arises from
formal ownership, but does not require any reference to a specific cause.
The authors, upon recognizing that trust businesses must have a cause, are
inclined to consider that it would lie precisely in the obligatory relationship as a
special "causa credendi", which prior to a provision by one party, (transmitter)
empowers it to demand from the acquirer of the right a set of obligations
regarding its exercise, application and subsequent destination.8
We do not share this thesis, at least in legal systems in which the notion of cause
is finalist, that is, it deals with the motives or motives that lead the parties to
contract and that, consequently, do not accept the cause as concept linked to the
reciprocal benefits of the parties, when it comes to bilateral contracts. We think
that the cause that leads the contracting parties to use the typical construction of
the trust business must be sought outside the elements that make up the
relationship, in the specific reason that leads the trustor to place his trust in the
trustee and understand that he will not abuse his position, despite being able to do
so and which will be, in each case, the certainty of better administration or
investment, the convenience of a specific form of guarantee, the liberation of the
responsibility inherent in annoying or unattractive management, the obtaining a
goal that is difficult to achieve by other means, etc.
In other words, it is not in the obligation that the fiduciary acquires where the
cause of the business for the trustor must be sought, but in the reason why to
obtain the proposed purpose, he uses a means that far exceeds in its possibilities
the dimensions of this. But not even trust, which plays a definitive role, justifies
or explains the cause by its mere presence. That is to say, confidence in the
fulfillment of the obligation is not the cause of the former, it is something deeper
and more valid, it is the reason why the constituent has to adopt a highly
dangerous formula and trust in the correct behavior of the person who commits.
not to use the powers that normally entail the right that is transferred, other than
what is necessary to achieve the purpose pursued by the fiduciary. There, we
believe, the "causa fiduciae" is discovered, the determining motive that leads to
the act or contract.
1.2.4.2. Indirect
It is also interesting to study indirect businesses in relation to fiduciaries.

Perrara understands that indirect businesses are those in which an oblique,
transversal path is used to achieve a legal effect, that is, those in which a business
is used to achieve a purpose different from that which corresponds to it as
typical. In this regard, it is stated that in these businesses "through shortcuts you
reach the desired result that is not normal for the figure used nor does it
constitute a reflection of its effect."9
Even though some authors have denied the existence of indirect businesses as an
independent category, it seems to us that accepting such a name to simply
indicate the intention of the parties seeking to achieve atypical ends through the
use of typical businesses, it is clear that fiduciaries could be included. among
those.
1.2.4.3. Simulated
In general, it can be stated that simulated businesses are those that have an
appearance contrary to reality, either because they do not exist at all, or because
they are different from how they appear.
To distinguish fiduciary businesses from absolutely simulated ones, some authors

have maintained that "the simulated business is carried out to produce an
appearance, a deception; the fiduciary business wants to make up for the
incomplete legal order or avoid certain annoying consequences that derive from
the business... The simulated business does not want to achieve either an
economic or legal result. The fiduciary wants the legal result but not the
corresponding economic result; Therein lies the divergence between the
economic purpose and the legal means used." Others, summarizing the previous
concept, express that "while in the absolute simulation the parties do not take into
account any negotiating purpose, in the fiduciary business they attempt, on the
contrary, to achieve a practical goal of private autonomy, extracting it from the
factual element carried out by the parties." parts". 10
Less clear is the distinction between fiduciary business and relatively simulated
business. Again adopting Grassetti's thesis we can say that the criterion of
distinction consists "more precisely, in the following: that through relative
simulation the parties pursue a typical object that, in whole or in part, is typical
of a different business." of the apparently realized; while in the fiduciary business
an atypical purpose is pursued that is not typical of any type of negotiation
specifically recognized legislatively and that, however, insofar as it is pursueable
by private autonomy in which it can be admitted on the basis of an economic-
social assessment of the relationship, and taking into account the general
principles of our law and in particular those of the contract that said purpose
responds to a legislatively recognized need...'.11
1.2.4.4. Interposition of people
This must be ruled out in all fiduciary businesses in which there is no obligation
to carry out management in favor of a third party, that is, there is no beneficiary
of the contractual stipulations, other than the constituent itself, because if the
purpose says only with the trustor, the existence of only two people rules out
interposition by definition. Likewise, it seems that direct representation can be
ruled out, since, as we have seen, the fiduciary exercises his own rights in his
own name, while the representative in this case carries out other people's
business and on behalf of another.12
When, on the other hand, it is about indirect representation or the so-called

mandate without representation, typical of the commercial commission, and
where, as we have seen, the agent acts on behalf of others but not on his own, the
differences are more difficult to specify, for at least in some cases. In fact, it does
not seem difficult to us when it comes, for example, to a mandate to acquire an
asset, since even within the thesis held by some according to which the agent
acquires in his own head with the subsequent obligation to transfer to the
principal , it is clear that in the trust business the transmitter is the constituent,
while in this case the transmitter of the asset would be the agent. When, on the
other hand, it is a commission to manage or sell, the similarity is evident, since
the commission agent acts as owner of the assets vis-à-vis third parties, both for
their management and for their disposal.
Now, this similarity fits within the study of pure trust business, because it is
obvious that in impure trust business, that is, regulated by law, there are
numerous differences that are established to distinguish the position of the
fiduciary from that of the simple commission agent. or agent without
representation. Among others, it is enough to note that according to which for
trust businesses some form of advertising is required that notifies third parties or
allows them to know the content and scope of the legal relationship.
1.2.5.
Reason to be
To conclude, let us just remember that trust businesses find their possibility of
development in the autonomy of private will and their reason for being in the
legislative insufficiency to solve all the problems or purposes sought by the
parties within legislatively recognized archetypes. And to the extent that the law
becomes broader and more flexible, abandoning casuist formulas, this possibility
will become clearer. This is the reason for being, at least in legislation inspired
by Roman Law. In the Anglo-Saxon ones, the same conclusion is reached, but no
longer as a result of the autonomy of the private will itself, but as a consequence
of the legal integration carried out through custom and jurisprudence. 13
Of course, to the extent that new formulations are adopted, they tend to be taken
up by the legislator, the positions of the parties regulated and protected. From
that moment on, the law will determine the scope and specific possibilities of the
contracting parties. But remember, to return to the origin, the pactumfidudae -
and we will see later the "uses" - arose to achieve results unattainable by other
means recognized at the time, only that while it disappeared when new forms
appeared that replaced it with advantage, taking into account the purposes for
which it was used, it evolved, was formed as a trust, with its own characteristics,
and currently constitutes a perfectly structured form.
Finally, we note, of course, that sometimes individuals have resorted to the use of
trust businesses to try to avoid prohibitive regulations, tax burdens, etc., an
expedient that can never be recognized by judges because it will surely be
contrary to morality or to good customs, or will allow the cancellation of the
business for illicit purpose or cause.
-------------------------------------------------------------------------------
2. Colombia. COPETE, Ignacio E. "The Trust." Ed. ABC, Bogotá, 1940. He has
maintained that this part of the Chilean Civil Code, the work of the prolific pen
of D. Andrés Bello and which is not found, therefore, in the French Civil Code,
demonstrates the deep knowledge that the author had of English Law, that is, of
the trust, by providing for figures totally unknown in our system but naturally
received in the Anglo-Saxon system. . Two articles from C. c. They would
expose it. 807 which says that "when the Trustee is not expressly designated in
the trust constitution, or when the designated trustee is missing for any reason,
while the condition is still pending, the same constituent, if living, or his heirs
will enjoy the property fiduciarily. ", which establishes the possibility of
separating assets from your assets to allocate them to a purpose V. Infra, Chap.
XXII, 3.2.1.2. And 808 which establishes that "if it is provided that while the
condition is pending, the fruits are reserved for the person who, by virtue of the
condition being met or lacking, acquires absolute ownership, the person who
must manage the assets will be a fiduciary holder, that it will only have the
powers of the curators of assets", which constitutes a clear precedent of the
professional fiduciaries of Latin American legislation. Bolivia, art. 1409 et seq. c.
Co.
3. Colombia, arts. 1368 to 1373 C. c.
4. NAVARRO MARTORELL, Mariano. "Trust property." Ed. Bosch, Barcelona,
1950, p. 36.
5. RODRIGUEZ AZUERO, Sergio. "The Trust Business in banking legislation."
pp. 39 And ff. NAVARRO, Mariano, op. cit., pp. 121 And ff.
6. Cited by NAVARRO, Mariano, op. cyl. p. 60.
7. VILLAGORDA LOZANO, José Manuel. "Brief study on the trust."
Commercial and Banking Law Seminar. Faculty of Law of the National
Autonomous University of Mexico, leans towards the first position; NAVARRO,
Mariano, op, cit., p. 248.
8. NAVARRO, Mariano, op. cit., p. 119.
9. FERRARA cited by NAVARRO op. cyl., p. 133. HINESTROSA, Fernando,
op. cyl. p.248.
10. FERRARA AND GRASSETTI, in their order, cited by NAVARRO, op, cit.,
p. 141.
11. Cited by NAVARRO, op. cit., p. 150.
12.V. Supra, Chap. XIX.
13. VILLAGORDA, op. cit., p. 60.
1.3. THE TRUST
1.3.1. Historical Origins: the two jurisdictions
Since the Norman Conquest, a process of unification of local laws took place in
England, known as Common Law. The chancellor's intervention led, however, to
the fact that, in the presence of injustices, he at one point stopped applying the
rules of Common Law to apply others based on equity and known as Equity Law.
At the end of the reign of Henry V (1413-1422) the court of chancery (Equity
lurisdiction) was recognized and under the reign of Henry VIII and, from that
moment on, it achieved maximum development.
A distinction was made between legal actions (Action in Law) and equity
proceedings (Proceeding in Equity), depending on whether the interested party
relied on Common Law or Equity Law14 The two jurisdictions continued in
parallel over time, until merging in 1873, although The substantive part
continued to be made up of autonomous principles, each inspired by its
respective source.
From what it says with the background of the trust, it seems unquestionable,
according to the authors, that it begins with the "use", meaning such a
transmission made to a third party with an obligation of conscience in favor of
the transmitter or other beneficiary. Its use seems to have become popular with
the issuance of the statute of mortmain, which prevented religious communities
from owning real estate. To avoid the inconvenience, the monks transferred or
acquired through a third party (jeoffe to use) the ownership of a property
intended to benefit the community (cestui to use). The constituent of use was
called feoffor to use or seU lar. It should be noted, however, that the "use" was
also used to carry out testamentary transfers prohibited by law or to defraud
creditors. 15
In relation to the origins there are different theories accepted by the authors who
take it from Roman Law, Germanic Law or indigenous movements.16 Whatever
the thesis accepted, the most important thing is to highlight, as in all systems, the
nonexistence of contractual figures that adapt to a certain need or the desire to
seek solutions to some restrictions existing at a given time, lead to the structuring
of fiduciary relationships in which not only trust plays a very prominent role, but
in which legal powers are usually conferred. higher than those that would be
required to achieve the economic purpose sought by the parties.
The authors seem to agree on the distinction of four stages in the life of the
trust.17 Let's look at them, following those indicated by Batiza.
a) From the appearance of the "uses" until the beginning of the 15th century
Even though at this time they did not enjoy legal protection, some laws were
enacted to prevent transfers in fraud of creditors (1376) and the transfer carried
out by the dispossessor (1377).
b) From the beginning of the 15th century to the promulgation of the Law of
Uses
The "uses" ceased to be a mere commitment of conscience to become an
indisputable right, receiving the protection of the chancery as the right of equity
transferable by assignment or cause of death. Therefore, even when the Common
Law courts did not recognize any right to "cestui que usa", the Chancellor, based
on the principles of "equity", which we have already seen, protected his position
effectively.
c) From the Law of Uses (16th century) at the end of the 18th century
The "Statute of Uses" of 1535 resulting from the rejection of those who justly or
unjustly felt injured by the situation, recognized the "cestui que usa" from now
on as the true owner without, however, depriving him of the protection of
"equity." As time went by, subtle distinctions were made that removed part of the
"uses" from the control of the law, being recognized by the Court of Chancery
and receiving the name of trust.
d) From the end of the 18th century to contemporary times

The institution developed rapidly. The Law on Judicial Organization of 1873
established that in case of conflict between the rules of Common Law and those
of Equity, these prevailed and even though the two systems have now been
merged, trust problems are known for a Special Chamber of the Court of Justice.
As a very important aspect, we must highlight "The Trust Act" of 1893, a

compilation of jurisprudence on the subject that, due to the long period it covers
and the maturity reached by the figure, constitutes an essential source of
consultation for those who wish to delve deeper into this matter.
After the brief historical review of the trust in England, we will now limit
ourselves to explaining its structure and operation in more detail.
It is appropriate to transcribe first of all the definition given by the "Restatement

of the law of trust", according to which "it is a fiduciary relationship with respect
to certain assets by which the person who owns them (trustee) is obliged in
equity to manage them for the benefit of a third party (cestui que trust). This
business arises as a result of an express volitional act of the person who creates
the trust (settlor)".18 We will see how the trust can also arise without
intervention of the will of a constituent, as when it arises by operation of law.
Let us note that the term trust, in what it has as a fiduciary relationship, is used in
a variety of meanings that extend to cases of mandate, executorship, deposit,
guardianship, etc., figures all of which escape the concept of fiduciary business
and are They are fully regulated between us, corresponding rather to intuitu
personae relationships. The annotation is pertinent because in attempts to
introduce the figure into systems of Latin origin its operation can be excessive by
covering more possibilities than required, creating apparent duplicity of figures
and introducing many difficulties in its study. In fact, there are laws that have
defined and developed the concept, specifying its structural elements, the parties
involved and their obligations, the way in which the trust is created and
extinguished, etc., while others have attempted to introduce the figure by simply
authorizing the banks to perform trust tasks listed in a non-exhaustive manner.19
Even though there are numerous definitions, let us add as an illustration that of
someone who maintains "that the fundamental idea that supports the concept of
trust rests on an essentially simple basis, which consists of the division of a
property right with regard to its administration and its economic benefit;
according to it, one or more people have ownership of certain assets, which they
manage for the benefit of others or for a specific purpose. 20
1.3.3. Items
As in all trust businesses, in general, there are personal and property elements.
1.3.3.1. Personal
The three people who correspond to the classic figure of a trust are the
constituent or settlor, the trustee and the cestui que trust or beneficiary.
a) Constituent or settlor
The settlor is the creator of the express trust and his function is generally
transitory, since once he separates himself from a right that is part of his assets
and allocates it for a specific purpose, its reason for existing disappears. Any
person capable of having a legal or equitable right that is not non-transferable can
be so.
b) Trustee
It is the most important of the three. It is the trustee who, by virtue of the transfer,
acquires the rights that the legal title receives. To do so, you must have the
capacity to "acquire and retain legal title to the assets, be endowed with the
natural and legal capacity to perform the trust and have your domicile within the
jurisdiction of the competent court."2! Its capacity must be special and the needs
and requirements of the trust will vary. If he does not have it, the court may
remove him in defense of the interests of the beneficiaries.
It is possible that the functions of settlor and trustee coincide when the former
declares himself a trustee, in which case there is not really a transfer of assets but
rather a separation of them from the estate.22
If the trustee is not designated by the constituent or if the trustee is not accepted,
the invalidity of the trust does not arise, since in accordance with the principle of
equity that does not allow the frustration of a trust due to omission or refusal, the
trustee will be appointed by the court.
The trustee's acceptance may be express or tacit, but when pronounced it has
retroactive effects and the resignation attempted must be presented to the
competent court or in the manner provided for in the constitution of the business.
The position of the trustee is very far from that of the owner in Civil Law and
even from that of the fiduciary owner within the business that we study, since
there is not strictly speaking a possibility for him to abuse. There is, in effect, no
disproportion between means and end since it is a typical business, where the
obligations of the trustee are established by law and the beneficiary becomes the
owner according to equity with the set of powers that such fact it implies. For the
Latin jurist, the similarity is valid, according to which the trustee is presented at
the same time as owner of the assets for some purposes and administrator of the
same in favor of a third party, for the others.23 But perhaps, the most attractive
approach results from stating that "... the trust is more than a division of property
rights. The permanence of the relationship between the trustee and the
beneficiary to whom he must be accountable, the obligations to perform that
weigh upon him, the prerogatives that are conferred on him, bring him closer to a
guardian"And
You are not allowed to claim any nullity to avoid compliance with your
obligations, since in such case a "resulting trust" is created until the restitution of
the corresponding assets is carried out.
You must ensure the conservation of the assets by ordering repairs and taking
appropriate measures to prevent their deterioration, maintain
-keeping them free of liens, paying taxes and insuring the properties. If the
money is insufficient to pay the expenses caused by conservative measures, you
can sell part of the assets, in order to cover them or request credits for the same
purpose, after notifying the beneficiaries, who can object by contributing the
money. necessary for the effect.
You are not only obliged to preserve your assets but also to increase them and
obtain the best profits, but without making speculative or risky investments for
any reason. That is, the increase must result from the dedication and skill put into
managing the assets. They can be disposed of and replaced by others with greater
performance or security, as long as it is not prohibited, on the basis of observing
the rules on investment of funds in the most zealous manner.
You have the obligation to keep a rigorous account of your management to

present to the beneficiaries and submit it for their consideration, upon termination
of the trust. If you need to go to court to defend the existence and conduct of the
business, you must follow the trial through all instances until its termination.25
It can be a natural or legal person, a possibility that differentiates it from the

fiduciary, in our legislation, where it is usually a legal person and more precisely,
a banking or specialized entity, specifically authorized for this purpose.26
Finally, and in case of doubt about any aspect of the assignment, you can ask a
"judge in chamber" for advice and approval of your actions when you deem it
necessary. "The vigilance of the judge is an essential wheel in the functioning of
the trust."
c) Cestui que trust or beneficiary

It is the one in whose favor the trust has been established or exists. Your right is
called "equitable state" and is protected by principles of "equitable law" and not
"common law."
Those who are able to acquire legal ownership can also acquire equitable
ownership. The incapacitated, minors, insane, etc. may also be beneficiaries, and
on many occasions the trust is established to protect their interests. In private
trusts the beneficiary must always be a specific person. In those of a public
nature, the beneficiaries may be indeterminate and
They will be appointed by the Court if necessary.28 When the cestui que trust is
the settlor himself or when the trust is established so that upon his death the
assets pass to a third party, it is called a "living trust." 29
The assets that constitute the trust do not become part of its assets, even though
the interest or right that it generates with respect to the returns and the subsequent
delivery of the assets does enter, a right that is therefore negotiable, with some
exceptions.
In accordance with his rights, the beneficiary can exercise a set of actions aimed
at getting the trustee to carry out an operation or enter into a contract or to refrain
from doing so; some to obtain its removal and others to invoke real subrogation,
that is, to claim as assets of the trust those that have been acquired with its
money. It can also pursue the assets of the trust in the hands of third parties, as
long as the sale does not correspond to the powers of the trustee, unless they have
given consideration and were not aware of the violation of the terms of the trust.
1.3.3.2. Patrimonial
The trust is formed by a set of assets that constitute an independent unit and are
assigned to a specific purpose in accordance with the "trust deed".
Any valuable asset may form part of the trust if it exists at the time of its
constitution and is not non-transferable in accordance with the law. Furthermore,
for the set of assets to make up the trust, it is necessary for the settlor to part with
them and constitute them as a separate unit, not only from his assets but from the
assets of the trustee and the assets that he has in the same capacity, as well as as
from the estate of the cestui que trust Or beneficiary.
Ordinarily, the rights are established at the time of their constitution. Otherwise,
all those necessary to achieve the purpose proposed by the constituent will be
understood to be included.30
The degree of interference of the settlor in the management of the trustee allows
jurisprudence to determine whether the trust has been established or not. If it is
very high, is constituted in favor of the settlor and is revocable, it is understood
that the assets have never left his patrimony and, consequently, there is no trust.
The transfer of assets and their constitution as a separate unit is not enough. It is
necessary that it be given a specific destination, affecting the goods for a specific
or determinable purpose. Jurisprudence has considered that if the position of the
trustee is so broad that the Courts of Equity would not be able to establish
whether there is an abuse on his part, the trust is not considered validly created.3!
If the destination becomes impossible to fulfill and the fact does not in itself
constitute a cause for the termination of the trust, the English courts can establish
a similar one, which means that the intention of the constituent is duly fulfilled.
This possibility is very important in the case of charitable trusts in which
circumstances tend to change over time and which, if they do not have a resource
of this nature, could be frustrated.
Finally, and to highlight the value of the involvement of the assets as a cardinal
element of the figure, "it can be stated that the involvement dominates the
development of the trust; that its existence is a 'sine qua non' condition of its life;
that the powers of the trustee are largely determined by it; that the English courts
jealously control its strict compliance, and that in cases where this is necessary,
to better satisfy the purpose that guided the constituent, it can indicate an
analogous affectation, when the primitive approach is unattainable or too
burdensome.32
1.3.4. Classes
Even though there are numerous classifications, we present the one that seems
simplest and accepted by numerous authors. According to her, and due to the
way in which it is born into legal life, the trust can be voluntary or by operation
of law. Due to the actions of the trustee, it is divided into simple and special. For
the protected interest, in public or private.
1.3.4.1. ESCROW
It can be express or implied. The first (express trust), as its name indicates, is one
that is manifestly established by the Lord. The implicit trust is that which is
inferred from the will of the parties, that is, it results tacitly from it.33
The express can be executed (executed trust) which once constituted does not
require any subsequent act to produce its effects or to be executed (executory
trust) when the constitution is only the first step to carry out a set of acts later. It
can also be imperative (instrumental), which requires the trustee to rigorously
follow the instructions of the trustee, or discretionary (discretionary), which
grants the trustee a broad power of appreciation.
1.3.4.2. By operation of law
This can be interpretive (constructive trust), which is imposed on someone

who, having a fiduciary position, obtains personal advantages from it, or
resulting (resulting), which is the one with which someone who has assets
destined to form a trust that cannot exist is taxed. as such, during the time they
remain in their possession.
1.3.4..3. Simple or special

The first is equivalent to the old "passive use" consisting of passing the assets of
the settlor to the cestui que trust, with the trustee performing the function of
simple intermediary. It was prohibited by the customs law, repealed by the Law
Property Act of 1925.34 The special imposes on the trustee its set of defined and
complex obligations aimed at fulfilling the will of the settlor. Some authors
divide them into "instrumental" and "discretionary."
1.3.4.4. Public or private
The first is also known as charity or beneficence (charitable), looks at the general
interest and is required by the agent of the Public Ministry. The second says with
the interest of one or several people, but not with that of the community, as it is
not directly beneficial for certain social groups.
1.4. RELATIONSHIPS BETWEEN THE TRUST AND THE TRUST

BUSINESS
It seems interesting, to conclude, to point out the most notable differences

between the fiduciary business and the trust. One of them is that while two
relationships can be recognized in the trust business, even if they are
interdependent and seek a single purpose, the structure of the trust implies the
existence of a single business in which the elements make up a whole that is
opposable as such to third parties. , both in what concerns the property of the
trustee and in what it says with his obligations. For this reason, in the trust there
are ample guarantees for the parties, especially for the settlor, without the
possibility of abuse arising, at least before the law.
It can also be distinguished in that in the trust there is double ownership in

relation to the same asset or group of assets, while in the trust business there is a
single property right attributed to the trustee.
Another difference is that the trust business usually results from a bilateral
contract entered into between the constituent and the trustee, while the voluntary
trust normally arises from a unilateral act through which an asset is affected for
the benefit of a third party.
Finally, to compare the trust with some form of fiduciary business under Roman
law, we could say that the fiduciary business "cum creditore" would be contrary
to the English rule that the trustee cannot take advantage of the assets of the trust.
2. TRUST OR COMMERCIAL TRUST
It is now our turn to study the actual object of the chapter, that is, that form of
impure fiduciary business that seeks to translate the trust into schemes inspired
by European continental law. And limiting ourselves, in this case, to the transfer
of property for a specific purpose, which means leaving aside all those trust
orders that we have mentioned in other places, especially in the chapter on the
mandate and that were introduced in several of our countries as functions of
commercial banks through their fiduciary or mandate sections.35
The possibilities of trust assignments, as we said, are of the most diverse nature
and include, among others, the possibility of intervening in the issuance of credit
securities, especially bonds or debentures; play the role of trustees, executors,
guardians, judicial depositaries, representatives of absentees, etc., all within the
possibilities conferred on them by civil law; manage all kinds of assets; issue
participation certificates regarding the co-ownership of those who have
contributed certain sums to the entity for investment and, in general, carry out all
kinds of trust assignments that are carried out largely through the execution of a
mandate contract. . Therefore, even if in a good part of our countries these so-
called trust assignments coexist with the power to enter into trust or trust
business, in this chapter we will limit ourselves to studying the latter, with the
understanding that the most notable functions and notes of the first have been
seen in previous chapters.36
It is not easy to give a universal concept of fiducia or trust because in Latin

America different notions have been adopted that obey different theories about
the legal nature of the business. They have incorporated the theory of irrevocable
mandate in some cases, that of the patrimony of attachment in others, and that of
the transmission of property or other rights in order to fulfill a certain purpose
indicated by the constituent, trustor or trustor. In the latter case, the scheme is
presented through the transmission of the rights to achieve the specific purpose,
but with the warning that the proprietary position of the acquirer (trustee) is
limited by the obligations it acquires. And these are none other than those that are
related to the fulfillment of the purpose.
We can affirm, however, that the influence of these different theories exists and
different definitions are presented, the most general notion, the one that is
gaining ground and that corresponds essentially to the last of the three, would
allow us to define the trust as the legal business in by virtue of which one or
more assets are transferred to a person, with the order that he manage or dispose
of them and with the product of his activity fulfill a purpose established by the
constituent, in his favor or for the benefit of a third party.37
The fundamental problem that has sought to be resolved is that of reconciling the
rights of the fiduciary with those of the constituent and beneficiary, given the
impossibility of conceptually structuring a double ownership such as that existing
in English Law. For this reason, the definitions and the rules that develop them
have been used to establish a set of limitations on the fiduciary, specifying that,
although it is the owner vis-à-vis third parties, it lacks dispositive powers, except
those that have been conferred on it by the constitutive act or that result from
necessary for the fulfillment of the intended purpose or granted by law. Or it has
been decided to introduce the notion that the assets transferred to the trustee
constitute a special or autonomous patrimony, with notes that individualize it
from the general of the trustee and the beneficiary and translate a series of
advantages from the tax point of view, from possible seizures. by third parties,
etc.
The advances have been notable and we could maintain that there are currently
sufficiently elaborate legislative institutions in Latin America to allow the
development of this legal business that in its original form has achieved such
high importance in Anglo-Saxon countries.38
2.1.1. Classification from a banking point of view

Having made the previous comments, one might wonder why the trust or
commercial trust has been studied in the last part of the book if, as we have seen,
the tendency seems to be to transfer the property assets to the trustee with the
latter being responsible for returning them to the trustee. trust or transfer them to
a third party after a certain time. This is why, if it seems to meet the conceptual
requirements of credit businesses, it does not appear as a precedent for a passive
operation through which the bank obtains resources.
and in truth the answer is not easy because it seems clear that the resources
obtained by fiduciary assignments, at least in a good number of cases, allow the
bank to fulfill its intermediation functions, as occurs in the case of investment
trusts where their task is to place the
- sums received from your client. However, this is not always the case. There are
numerous types of fiduciary assignments or fiduciary businesses where the bank
cannot place resources indiscriminately but must limit itself to allocating them to
a purpose that does not correspond to an intermediary task. Furthermore, the
obligation to return or transmit is not always essential because it is possible in
many laws that for certain types of cultural or charitable activities, trust
businesses are established indefinitely over time, in which case the obligation of
the owners would disappear. credit businesses to return the equivalent amount
received.
For the above reasons, which, in summary, mean that the return of the assets is
not of the essence of the trust business, since there are exceptions that allow the
business to be carried out for an indefinite period of time, because in numerous
cases the assets that are the subject of the trust are not They are fungible, which
generates a restitutionary obligation of a certain kind or substance, and on the
other hand, insofar as the allocation of the resources does not allow in all cases a
free placement that results, far from it, from the bank's choice between the
different possibilities that the law would offer, if it is not limited to compliance
with certain instructions from your client, it is necessary to study this contract as
one of those that precede the execution of neutral or complementary operations,
typical financial management services.
2.2. LEGAL NATURE
From the analysis of the previous point and the review made of the definitions
contracted by the different Latin American legislations, it can be verified,
without difficulty, the presence of several theories that, in a simple way, we
present below.
2.2.1. Theory of irrevocable foundation
This theory supported by the Panamanian jurist Alfaro in his interesting effort
that led to the incorporation of the trust in Panama, has, however, been the object
of numerous criticisms shared later by the same author, who explained that, being
a novel and Having to make an effort to accommodate it to the traditional
schemes of legislation inspired by Roman Law, he wanted to use an expression
that, although imprecise and defective, in his opinion, nevertheless translated,
quite closely, the idea of the Anglo-Saxon trust, by establishing that once the
commission was accepted, the powers conferred were irrevocable.39
The theory has been criticized not only for the apparent inconsistency between
irrevocability and the mandate as a revocable contract, but also because, in
principle, the agent acts in the name and representation of his principal and even
when he does not have the latter, the legal transactions that it enters into are
intended to be settled in the head of its principal. None of this occurs within the
contemporary structure of the trust, in which the trustee acts as owner or holder
of the assets before third parties, carrying out business in his or her name or in
that of the trust, if desired, but not in that of the trust. constituent or for its
benefit, even if it directs its activity to the achievement of a certain purpose that,
as such, may be beneficial.4O
2.2.2. Affectation heritage theory
Supported by a distinguished French jurist, this theory has sought to explain the
legal nature of the trust through the study of its fundamental elements to affirm
that, within the possibilities of English Law, emphasis should not be placed on
the supposed obligations derived from the relationships between the trusts. parts,
since they are neither constant nor necessary and the modalities studied show that
one or the other may be missing, within the different solutions. Therefore, it must
be concluded that the only constant and essential elements in trust business lie in
the existence of an estate and a destination, from which it can be stated that "it is
a legal institution that consists of an estate independent of any subject of law and
in that the unit is constituted by an affectation that is free within the limits of the
laws in force and public order."41
The theory has been severely criticized for considering that it was the result of an
artificial construction because, to prove that the personal elements were not
essential, examples were taken of different types of trust, in one of which the
settlor is not necessary, In another, if a trustee is not appointed, he will be
appointed by the court and in many cases the beneficiary does not exist. But,
overall, there always has to be some personal element, linked to the trust in any
of its forms. Furthermore, it has been argued that the expression "affect" does not
have its own content in many of our laws and that, consequently, it cannot be
given the scope that the French jurist intended to assign it.42
If the observations are reasonable, we must confess, however, that the theory has
made great contributions to the proper understanding of the figure, because
without going to the extreme of thinking about a heritage unrelated to any
subject, what can be recognized, in the most of the legislations, is that the assets
received by the trustee form a set or patrimonial unit separate from the rest of the
assets of the institution and, what is more important, free for this reason from the
economic vicissitudes that could affect the trustor. , fiduciary and trustee, as we
will see. This is the great value of the contribution made by the theory, by
allowing recognition of the legal-economic autonomy of the transferred assets.
43
2.2.3. Trust business theory
This theory accepts that the commercial trust is a type of fiduciary business
because it contains two elements: real, on the one hand, constituted by the
transfer of assets or rights, and personal, on the other, constituted by the
mandatory limitations resulting from the agreement between the parties. It cannot
be stated, however, that there is a disproportion between the means used and the
purpose sought because in the case of typified figures, as is the case in our case,
the purpose sought must be achieved precisely through the file. of the
transmission. Furthermore, it should be noted that it would not, therefore, be a
pure fiduciary business since it is not based exclusively on trust, but rather the
rights and obligations of the parties are carefully regulated by law without the
possibility of abuse, in the sense of betrayal of the will of the constituent that
remained unpunished because there was no different control over its fulfillment
than the fiduciary's own conscience, as happened in the primitive manifestations
of these businesses. For this reason, and for this aspect, it would have to be said
that it is a kind of impure trust business.
We lean towards this theory because we believe that, through the mandatory
relationship enshrined in the law, it is easy to explain that the fiduciary has a
property right restricted and directed exclusively to fulfill the purpose provided
for in the contract. And for this aspect, it should be added that one of the most
notable characteristics of assets acquired under fiduciary ownership is that they
are constituted, as we said, in an autonomous or special patrimony, with
consequences that are even more defined when it comes to countries in which
which the figure is recognized, but which in any case seeks to detach the set of
assets received from the assets of the fiduciary, so that none of the effects that
could be predicated in relation to the latter occur with respect to the latter. The
assets received in trust are not increased or decreased because such things happen
to the assets of the trustee, but as an exclusive consequence of the success in its
administration or of the difficulties and losses that are endured in it.
It is, therefore, a transfer of property for the achievement of a specific purpose,
which explains why the normal powers of the owner are subordinated to the
mandatory terms provided for in the contract, all of which constitutes a type of
impure fiduciary business.
. 2.3. LEGAL CHARACTERISTICS
The trust or commercial fiducia, in its most representative form, is a main,

onerous and commutative contract, of instantaneous execution or of successive
tract, as the case may be, typified in some legislations, as we already indicated
and atypical or unnamed in the rest. There are two characters, however, on which
we must pause a little more to make the pertinent explanations. We mean that it
is also bilateral and, in many countries, solemn.
Even when the operation of the trust is explained in light of a tripartite
relationship, the truth is that as a legal act it can be unilateral or bilateral,
depending on whether it is a trust established by will or an inter vivos act. And
even the point is debatable because within the legislations in which the non-
designation of a trustee or its non-acceptance does not invalidate the trust but
rather it is possible for the judge to proceed to appoint, in the first case, or
designate a substitute, in the second , it could be stated that the trust would be a
unilateral legal act, that is, producing legal effects by the sole manifestation of
the fiduciary's will.
Notwithstanding the above, the truth is that in our legislation the majority's
propensity to regulate it as a bilateral legal transaction, perfectable by the
agreement of wills between the trustor and the trustee, seems clear when it is a
trust constituted by an inter vivos act.44
Neither as a legal transaction nor as a contract can it be said to be Plurilateral

because, in the first case, the will of the trustee does not usually participate in the
constitutive act. Even if an agreement of wills is required, it occurs between the
trustor and the trustee. The trustee has the role of a third party and the trustor
intervenes in the manner of someone contracting for another, without an absolute
simile being able to be made between both figures.45 Nor do obligations arise for
the trustee, at least as an essential and representative element of the contract,
unless possible charges are imposed on his head, in which case he would have to
expressly or tacitly accept the constitution of the trust. However, what usually
happens is that only rights are enshrined in their favor.
Regarding formalism and solemnities, we can affirm that there is a wide range of
possibilities that ranges from the perfection of the contract, by simple verbal
manifestation, typical of the consensual form, to the existence of solemn
requirements such as being recorded in an authentic writing or in a public deed,
passing through the writing as a simple means of proof when it comes to a trust
established by an inter vivos act. The testamentary trust must be subject to the
solemnities inherent to this act of last will in each country. Regarding the first, it
can be stated that the trend is for the transaction to be concluded in writing,
endowed with authenticity.46
Since the trust involves the tradition or transfer of assets and rights, it must be
subject to the formalities established in each legislation, which in most cases will
require registration in the competent office for those businesses that involve real
estate; the notification to the debtor when it comes to assigning personal credits,
the simple delivery or the endorsement and delivery or both, plus the registration
in the books kept by the issuing company, when dealing with securities,
depending on whether they are to the bearer, to the order or nominative,
respectively; and finally, the simple delivery when there are furniture among the
transferred assets. The effectiveness against third parties will usually depend on
the form and compliance with the requirements regarding the transmission. Some
legislation requires that when the constitution, modification or termination of the
trust is a commercial act, it must be registered in the commercial registry. 47
Probably the most important aspect that should be highlighted from the Latin
American experience is the classification of the contract as commercial and its
professionalization, in the sense that it is not a business that can be carried out by
anyone, as far as the person of the trustee is concerned, as we will see shortly, but
that this function has been reserved, in the most representative examples, to
financial entities. Consequently, its use, in practice, has been very much oriented
towards "doing business", with which, without abandoning the possibilities
alities rich in developments of Anglo-Saxon law, as an instrument of estate
planning and an ideal mechanism to assist the courts in their jurisdictional
functions, since both are received and carried out, they have been enriched and
complemented by emphasizing business activities , for which bankers are
particularly gifted. If we add to this circumstance its finalist structure, then
everything is designed to achieve a result and avoid frustration; the constitution
of an autonomous or special patrimony, which we will see later, and its natural
elasticity to integrate complex businesses with its use, we can undoubtedly
understand the notable contemporary development that the figure has
experienced.
It should be added that, as it is impossible to carry out complex long-term
projects guaranteeing that there are no conflicts, the very high possibility that
differences may arise between parties with various interests, often conflicting,
means that the presence of a fiduciary allows us to have a kind of " balance" that
ensures that the balance is maintained and protects the legitimate interests of
those involved. Being able to count on a friendly permanent conciliator, during
the life of the contract, constitutes another obvious value of the figure.
2.4. PARTS INVOLVED
With the exception that the presence of the three is not always essential for the
birth of the business, nor do obligations arise for all of them, let us study the
three categories of people who can intervene in the trust, namely: trustor, trustor
or constituent, on the one hand, trustee, on the other, and trustee or beneficiary,
finally.
2.4.1. Trustor or trustor
It can be said that any person capable of disposing of their assets can establish a
trust. This does not exclude an incapacitated person from acting through his or
her legal representative, as long as he or she meets the requirements established
by law to make the aforementioned transfer. In addition to physical or natural
persons, legislation accepts the possibility of legal entities being trustors,
including some public law entities and even certain judicial or administrative
authorities. In the legislation that establishes this last possibility, the fact that they
are empowered to transfer assets that they would have in their possession for
"safekeeping, conservation, administration, liquidation, distribution or disposal"
has been rightly criticized, since not in all cases the rights of the authorities
would allow them to transfer them into property.48
The trustor can be a trustee at the same time, when he establishes the trust in his
favor.
2.4.2. Trust
The trustee is the one who acquires the assets and undertakes to manage or
dispose of them to achieve the purpose indicated in the constituent act. He is,
therefore, not only an owner vis-à-vis third parties, but also the executor of the
constituent's will expressed by inter vivos act or by will.
Most Latin American legislation has introduced a restriction regarding the person
of the fiduciary, stating that only banks authorized to do so or trust companies
that have also received express authorization can act as such. 49 The exception is
constituted by some countries in which it is still allowed that the fiduciary can be
a natural or legal person without special qualification or state authorization.
Several trustees may be appointed to carry out the assignment jointly or

separately or so that some succeed others in the event of non-acceptance or
failure. 5 I If the order is fulfilled jointly, there are numerous provisions in the
laws that, in general terms, establish that in the event of a tie the judge will
decide; If the number is odd, the decision will be by the majority; Whoever saves
his vote will not be responsible for the actions of others, unless due to acts or
omissions he subsequently prohibits them, etc. Experience seems to suggest that,
just as a collegiate body works well at the management level, setting objectives
and defining policies to achieve them - which is what, ultimately, a Board of
Directors does - it is less efficient at the execution level, which It is what
frequently corresponds to the fiduciary in pursuit of the stated purpose. Here joint
intervention or the presence of a plural fiduciary should be the exception rather
than the general rule. The substitute, for his part, is not responsible for the actions
of his predecessor, unless he negligently covers them up or does not take
corrective measures aimed at improving decisions that could be classified as
objectionable, including the exercise of legal actions against his predecessor.
In the absence of a trustee due to non-initial designation or any other subsequent

cause, he may be appointed (at the initiative, in some countries of the settlor and
in others, of the trustee) with the intervention of the judge of the trust or of the
control entity to which have been assigned such functions. 52
The tendency of legislation is to impose on the fiduciary the obligation to accept,

except for just cause. However, if the same is not established in all of them, that
is, non-acceptance is possible in some, what seems to constitute a general rule is
that once accepted it is not possible to renounce the commission, except for just
cause qualified by the judge or the competent entity, who must give their
approval before the resignation takes effect.53
The trustee may never be a trustee, that is, he may not benefit as such either from
the fruits or products of the assets received or from the subsequent transmission
or better, the consolidation in his head, of the assets with respect to which he is
the fiduciary owner. . This rule of obvious convenience and which eliminates,
from the outset, numerous hypotheses of conflicts of interest, has seen some
exceptions that seem to us to be criticised. 54
2.4.3. Trustee
It is the person who, by virtue of the legal transaction, must receive the benefits
derived from the fulfillment of the order and, eventually, the trust assets
themselves upon expiration of the stipulated term.
The trustee must be a person capable of receiving rights, which leads to affirming
that any person can be a trustee, since by the fact of being one he or she enjoys
general capacity or enjoyment. 55 It must be emphasized, however, that the
person cannot have particular disabilities or disabilities when he must receive the
trust assets and these are transmitted by testamentary means. Whoever, in
accordance with the laws of a country, is unworthy or incapable of receiving
certain assets or certain people through succession, could not acquire them either
through the trust business because what is sought with the respective provisions
is to prevent the trust from allowing businesses prohibited by law. 56
For the rest, a person incapable of exercising, a minor, for example, may be a
beneficiary without any difficulty and will act before the trustee and before third
parties through his legal representative. Remember, if necessary, that one of the
reasons that explain numerous types of trust is to transmit assets for the benefit of
incapable people who, because they cannot take care of themselves, want to be
protected by the constituent through the transfer of assets to a serious and
professional entity such as the bank.
It is normal for the trustee to exist at the time the business is completed.
However, some legislation establishes the possibility that this may not happen,
reiterating the principle that the existence of the trustee is not essential for the
perfection of the business. Sometimes non-existence is conditioned when it
comes to natural persons, on them being at least conceived at that time or coming
into existence within the maximum period provided for the trust by the business
or the law or on being simply a trust with a lawful and determined purpose
where, in the event of doubt that may arise for the trustee, due to this
circumstance, a consultation with the judge or the control entity will allow the
destination of the resources received to be specified. 57
There is a clear tendency to prohibit trustee substitutions, although some

legislation allows them with certain limitations. These may consist of the
substitute existing when the right of the first beneficiary arises or being alive or
conceived at the death of the trustor or, finally, that the substitutions occur within
the maximum term provided for the business. 58
It should be stated that the trustee can be the same trustor and that there can be
several, in which case mechanisms such as the majority, the intervention of the
judge, etc. are established by legislation to exercise their rights.
There is a complex aspect, derived from the circumstance that in trust

transactions concluded for onerous reasons, it could be stated, by some, that both
parties obtain benefits from the fulfillment of the order. In fact, concern does not
exist in businesses in which the cause is eminently gratuitous, because there the
clarity regarding the person of the beneficiary leaves no doubt. But, on the other
hand, when it comes to the transfer of an asset so that, in turn, it is later
transferred to a beneficiary who has already paid the price of the same or who
must have paid it before that moment, one might ask whether, In a broad sense,
the constituent would not benefit, likewise, from the result of the fulfillment of
the order, as he would be released from his obligation to transfer. And the same
thing could be said in the guarantee trust modalities in that the use of the asset or
its disposal to cancel the rights of third parties implies, correlatively, the
liberation of the constituent-debtor from the respective obligations.
We had maintained that the doubt seemed more apparent than real, because in the
sense in which the law establishes it, the beneficiary is the one in whose favor the
benefit or benefits implicit in the fulfillment of the purpose has been consecrated,
without the mere recognition that Such a circumstance frees debtors obliged to
act in that sense and, for this reason, benefits them, could introduce confusion on
the matter. It is evident, we added, that every debtor who pays feels freed from a
burden that could be coercively demanded of him and, from that point of view,
his satisfaction benefits him. But it is, we concluded, a more ethical than legal
concept. It is clear that if there is a creditor and a mechanism is created to ensure
that his rights are satisfied, he is, legally, the beneficiary of the business, so from
a moral point of view the result obtained also benefits the debtor who complies
with this obligation. via.
We must rectify that position because it seems to us that we were starting from a
sophistry. In effect, the benefit that the debtor trustor obtains is not merely moral,
it is, at the same time, legal, since the full fulfillment of the order leads to
releasing him from his obligation with what this means as positive and concrete
in the field of business relations. . For this reason, we now think that there is
nothing to prevent, without, of course, ignoring that the third-party creditor is the
normal beneficiary of the business, this capacity can be simultaneously admitted
to the head of the debtor constituent.
and the issue would be merely rhetorical if it did not mediate in many
legislations, as we will see, the consecration of precise powers in favor of the
beneficiary, which include a set of actions both against the fiduciary and the
control entities and the judges, and that, Faced with the new position that we
expressed, it would allow the trustor to exercise them in most of the times.
-------------------------------------------------------------------------------
14. BERNATE, Alejandro. "The Trust in the United States." Magazine of the
National University, No. 27, 1968, p. 55.
15. RENGIFO, Ramiro. "The Trust. National legislation and comparative law".
Small Forum Collection. 1984, Bogotá, pp. 30 And ff.
16. BATIZA, Rodolfo. "The Trust." Theory and practice. Ed. Porrúa, Mexico,
1959, pp. 29 And ff. COPETE, Ignacio. "The Trust." Ed. ABC, Bogotá, 1940, p.
53.
17. BATIZA, Rodolfo and BERNATE, Alejandro ops. cits. pp. 30 and 57
respectively coincide in all, except in the third that the second concludes at the
end of the 17th century and the first extends until the end of the 20th century.
XVIII. RABASA, Oscar. "Anglo-American Law." Ed. Fund of Economic
Culture. Mexico, 1944, p. 270 distinguishes the following: a) before the law of
uses, b) the law of uses, c) the effects of the law, and d) the trust.
18. SERRANO, cited by VILLAGORDA, op. cit., p. 18.
19. Among the first we can mention Peru, Argentina, Paraguay, Bolivia,
Venezuela, Nicaragua, Guatemala, El Salvador, Mexico, Panama, Ecuador and
Colombia in their current Commercial Code. Among the seconds are Chile,
Bolivia, Costa Rica and Colombia in Law 45 of 1923.
20. POWELL, cited by BATIZA, op. cit., p. Four. Five.
21. LEWIN, cited by BATIZA, op. cit., p. 49.
22. RENGIFO, op. cit., p. 72. Colombia. Exceptional case of art. 807 C. c.
23. GUISAN, cited by COPETE, Ignacio, op. cit., p. 68. In the same sense
CLARET and MARTI, Pompeyo. "Of the Fiducia and the trust." Study of
Comparative Law. Ed. Bosch, Barcelona, 1945, p. 51.
24. BERAUDO, Jean-Paul. "Les trust Anglosaxons et le droit francais." Ed.
LGDJ. Paris, 1992.
25. BÉRAUDO, op. cit. notes that "...the powers of the trustee are not truly the
counterpart of his obligations. They are rather prerogatives that allow you to
achieve the purposes of the trust. They result, for the most part, from the fact that
the trustee is the owner of the assets of the trust but rather than flowing from his
status as owner trustee, they are subordinated or result from an express or implied
provision of the articles of incorporation or a statutory provision. or authorization
from the competent judge".
26. France. In 1992, Bill No. 2583 was presented to Parliament for its
consideration, which did not become law, but which constituted a very complete
elaboration, by virtue of which it was intended to incorporate an institution such
as the "trust" into French law. Due to the academic importance of the proposed
concepts and the conceptual structure that supports it, we will mention it in some
sections. In the particular that is being mentioned, the project provides that the
fiduciary can be a natural or legal person, not specialized, as is also the case in
English law.
27. CLARET, Pompey, op. cit., p. 52.
28. BOGERT, cited by SERRANO and this, in turn, by VILlAGORDA, op. cit.,
p. 25. BERNATE, Alejandro, op. cit., 29. COPETE, Ignacio, op, cit., p. 74.
30. COPETE, Ignacio, op, cit., p. 68. He comments that what technically seems
simple causes serious problems in England due to the large number of
overlapping rights that the law recognizes over land ownership.
31. CLARET, Pompey, op. cit., p. 68.
32. COPETE, Ignacio, op. cit., p. 66.
33. The Hague Trust Convention, signed in 1985 and which came into force in
1992, only applies to those created voluntarily and whose proof is in writing.
This would exclude implicit trusts. BERAUDO, op.cit. maintains, however, that
since these can have two modalities, the so-called "resulting trust" and the so-
called "constructive trust", those are also covered by the Convention. To support
his position he expresses: "The 'resulting trust' is born from the will of the
constituent. A 'resulting trust' can come into being when an express trust has
come to an end, for example on the death of all the beneficiaries, and the assets
remain in the hands of the trustee. Then it is presumed that he has not received
them in a personal capacity, and he remains as trustee (in fact) until the assets of
the trust have been returned to the constituent or distributed to his heirs. There
may also be a 'resulting trust' when a person purchases an asset with the money
of another, it is presumed that the lender of the money has understood to
establish a trust for his benefit over the asset acquired with the borrowed funds.
The 'constructive trust' is created by the judge against the will of the constituent,
to force him to repair damage or to restore unjust enrichment. He is excluded
from the domain of the Convention. - But a 'constructive trust' can also exist prior
to a judicial decision if the parties anticipate the decision by an amicable
agreement. In this particular situation, the will expressed by the constituent will
bring the trust into the field of the Convention" (p. 219).
34. BATIZA, Rodolfo, op. cit., p. 56.
35. Ecuador, art. 198 LGB; Chile, art. 86 L. of B.; Peru, art. 221 No. 32 And art.
275 L. of B.; Argentina, L. 8875/12; Bolivia, L. 1488/93; Costa Rica, L. 15/36;
Colombia, art. 105 of the repealed L. 45/23.
36. V. Supra. Chap. XIX, 9.3.
37. Colombia, art. 1226 C. Co.; Venezuela, art. 1st Law of Trusts; Honduras, art.
1033 C. Co.; Costa Rica, art. 633 C. Co.; El Salvador, art. 1233 C. Co.; Bolivia,
art. 1409 C. Co. They enshrine the theory of affectation heritage: Mexico, art.
381 LGTOC and Guatemala, art. 766 C. Co. and establishes that of the
irrevocable mandate: Panama, art. 1 L. 1 a/84.
38. In the last decade of the 20th century the figure was incorporated in Peru, L.
26702/96; Argentina, Trust Law (L. 24,441); Costa Rica, Law to modernize the
Financial System of the Republic; and Paraguay, Trust Business Law (L.
921/96).
39. COPETE, Ignacio, op. cil., p, 121 and SS.; BATIZA, op. cyl., p. 66;
GOLDSCHMIOT, Roberto and EDER Phanor. "The Trust in Comparative Law."
Ed. Arayu, Buenos Aires 1954, pp. 111 And ff.
40. Colombia. The Banking Superintendence maintained that the trust is a legal
transaction distinct from the mandate (Official Letter OJ-379/73). Later,
however, in a position that we do not share, he defended the thesis according to
which "it can be said that in the transfer fiduciary business or commercial trust,
there is a true qualified mandate - commission - preceded by a formal alienation
of the ownership of the assets." trust assets". DB-777 concept from 1987.
41. LEPAULLE, cited by BATIZA, op. cit., p. 76.
42. QUINTERO, Carlos. "The Trust in Mexico. Economic and legal aspects of
its development". FELAB Magazine..,N, N" 22, Ed. Kelly, Bogotá, 1975, p. 295.
43. GIRALDO ARISTIZÁBAL, María Helena, SANÍN DE SAFON, Nohora
Lucía. "The Special Assets of the Mercantile Trust." Ed. Excelsior, Bogotá,
1982. They lean towards this intermediate solution, compared to the opposite and
extreme positions enshrined by subjective and objective theories on heritage. In
effect, they understand that the existence of several assets is possible, but always
in the head of a person, that is, with a subject of law and they admit that the
purpose allows recognizing the independence of these separate assets. They
believe that it would be more technical, then, to speak of special and non-
autonomous assets, because these suggest the nonexistence of a subject, a
possibility that they reject. Defining it, they affirm that "Special Heritage is a set
of active and passive legal relationships of economic content, which constitute a
legal universality that in turn is part of another legal universality - personal
heritage - that corresponds to the same person and tends to a specific and
exclusive purpose due to which a limitation of liability occurs", p. 48.
44. Venezuela, art. 3rd L. of F.; Guatemala, art. 770 C. Co.; Costa Rica, art 635
C. Co.; Panama, art. 1st Law 1a/84; El Salvador, art. 1234 C. CO. In Mexico, art.
387 LGTOC, the doctrine is found. RODRIGUEZ, J. "Commercial Law", T. 11,
p. 120 maintains that normally, the settlor establishes his will in an inter vivos act
or in his will... all of this independently of the acceptances of the trustee and the
trustee, which for this reason are not essential manifestations of will." BATIZA,
op. cit., pp. 109 And ff. And 155 And ff. maintains the opposite opinion saying
that "the alleged legal obligation for fiduciary institutions to accept the trusts
entrusted to them, apart from being contrary to consecrated principles of our
constitutional law, does not prevent the possibility of excuse, hence even when
the law is leans towards the opposite situation, the contractual nature of the trust
is imposed, making the acceptance of the trustee an essential element for its
existence". Honduras enshrines both possibilities, as it establishes that "the trust
may be established by an inter vivos act or by will, depending on the
circumstances, and as a unilateral act or as a contract, between two or more
people", art. 1034 C. Co. In the same sense, Bolivia, art. 1411 C. CO.
45. BATIZA, op. cit., pp. 122/3 points out the differences, among which the most
important, in our opinion, is that "in the trust, unlike the stipulation in favor of a
third party, the revocation of the settlor is not conditional on the acceptance of
the beneficiary... ". Regarding the parties involved, RODRÍGUEZ, J.
"Commercial Law", T. 11, op. cit., p. 121 that "not two, but three parties can
concur in the constitution: the trustor..., the trustee... and the trustee who
contracts them (rights and obligations) against the trustor and against the trustee.
Given the legal unity of the business, we can say that we are faced with a case of
plurilateral contract or business...
46. Panama, art. 10 Law 1a/84 "...by public or private instrument..."; El Salvador,
art. 1234 C. Co.; Colombia, art. 1228 C. Co. and Guatemala, art 771 C. Co.; by
public deed. In the first, it has been specified that the public deed must be
registered "according to the nature of the assets." This has led some authors and
even the Council of State to maintain that, in the case of transactions involving
movable property, only a private document will be required. Additionally, the
Bogotá Chamber of Commerce certified in 1989 that this was commercial
custom. Venezuela, art. 3rd L. of F./56 per authentic document. Costa Rica, art.
635 C. Co.; Honduras, art. 1052 C. Co.; Mexico, art. 387 LGTOC and the Hague
Convention, in writing. RODRÍGUEZ, J., op. cit., p. 125 warns, for the latter
country, that "writing in writing is not an essential element, but rather a
requirement of proof."
47. Venezuela, art. 5° L. of F.
48. Honduras, art 1039 C. Co.; Mexico, art 3851nc. 1st LGTOC; BATIZA, op.
cit. p. 139.
49. Venezuela, art. 12 L. of F.; Mexico, art. 385 LGTOC; Honduras, art. 1040 C.
Co.; Guatemala, art. 768 C. Co.; El Salvador, art 1238 C. Co. and 67 L. of B.;
Colombia, art. 1226 C. Co.; Argentina, art. 5 Law 24,441. BENELVAZ, Héctor,
"The Banking Trust." FELABÁN Magazine N" 12, 1972, p. 74. In Venezuela
there is an exception, since a fiduciary can be "any person capable of contracting,
in the unique and exceptional case, trusts established by the competent judge, as
a consequence of a trial for alimony" cited by BERHMAN, Marielisa Rugeles de.
"The Venezuelan Trust Law", Rev. FELABÁN, No. 8, 1974, p. fifteen. In this
specific case and in the quote from Argentina, however, these are fiduciary
assignments, apparently, rather than trust... It is interesting to note how in Canada
one of the four pillars of its financial system is made up of Trust Companies, in
relation to which it can be stated that the legislation of Quebec, enacted in 1987,
constitutes one of the most complete on the subject.
50. Panama, art. 19 Law 1 a/84; Costa Rica, art. 637 C. Co.
51. Honduras, art. 1042 C. CO.: Costa Rica, art. 640 C. Co.; Guatemala, art. 774
C. Co. In Venezuela the appointment of substitutes is possible, but it is
established that "there will be only one trustee for each trust", art. 13 L. of F.
52. Costa Rica, art. 638 C. Co.; Panama, art 22 Law 1 '/84; Honduras, art. 1041
C. Co.; Mexico, art. 385 LGTOC; Venezuela, art. 13 L. of F.; Bolivia, art. 1412
C. CO.
53. He is obliged to accept the position and can only excuse himself for serious
reasons: Honduras, art. 1047 C. Co. You can only resign for just cause:
Colombia, art. 1232 C. Co.; Costa Rica, art. 646 C. Co.; Venezuela, art 20 L. of
F.; Mexico, art. 385 LGTOC.; Panama, art. 23 Law 1'/84.
54. France. Bill 2583 states that "when the trust is made for guarantee purposes,
the trustee may be the beneficiary under the conditions mentioned in the contract
(art. 2062) Mexico. LGTOe, art. 400 added at this point by the Decree of May
23, 2000.
55.V. supra, chap. 1, 52.
56. Honduras, art. 1041 e. ea.; Colol7)bia, Tít. V, eE 007/96 SB.
57. It must come into existence within the term of the trust: Colombia, art. 1229
C. Co.; Panama, art. 18 Law 1 a/84. It may not exist if the purpose is lawful and
determined: Mexico, art. 390 LGrOC; Honduras, art. 1045 C. Co. If no trustee is
designated, your rights correspond to the Public Ministry: Guatemala, art. 779 C.
Co.; Mexico, art. 390, 2 LGTOC.
58. Person that exists when the right of the first beneficiary arises: Venezuela,
art. 8 L. of F./56. People who are alive or conceived at the death of the trustor:
Costa Rica, art. 660 C. Co.; Mexico, art. 394 LGroc. Within the maximum term
of the business: Honduras, art. 1043 C. COL At any time, Panama, art. 16 Law 1
a/84.
2.5. OBJECT OF THE CONTRACT
2.5.1. One or more assets
In general terms, all types of assets and rights can be established as a trust, except
for those that are very personal to the trustor, which, in general, are never
susceptible to alienation. When talking about the solemn declarations we saw that
the nature of the transferred assets may imply the completion of certain
formalities, such as registration when it comes to real estate, notification when it
comes to personal credits, etc. Some legislation specifically provides that
property or property rights may be transferred to the trustee, which always
happens, but at the same time establishing rights of usufruct, use or habitation in
favor of the trustee. In this case, in addition to the ordinary limitations that limit
the natural powers of the fiduciary owner, this would in truth be nothing more
than a bare owner, with the beneficiaries being usufructuaries or holders of the
rights of use or habitation. 59
2.5.2.
Autonomous heritage
Based on the theory of affectation, it considers the assets received in trust as
forming an autonomous patrimony or assigned to a purpose, in terms that cannot
be confused with the assets of the trustee.6O This principle is translated into
several characteristic notes:
2.5.2.1.
Assets separated from the rest of the assets
The separation required is above all accounting and seeks to ensure that the
assets constituted in trust are not confused with the trustee's own assets or with
those corresponding to other trusts held by the entity. It assumes the existence of
separate accounts for each of the trusts with precise indications about the
constituent, the beneficiary, etc., so that there is no doubt about the way in which
the increases received, the charges made, etc. are constituted.
This is a common characteristic as it extends to mere fiduciary assignments, in

relation to which accounting separation is also required. In general, it
corresponds to the way in which the accounting records must clearly reflect the
difference between own assets and those held on behalf of third parties, in the
case of orders or of which one is the owner, in the event of the commercial trust,
but forming a special patrimony in the head of the trusteeY
2.5.2.2. Excluded from the general guarantee of the trustee's creditors
In several places we have stated that the assets of a debtor constitute a general
pledge in favor of his creditors. Although there has been an entry of new assets
whose ownership lies with the head of the fiduciary entity, the application of the
autonomy of the patrimony leads to maintaining that its creditors cannot take
advantage of such increase or pursue the respective assets, because, and here we
could return Under English Law, while the trustee appears as the legal owner,
others actually appear as beneficiaries of such rights. There is no risk for the
trustor or the beneficiary, since the economic vicissitudes that the trust entity
may suffer will not compromise the fate of the assets received.
2.5.2.3. Excluded from the general guarantee of the trustor's creditors
Making a parallel with the previous case, the transfer of the assets made by the
trustor by separating them from his assets prevents his creditors from pursuing
them with an exception, which if in some way impairs or weakens the scope of
the principle of patrimonial autonomy, it is explained to avoid the creation of
trusts in fraud of creditors. This exception, frequently criticized, consists of the
assets being liable for the obligations contracted by the trustor prior to the
constitution of the trust.62 It may also consist, more broadly, of the assets being
used to respond to the creditors of the inheritance, in the case of testamentary
trusts.63 But, regardless of this possibility, there are undoubted advantages in
favor of the trustor with the application of the principle. Take the case of a
wealthy businessman who works, however, in a high-risk activity, who, in order
to avoid compromising his entire assets in the future, transfers a part to a trust
entity in order to constitute a reserve, provide to the education of their children or
any other similar. If such economic disorder occurs later, the debts that may arise
then will not confer on their holders
any right over the assets transferred in trust.
2.5.2.4. Excluded from the general guarantee of the trustee's creditors
If the trustee is not the owner and ordinarily has, at most, an expectation
regarding the transfer of the assets and/or receives their fruits periodically, his
creditors cannot claim any right over the assets in trust although, of course, Yes,
they can seize the fruits produced by them that are intended for them. In the latter
case, because these are property rights in your head that, for this reason, are
responsible for debts in favor of third parties.
2.5.3. They guarantee the obligations contracted to fulfill the purpose
If provisions are established to preserve the autonomy of the assets against

attacks by third party creditors of the parties, the same cannot be done, however,
when it comes to obligations validly contracted to obtain the purpose provided
for in the constitutive act. As we will see, the trustee has all the necessary powers
to carry out the assignment successfully except those that the trustor has reserved
or that are prohibited by legal mandate. But, if the restriction does not exist or
you are expressly authorized to do so, if you acquire obligations with third parties
in the process of executing the order, it is logical that such obligations be directly
supported by the trust assets, without prejudice to the liability that the interested
parties may have. later deduct from the fiduciary in case of excess of his duties or
the adoption of reprehensible conduct, to which non-compliance with obligations
and negative consequences on assets could be attributed.
2.5.4. They must return to the trustor
At the end of the trust, the assets must return to the trustor or his heirs if nothing
else has been established. This means that, except in those cases in which, by
exception, the trust can be held for an indefinite term, it is normal that there is an
expiration period and since the trustee cannot at any time become owner of the
assets, according to the general rule, they must pass to someone, who may be the
beneficiary or must return to the trustor if something different has not been
provided for by the trustor.64
An interesting provision that exists in some countries is that, in the case of return
of the assets when they are real estate, and we would say all those that have had
to be transferred with certain formalities, it will be enough for the fiduciary
institution to enter the declaration in the document. and that it be registered in the
respective registry office. From which it would result that the transfer of the
property in return, which normally had to be done by public deed, would be
carried out by that simple file.65
2.6.
PROHIBITED BUSINESSES
2.6.1.
Secret trust business
This restriction constitutes one of the most evident evidence about the legal
nature of the trust as an impure fiduciary business, in which the rights and
obligations that regulate the relationships between the parties are perfectly
defined and protected by law. 66 Because within the theory of pure fiduciary
businesses it is precisely in the secret, non-externalized orders and agreements
where its extraordinary strength lies and where the transferring party is released
exclusively to the trust that the fiduciary acquirer deserves. . However, most
legislation is inclined to prohibit secret trusts. An unresolved problem remains,
since it does not properly correspond to the commercial trust but, in the countries
in which it exists, it is part of the inheritance law located within the broader
framework of Civil Law.67 We refer to the so-called fiduciary executors, which
we mention At the beginning, they receive a portion of the deceased's assets
through testamentary means, with the confidential charge of carrying out certain
purposes, with respect to which no explanations or proof of their fulfillment can
be required.
Perhaps the most prominent type of pure fiduciary business that can be found in
Latin American legislation, because, as can be concluded without difficulty, in
this type of testamentary assignments the deceased acts based on the absolute
trust that the executor deserves in him and depends on the good faith with which
he executes his assignment.
Note that if the majority of legislation establishes a written and authentic form
for the constitution of the trust, if not notarial, the constitution of a secret trust is
by definition inconceivable because, even if it were not an essential element, the
written form would have to be considered. as a solemn testimonial. The same
may occur when the fiduciary is a professional in the financial sector if the
regulations of the central bank or the supervisory authority and the general
accounting regulations lead to an unequivocal record of the conduct of the
business. In this event, one will be the reserve or bank secrecy that allows the
business to be kept confidential, as a general rule, and another will be the
circumstance that, if necessary, for a judicial investigation or in the event of a
conflict between parties entitled to access the information, it may be the reality of
what happened is known, with which, without hesitation, the business cannot be
conceived as having ever been secret.
2.6.2.
Successive trusts
This prohibition, which we discussed when talking about trustees, aims to
prevent the old fiduciary substitutions through which ownership of certain assets
was intended to be perpetuated in a single family. There are, however, exceptions
linked, as we said, to the substitute existing at the time of the death of the trustor
or at the birth of the right of the first beneficiary or to being present, in any case,
within the maximum term established by law. or the business for its duration.
The exceptions are not universal and there are countries in which the successive
trust is simply prohibited, while in others it is specified that the prohibited one is
one in which the substitution occurs due to the death of the first beneficiary. That
is, if the substitution must be carried out for any other reason, it could not strictly
be spoken of as a successive trust, since what the law finds reprehensible in these
countries is the establishment of succession orders that prevent the first
beneficiary, in practice, freely dispose of their assets due to death.68
2.6.3.
Those celebrated over a certain period of time
It can be stated that Latin American legislation is classified into two large groups
with regard to this type of prohibited business: those that establish as a general
principle that the trust is indefinite, but establish exceptions to which a time limit
is applied, and those that establish a limit in time to which, however, exceptions
are made.
In those of the first group, it is concluded that the absence of a time limit applies
to those trusts in which the beneficiary is a natural person. The limit would then
result from the life itself and the restriction on successive trusts that we saw in
the previous point. The restrictions apply, then, to trusts in which the beneficiary
is a legal entity, but even in this case, reservations are conceived that lead to the
existence of indefinite trusts. Such is the case of those consecrated in favor of
state entities or charitable institutions or intended for the maintenance of
museums, in some countries. From which it is concluded that in the case of legal
entities there is a maximum limit in time; in that of natural persons, a limit
constituted by their own life or that of their successors in benefit, within the rules
that regulate successive trusts; and for certain legal entities, state-owned or
dedicated to works of high social or cultural content, there is no restriction, that
is, the trust can be established indefinitely, as long as the legal entities subsist and
the purposes provided for by law are met.
The second group, on the other hand, points out as a general principle the
existence of a limit in time, but generally excepting from this principle trusts in
favor of incapacitated persons, while such incapacity subsists or those established
in favor of state entities or of public charity or common utility. From which it is
concluded that the fundamental difference with the countries that adopt the first
system is related to the case in which the trusts are in favor of natural persons,
since for these the temporal limitation also applies.69
The reason for this type of restrictions lies in the will of the legislator not to
allow an indefinite freezing of wealth or to estimate that within the indicated
terms the purposes for which trusts can be established can be met ordinarily and
satisfactorily. . But, in our opinion, this is a clearly unnecessary provision.
Indeed, if the incorporation of companies can be carried out within very long
terms and the same occurs with leasing, to cite two successive contracts of
permanent execution, there is no reason why, in essence, it supports such a
limitation. On the contrary, it may happen that, in practice, it becomes an
obstacle for certain types of long-term businesses, such as construction projects
or transfers for the securitization of assets.
2.6.4. Those that grant profits to the trustee other than
of the fees
Some laws also indicate among the prohibited businesses those that grant the
trustee, in addition to his remuneration or in exchange for it, profits such as
prizes, commissions, differences between sale prices, etc., believing that it is
certain that the trustee should not have any economic interest in the results of the
fulfillment of their assignment, other than obtaining their remuneration,
previously agreed upon or indicated in the manner provided by law. In other
words, if the trustee can never be a trustee, it is estimated that in this way the
principle could be violated because if, for example, it is established that he will
receive the difference obtained between a certain minimum interest rate expected
by the constituent and that which really resulting from the placement will begin
to suffer the fate of the trust, becoming, from this point of view, a trustee. In this
regard, it is worth remembering that in some countries it is expressly prohibited
for the fiduciary to guarantee the returns of the assignment,7° which, moreover,
seems obvious if it is remembered that the fiduciary's obligations are of means
and not of results. .
2.6.5. Those carried out in fraud of the law
It is not usually enshrined as a specific prohibition, but it flows from the analysis
of fiduciary businesses regulated as such and from the general principles of law.
In fact, given that the trust business must seek a seriously desired goal and that,
simply, an instrument is used that grants greater powers than would be required
to achieve the assignment, even if the classification of the figure mitigates the
disproportion, it is obvious that the trust, like any other legal transaction, cannot
be used to obtain results that would be prohibited if the constituent was
contracted directly.
Seen another way, it is evident that there are innumerable possibilities by virtue
of which economic purposes, difficult to obtain by any other means, can be
obtained or better achieved by using a fiduciary file. But this wide range of
possibilities that practically leaves the determination of the pursued object to the
imagination, must be understood as limited, naturally, by the impossibility of
seeking, through an oblique mechanism, the obtaining of a purpose that would
not be lawful. obtain the trustor, if he acted directly.
And, naturally, this implies a theological analysis of the contract to know what is
really sought with it, whether the achievement of the economic purpose that is
apparently established as the object of the contract and burden for the fiduciary
or the elimination, by that means. , of restrictions or requirements that linked to
compliance with mandatory regulations, in which public order or good customs
are embedded, could lead to the conclusion of a contract
- void due to illicit purpose. But note that there are many cases in which a party
cannot directly carry out an action, which is why it uses the trust as an ideal
instrument to secure it, without this "per se" transgressing the law, because the
violation of the above-mentioned standards and criteria. And we have frequently
invoked this to defend the many possibilities of the public trust, demonstrating,
for example, that a state official cannot carry out an expense not included in the
budget, no matter how plausible its purpose may seem, but nothing prevents him
from foreseeing in the contract that the fiduciary 10 makes for certain events
against his profits and as part of the obligations he assumes. There the purpose of
the disbursement does not deserve any censure, but it could not have been done
by the official, since the budgetary regulations would have prevented it.
Ultimately, what is condemned is the use of trust businesses as a mere screen, to

disguise the vices or censures that would merit direct action.71
2.7.
OBLIGATIONS OF THE TRUSTEE
It is difficult to find a contract that more fully illustrates the evolution of the
notion of professional contracting, the derived obligations and the consequent
liability issues, than that of fiduciary. In effect, the fiduciary is above all a
professional manager of other people's interests, which is why all the
requirements that we analyzed, at the time, in Chapter III are predicated on his
conduct. Therefore, judges will tend to look for a triple source to preach in their
charge those enshrined in the law, those specific to the contract and the
professional ones that doctrine and jurisprudence have deduced in their heads and
that we collect in the generics of prudence and loyalty. .72
To study its obligations, some of which allow, at the same time, to analyze its
rights, one must start from the principle according to which the trustee has all the
necessary powers to fulfill the purpose indicated by the trust, with the limitations
derived from the terms of the assignment, its incompatibility with the
achievement of the same purpose or the reservations made by the trustor at the
time of constitution. In other words, if the trustee as owner would have all the
rights inherent to his condition, the mandatory relationship characteristic of the
trust limits them to those necessary to carry out the purpose of the assignment. It
is not a question of remembering what the rights of the owner are, because they
are limited and are a function of the constitutive will.
The owner can enjoy, use and dispose of the assets under his control and it is
therefore worth asking to what extent the fiduciary has identical powers. We
know that enjoyment must be ruled out because the benefits obtained from the
assets subject to the trust must be used exclusively for the proposed purpose,
cultural, scientific or educational work or delivery to the beneficiaries designated
for that purpose. The powers of use or administration of the assets and disposal
then remain.
Administration is a power and a burden at the same time, because the adequate
fulfillment of the trustor's will largely depends on the management, conservation
and natural economic exploitation of the asset. Of course, in practice, some
difficulties arise, such as those related to knowing whether the administration
understands the power to obtain credits, to encumber the assets of the trust to
support them, to compromise or compromise regarding lawsuits filed over the
same assets, etc. ., all solutions that, if they are not expressly enshrined in the
contract or regulated by the law of the country, will have to be sought through the
application of general principles of interpretation of one or the other. As far as it
is concerned with the alienation or disposition of the assets, it is also linked to the
purposes and rules indicated in the constitutive act and it will depend on its
content to support an eventual alienation of the assets or repudiate the possibility
of carrying it out. In any case, use and disposition, with the scope they may have,
will always be aimed at achieving the objective indicated by the trustor and its
results will benefit the trust and not the trustee.
What perhaps should be highlighted in the face of these doubtful situations is that
the majority of legislation has established the possibility and obligation, at times,
of consulting decisions with a competent judicial or administrative authority to
resolve doubts, interpret vague provisions and even change the will of the trustor
or modify it in something, when the circumstances seem to impose it and the
intention of the person who established the trust is not betrayed. Therefore,
because it is ultimately about applying the general provisions in force in each
country for the interpretation of contracts and the law and because, on the other
hand, in a good number of cases the solution will come through consultation, we
consider it sufficient to raise the question mark.
2.7.1.
Manage assets in the established manner
This obligation of the fiduciary does not require further explanations, after what
has been said in the exposition and consists of the management of the assets
according to their nature, with the special care and precautions that may be
required of the fiduciary and seeking to obtain, at the same time, the safer and
better investment conditions and remuneration for resources or products.
Since in a good part of our countries the fiduciary must be a credit institution or a
legal entity authorized for this purpose and taking into account that it is not
possible to act directly in any of them but must do so through representatives or
agents, in some countries it is established that although the trustee cannot
delegate the fulfillment of his functions, unilaterally appointing a substitute
debtor to assume the fulfillment of his obligations, he can, however, employ
auxiliaries and collaborators for proper care of the trust and even designate a
specific official who is responsible for managing the assets on your behalf;
official who will sometimes have to fulfill some requirements before the judge or
the control entity and who in several countries is called "fiduciary delegate."73
2.7.1.1.
Carry out the necessary acts to achieve the purpose
The cardinal principle that dominates the operation of the trust is that the trustee
must carry out all the necessary acts so that the will of the constituent is fully
carried out. Given the breadth of the point, it is enough to note that the
achievement of the objectives of the trust begins with the adequate conservation
and custody of the assets received, materially and legally. For the first aspect, the
fiduciary must order the works and repairs essential to preserve the property or
allow it to better fulfill the corresponding economic purpose and for the second,
meet the obligations that arise from laws and regulations such as paying taxes,
obtaining patents, celebrate the contracts that arise from their assignment, etc.
You must also take out the insurance that you usually take to cover the risks of
the assets in your possession, such as fire insurance for real estate.
Some legislation requires express authorization in the constitutive act or, failing
that, issued by the judge of the trust or the entity in charge of its control for
certain hypotheses, some of an administrative nature and others operative such as
imposing liens on the trust assets, alienating them, and compromising or
submitting to arbitration commitments is the conflicts that arise regarding the
assets or rights in his charge.74 From which it is reiterated that the fiduciary can
carry out all the acts and contracts necessary to carry out the purpose that are not
prohibited. by law or the constituent act or for which express authorization is not
required in that or this act.
2.7.1.2.
Inverted
Another principle that flows without difficulty regarding the administration of
assets is that they must produce fruits or returns, since ordinarily the simple
maintenance of the "status quo" would not be enough to meet the will of the
constituent. The return will correspond to the normal use of the assets without
disposing of them, such as the leasing of real estate or other similar assets to a
third party, the direct exploitation of commercial businesses, if the bank is
capable of assuming the burden or its rental to a third party and the investment of
the liquid resources held by the trustee in operations that at the same time have to
be safe and profitable.
The administration of these assets, as we have repeated, and the investment of
liquid resources, must be done in accordance with the instructions, if any, and,
otherwise, always accommodating the finalist interpretation of the contract, that
is, taking into account the will of the constituent and the opinion of the trust
judge when consultation is convenient or necessary. This will, therefore, be the
midpoint between the existence of precise instructions and the power to act in a
discretionary manner that may have been enshrined in the constituent act.
If there are no precise orders or discretionary powers and even in the latter case it
would not be superfluous to have them at hand, the legislation indicates some
principles in relation to the investment of resources. They correspond to healthy
rules of administration and sometimes reproduce the incompatibilities that are
expected of agents or guardians with respect to the assets of their principals or
wards. Among others, we can mention the need to diversify investments to avoid
the risks derived from excessive concentration in a single line of economic
activity or in a single business. Invest in bonds, stocks or credit securities with
more emphasis on their security, we would say, than on the profitability itself,
noting that the usual thing is that the higher yield of a paper usually goes hand in
hand with the greater risk of the investment. In this case, some legislation insists
that the investment must be made in papers and bonds of national entities and
that it cannot, of course, be made in the trust entity's own bonds or shares, unless
in this case they are securities listed on stock market and that the operation is
carried out at market prices.75
In any case, we must insist on the principle that the management of assets must
seek their highest return, which means that every act in relation to them must be
for consideration, since gratuitous acts would not be conceived. Also and with
respect to this point, some legislation imposes the need for the trustee to report to
the trustee, within certain deadlines, the conclusion of any investment or disposal
business or the receipt of the products corresponding to the operation.
2.7.1.3.
Respond for your handling
From the administration of the trust assets arises the need to respond for their
management, which will arise when their decisions are discussed or the results of
the operations carried out are discussed. The problem is linked to the classic
notion of fault through three degrees of conduct known as gross fault, consisting
of not managing the business of others with the care that even negligent people
would take in their own business and which in some systems is equivalent to
fraud. ; slight fault, that is, the lack of diligence and care that is used by a person
in the management of his or her own business and that generally corresponds to
the notion of managing or administering assets as a good father of a family would
do, and fault very slight or lack of careful diligence that an expert man would
employ in the management of his most important businesses. This gradation is
not universal and in fact does not exist in the French Civil Code. It was included
in the Chilean Code by the provident pen of Don Andrés Bello and governs, in
this way, in the countries that adopted it or whose legislators agreed on this
scheme.
Under this scheme, it is not that there are three types of fault but that to
determine its existence, at a given moment, different behaviors are classified
according to the interest that the person has in the operation, whether it is free or
onerous, whether deals with the management of minors' assets or businesses
between fully capable people, etc. We could say that, in general terms, Latin
American legislation requires the fiduciary to behave like a good father of the
family in the administration and management of the assets entrusted to him, so
that he is responsible for its management even in cases of slight fault. However,
the laws sometimes speak of the care of a diligent administrator or that employed
by a merchant in his own business, conduct that has the peculiarity of insinuating
that he is a professional who must know the details and circumstances, even
secondary ones. , in relation to the business he carries out.76 Consequently, even
if it is a matter of legislative consecration, and whether it results from the
doctrinal formulation collected by jurisprudence, the questioned conduct of a
fiduciary will tend to be compared with that adopted by another "good
professional", in similar circumstances.
In addition to the responsibility that may be deducted from the fiduciary as a
consequence of not having acted with the necessary prudence in the management
of the assets that have been transmitted to him, it may happen that the law even
provides for the establishment of criminal sanctions for the administrators. of the
entities that have been entrusted with the care of one or more businesses,?7 for
whose management responsibility can be deducted.
As is often the case with third-party business managers, it has been held that the
obligations of fiduciaries are one of means and not of result, following the
classification of contracts attributed to the French jurist Demogue which, despite
many criticisms , has seen a notable development.78 Fundamentally and in a very
simple way, it could be said that managers, in general, including doctors and
lawyers, are obliged to do their best, make their best effort and apply the
particular knowledge of the field in which they offer their services, to achieve the
result that their clients expect without, however, being guaranteed.
Such would happen, in the case of the former, with a delicate operation or in the
latter, with a lawsuit whose representation they assume. By not obligating
themselves to use their "expertice", the failed result of the operation that even
leads to the death of the patient or the loss of the judicial controversy, that is, the
failure to obtain the expected favorable result, will not in itself generate a liability
to their position, unless they are shown to be negligent in their actions, that is,
they have not acted with the prudence and diligence that another good
professional, placed in the same circumstances, would have used.
On the contrary, in typical obligations of result, such as the preparation of a
material work, the delivery of a vehicle or the timely issuance of a guarantee, to
give some examples, the failure to achieve the result leads to a kind of
presumption of fault, borne by the person who appears to have failed to comply
and who, consequently, to be released from liability must prove that he could not
obtain it due to circumstances of force majeure or fortuitous event or due to
irresistible acts of third parties or due to the fault of the claimant. Comb sees
things stated this way, the difference translates, first of all, into the reversal of the
burden of proof: if the result is not obtained and the obligation is of this nature,
the debtor must prove the releasing facts of your responsibility to be able to
exonerate yourself from it; If it is not obtained and the obligation is in the middle,
it will be necessary for the creditor to prove that his counterpart did not act
diligently.
Well, without prejudice to what was stated in the first part of the work and
simplifying the presentation of the topic as much as possible, it must be said that
experience not only shows that the fiduciary's obligations are not always a
means, since they can be a result, but that In some way, the simplification that
has stated it, as a general rule, has done damage to the full understanding of the
figure and the confidence that is extremely required in a business of this nature.
In effect, if the fiduciary assumes medium obligations in investment trust
businesses, since by not taking his own position, he cannot guarantee the
financial result, that is, the expected profit, in return there are numerous
obligations he assumes in the other modalities, which we will see later, and in
which their clear obligation is one of result.
Think of a trust in which a sum of money is given to invest, within a certain

period, in certain stock securities abundant in the market. Or in trusts linked to
private construction projects or public works, in which funds have been received
to make periodic payments against the presentation of collection accounts by
contractors. In all these cases, the obligations assumed are of result and, if not
obtained, the client could not be placed in the need to prove any negligence on
the part of the fiduciary, so that, in this regard, his claim is successful.79
2.7.2.
Take inventory and provide security
This is not an obligatory obligation of all fiduciaries and it could rather be noted
that it is exceptional. Taking an inventory is taking detailed notes of the goods
that have been received and arises from the same constituent document where
they must be specified, so carrying it out in practice would only involve making a
count and physically verifying their existence. Some legislation requires it when
it comes to a testamentary trust. 80
Providing security, for its part, is a requirement aimed at guaranteeing
compliance with the main obligations of the fiduciary, which, due to the same
circumstance, is only imposed exceptionally at the request of an interested party,
by judicial decision and as a conservatory measure. when for some reason it
seems necessary to obtain this type of guarantee. It is not common because
despite its detailed regulations in the laws, the trust continues to imply enormous
trust on the part of the constituent in the trustee and, therefore, as soon as the
latter has been appointed by the former, sufficient trust in the due trust should be
presumed. fulfillment of the order. Which does not prevent, we repeat, the
interested parties from being able to demand and obtain the provision of such a
form of guarantee.81 But it seems to us, clearly, unacceptable, when the fiduciary
function is fulfilled by financial entities because, in that event, These are entities
that have had to obtain prior authorization from the State to be able to operate,
they usually have to contribute significant capital to do so and are subject to
permanent surveillance and supervision, to which other merchants are not
subject.
2.7.3. Keep assets separate from the rest of your assets

We already said it when talking about the object of the contract and we saw what
interesting consequences could be deduced from the application of the principle
according to which the assets constituted in trust form an autonomous or special
patrimony.
Well, their maintenance separately from the rest of the institution's assets, rather
than an obligation of physical content, is naturally reflected in the existence of
accounting records that clearly allow the existence of assets to be identified
within the trustee's accounting. linked to a certain trust, in relation to which a
current account system will show the permanent evolution of the trust. Such
accounting separation must be reflected, in turn, in the presentation of the
balance sheet of the trust company, since strictly speaking neither the trust assets
increase the corporate assets nor the debts assumed for the realization of the
intended purpose affect its liabilities, reason by which fiduciary assignments
must appear in what are called in some countries "memorandum accounts" that
record contingent obligations or, as in this case, assets located in the head of the
fiduciary, but foreign to his general assets.
Some legislation establishes that when all or part of the assets constituted in trust
or their products are constituted by money, it must be kept in cash or in a special
account of the central bank while it is invested, if such decision corresponds to
the intended purpose. or it is given the destination that corresponds to the terms
of the trust or the instructions of the judge.82
2.7.4.
Carry out legal representation for the protection of assets
Even though seen in a certain way at the beginning of the point, it is not
unnecessary to insist that the obligations of the fiduciary, beyond the simple
conservation and custody of the received assets of which he is the owner,
translate into the need to exercise judicial actions and propose the defenses that
are relevant to preserve them in their legal integrity, not only in the event of
factual or legal disturbances that may result from the claims of a third party, but
also from any circumstance that may affect the assets received in trust. You will
therefore have to defend them against de facto occupations, when the properties
constituting them are invaded by third parties or propose the necessary defenses
against vindictive claims or lawsuits of any nature regarding the assets. You must
propose actions to evict delinquent tenants, obtain the recovery of overdue debts,
collect interest agreed upon in your favor, etc., and also protect them globally,
even from indirect risks. If a tax assessment deducts from the assets sums that
exceed those that, in the opinion of a legal advisor, may correspond to it, it is the
fiduciary's obligation to take to its ultimate consequences the judicial or
administrative actions aimed at challenging the aforementioned assessment.
This obligation implies, obviously, that it has broad powers to appoint judicial or
extrajudicial representatives. It has some limitations in certain countries, such as
the one according to which it is not possible to compromise without express
authorization from the judge. And it also implies, although it may seem awkward
to say it, that you have sufficient resources to do it since, of course, you are not
obliged to provide them. Therefore, in practice, trust businesses with respect to
which this type of requirements can be imagined, must have liquid resources or
income that reasonably allow them to be assumed.
The obligation of the fiduciary is of such scope that it includes defenses against
acts of the beneficiary and even of the constituent himself, since unless the latter
has reserved specific rights in the constituent act and the dispute revolves around
them, the truth is that The fiduciary as the legal owner of the transferred assets or
rights has the obligation to protect them against any foreign claim.83
2.7.5.
Account for your management
The trustee is the legal owner of the assets, it is true, but by virtue of the structure
of the trust itself, it ultimately carries out management aimed at obtaining the
purpose intended by the constituent. Due to this circumstance, because the entire
business is organized around the achievement of the purposes, the fiduciary has
to render a complete and timely account of the efforts carried out. Said report
includes different specific statements, already mentioned, such as notifying
within a short period of the conclusion of certain investment operations or the
receipt of fruits derived from them, but more specifically it refers to the need to
present complete information. and reliable information on the accounting
movement of the assets in their possession; the income and expenses produced
during the corresponding period and the sum or assets that the trust has, as well
as its liabilities.
If you want, and analyzing the trust as an autonomous or special patrimony from
this aspect, accountability involves the presentation of a balance sheet of the trust
accompanied by a profit and loss statement that records income and expenses and
shows the existence or not of a surplus obtained by management. This last aspect
is interesting because, as we noted when talking about the fiduciary, one of the
just causes for resigning in some countries is the circumstance that the assets in
trust do not produce sufficient returns even to pay their remuneration and the
interested parties are not willing to paid.
The rendering of accounts can be done at different times as established by law or
the constituent act. The possibilities are wide and range from the rendering of
accounts upon completion of the assignment to that which must be carried out
with a predetermined periodicity such as three, six months, one year, or finally,
that which must be carried out at the request of the interested party. . In some
countries, failure to render accounts within the period provided by law constitutes
just cause to request the removal of the fiduciary.
In others, although such provision is not expressly established, we think /
that the same conclusion must be reached, because if one of the fiduciary's
obligations is to render accounts, failure to comply with the same implies a
breach of the assignment and, consequently, a reasonable cause to request his
removal.84
2.7.6. Transfer the assets to whomever corresponds
From the content of the constitutive business, it can be deduced to whom the
assets must pass upon completion of the order if it concerns those hypotheses in
which the trust must have a temporal limitation.
The general rules, however, are two: the trustee can never become a trustee, in
accordance with the provisions of the vast majority of legislation, and unless
otherwise provided, the assets must pass to the trustor or his heirs.85
2.7.7. Consult the jurisdictional or administrative authority
To stay healthy and fully comply with the careful administration of assets, a good
number of laws provide that the fiduciary can or must obtain the opinion of a
judicial or administrative authority in case of doubts about the scope of the
powers granted by the fiduciary. constitutive act or that are enshrined in law or in
the event that, despite the clarity of the instructions, circumstances not
foreseeable at the time of constitution impose, at a given moment, the need to
separate from them. In both cases, looking at the final structure of the contract, it
is essential to use mechanisms to prevent the existence of a confusing instruction
or the impossibility of following it from conspiring against the achievement of
the purposes of the trust. Therefore, once the point has been decided by an
authority, the fiduciary may act in accordance with what is established by it.86
2.7.8.
keep secret
It constitutes a generic obligation applicable to all reports that the bank is aware
of in the development of contracts entered into with its clientele, which some
legislations expressly establish to record investment, acquisition or replacement
of assets when it is impossible to notify the beneficiary within the period
provided for in it. In this case, the records that reflect the details of the
aforementioned operations must be maintained with absolute
- reservation in one of the countries studied, even "before the authorities or courts
in lawsuits or claims other than those filed by the settlor or trustee against the
institution, or vice versa..." Violation of this secret gives rise to civil liability for
the damages caused, without prejudice to criminal sanctions or any other
penalties that may arise. 87
Given the special confidentiality that is predicated on trust business, the doctrine
censures the use of public deeds as a requirement for their constitution, in those
countries in which it is required, since in this form and ab initio, particular and
private reasons that constitute the cause of the contract and which, not
infrequently, are reflected as its antecedent, are subject to the natural publicity of
a document whose copy can be obtained by any person.88
In any case, one is the absolute notion of secrecy, such as the one predicted by
the order made to the executors of the will, mentioned at the beginning of the
chapter, and another is the notion of "banking secrecy," which is relative, since
although it leads to banks keeping confidentially the information received from
its clients, not only is it aware of numerous exceptions, in which it must yield to a
higher interest, but it is compatible with getting to know the existence of the
business, if this were to become necessary.89
2.8.
RIGHTS OF THE TRUSTOR OR TRUSTOR
In addition to the rights that he usually has in all systems to designate one or
more trustees or trustees, the trustor may maintain during the life of the trust
others that result from the express reservation that he has made in his favor in the
constitutive act or that he are directly conferred by law. Some authors even think
that the natural vocation of the trustor is to disappear once the trust has been
established.9O Within this theory all powers should result from an express
reservation on the matter. 91
We will mention this power as a first and generic one and then we will do the
same with others of frequent legislative enshrinement.
2.8.1. Those that have been reserved
The very breadth of possibility makes it imprecise. It can be conceived, first of

all, that all the rights that we will see below are reserved if this is necessary
because they are not consecrated as a direct power in their favor in the respective
country. Likewise, one could think about the transfer of some of the rights
derived from property such as usufruct, but retaining the bare ownership in its
head, which would fit into some definitions. But more than these, the authors
seem to suggest that the reservation of rights is related to those that correspond to
the generic possibility of monitoring the development of the trust to verify that its
provisions are fully complied with as intended. An example of this intervention is
constituted by the possibility of appointing a technical committee in order to
advise the fiduciary in decision-making, of which he may eventually form a part,
to make some decisions related to the investment of the assets received, the
possible substitution of one for another, the hiring of third parties, etc.92
The scope of the powers of the Committee, compared to the eventual
responsibility of the Trustee in the fulfillment of its obligations, is a topic that
deserves additional reflection. Indeed, it is possible in this way to enrich and
facilitate the decisions made by the fiduciary and, even, within the contractual
logic, it is possible to understand that compliance with the instructions given
relieves him of responsibility.93 However, We have maintained, regarding its
function, that "no matter how important it is, no matter how large the
contributions are, no matter how enriching they are in technical matters that the
fiduciary does not know, they cannot go, in our opinion, to the point of relieving
the fiduciary." of the fulfillment of its fundamental obligations, nor of course, of
the responsibility that could arise from actions that cause harm."94 In other
words, the function of the committee must complement, clarify or allow
administrative or operational decisions to be made of the assignment, without
reaching to the extent that it can modify "per se" the purpose indicated for the
business - which would only be susceptible to being so, by the constituent itself,
if it participates in it and provided that the rights of third parties are not affected,
since in that case it would be necessary to count with their consent or act contrary
to the stated purpose, because there the position of the fiduciary in defense of the
trust and in safeguarding his own responsibility must prevail.
2.8.2. Revoke the trust
In this matter, it can be argued that the trust is in principle irrevocable, as

established by Panamanian law at the time, but that the trustor can reserve the
opposite possibility in the constitutive act in order to put an end to the trust. In
some legislations, revocability is, in any case, restricted, since it can only be
reserved in trusts established for purposes of particular interest, but not in those
in which collective interest is linked.
The power to revoke seems reasonable in many cases because, except for those
modalities in which long-term results are to be achieved or for scientific or
cultural purposes or in favor of state entities, which as we saw can be done for an
indefinite term, the truth is is that within the mutability of the circumstances in
which the relationships between people occur, it is possible that the one
established, for example, to benefit a relative, who has become a recipient of aid
due to his conditions of poverty and loyalty, will tomorrow result unnecessary
because he acquires assets of fortune or adopts conduct with the trustor that does
not show compassion for the collaboration offered by him.95
But likewise, there are cases in which and due to the very nature of the business,
revocation cannot be conceived. This would happen with all those domain
transfer trusts in relation to which there are third parties in good faith who have
given onerous consideration, as would happen in a good part of the real estate
development trusts or in the guarantee trusts in which there is means the
patrimonial interest of a third party.
Furthermore, Anglo-Saxon jurisprudence has established that if the constituent

reserves the power to revoke and to intervene decisively in the exercise of the
trustee's powers, the existence of a trust cannot be properly recognized. 96
2.8.3. Demand accountability
It corresponds to the general obligation of the fiduciary, which we already

discussed, and which constrains him to present reasoned reports on the state of
the trust, within certain deadlines established by law or contract.
2.8.4.
Exercise liability action against the fiduciary
By this power, the trustor is in a position to discuss the acts of the trustee before
the judges and in the event that, as a result of his actions, damage has occurred to
the trust assets or the interests of the trustor or the trustee, demand the
corresponding responsibility. and compensation for damages and losses that may
arise. Action of responsibility that, ordinarily, is also conferred on the trustee.
2.8.5.
Request the removal of the trustee and appoint a new one
Power that also corresponds to the trustee and that we will see later, specifying
that for its exercise two hypotheses can be imagined: the reservation made in the
constitutive act, in which case it is a discretionary power, or the incapacity or
misconduct of the trustee, course that does not require any reservation to demand
removal but that implies supporting the demand on justifying reasons, on which
the judge can make the corresponding decision. In some countries, an
administrative authority may be
. in a position to remove the trustee at the request of an interested party,
appointing an interim administrator while the property trustee is appointed. If the
arguments invoked by the trustor are proven before the judge and the judge
orders the removal of the trustee, the trustor will normally be in a position to
appoint a replacement. If a system for appointing a fiduciary made by the judge
does not exist by then and is not provided for by law, the removal of the non-
replaced fiduciary would give rise to the termination of the contract.97
2.8.6. Obtain return of goods
Somewhat repeating what we have already seen, we know that, unless something
else has been provided, that is, there is a beneficiary of the capital, as provided
for in the French bill or a trustee is recognized as recipient of the assets, different
from the beneficiary who It would be the fruits, that is, the results of the
administration and exploitation of the assets, the assets must return to the trustor
upon expiration of the trust. Therefore, he or his heirs will have
right at that time or to early termination, if that were the case, or to have the trust
assets delivered to them.
2.9.
OBLIGATIONS OF THE TRUSTOR
2.9.1.
Remuneration
The first obligation of the trustor is to remunerate the trustee within the principle
that the assignment is remunerated. Of course, if it is noted as an obligation of
the trustor, it is because in practice and given the impossibility of obtaining
sufficient returns in the management of the trust to even meet the remuneration
of the trustee, it must be understood that the trustor will assume the cost of the
management carried out by the trustor. trustee as a consequence of his decision to
create the trust. As we will see later, non-payment of remuneration is just cause
in a good number of countries for the trustee to resign and, therefore, for the trust
to end, if it does not proceed or a replacement cannot be appointed. .
2.9.2.
Reimburse expenses
If the trustee had to incur expenses in the performance of his assignment, it is
logical that the trustor, on whose initiative he is precisely doing so, is obliged to
reimburse them. This is what usually happens in all management activities in
which the person entrusting them must bear the economic burden that requires
them to be carried out.
Both obligations, remunerating the trustee and reimbursing his expenses, are
generally met from the trust's proceeds, since it is assumed that if the assets are
reasonably exploited they must produce, at least, to meet the administration costs
- which, in Ultimately, that is what both lines mean - and being able to allocate
the surplus to fulfill the intended purpose.
2.9.3. Sanitation by eviction
Some authors rightly maintain that since the trust is a transferable act, the trustor
must be reclaimed by eviction, but distinguishing between the free trust in which
such a thing is not ordinarily presumed, but must result from an express
agreement by analogical application of the rules on donation, of the onerous trust
where such obligation is always established for the trustor. This would be the
case of the guarantee trust that we will study at the end of the chapter, in which
the transfer of assets to fulfill the order is obligatory consideration to guarantee
the fulfillment of a main obligation. 98
2.10. BENEFICIARY RIGHTS
Although in English Law some authors have defended the thesis that the
beneficiary is an equitable owner vis-à-vis the trustee, the legal owner, supported
by the historical evolution that the trust had in England, it seems clear to begin
the study of the rights of the beneficiary, warning that within our legal regimes
and given the impossibility of conceiving such a novel but peculiar figure as that
of the charitable owner, the trustee is nothing different from a special creditor of
the trust, as a result of the stipulation in his favor derived from the agreement
made between the trustor and the trustee, from which rights of enormous
importance can be derived, as well as from the law. You can seize the fruits
produced by the trust assets and you can even seize in relation to them, after a
certain period established by the trust or the law.
But he is nothing more than a creditor, he lacks real rights over the assets that
form part of the trust, to such a point that, as we have already seen, his creditors
cannot be pursued and must limit their claims to the fruits produced by them
when they correspond to them. . It has, however, some exceptional rights that we
will see later and that could, however, suggest the conceptual influence of the
dual property structure that characterizes the Anglo-Saxon system.
It is also worth noting that in many countries, in the absence of the trustee, which
as we know is possible in certain circumstances, his rights are exercised by the
Public Ministry. Likewise, the powers that we will see as belonging to the trustee
are granted in some legislations to the trustor, when he has reserved the power to
revoke or to whom the assets must be delivered at the end of the trust, even if it is
a person other than the one who receives initially its fruits.
It goes without saying that the beneficiary's own rights are those that derive from
his status as a creditor and that will include the demand for the fruits in the terms
and conditions indicated by the order and the subsequent delivery of the goods, if
he is also the recipient of the same. Therefore, rather than analyzing these natural
rights, we immediately study some powers that the laws ordinarily grant them in
order to highlight their position as a creditor but in conditions that go a little
beyond those that are ordinarily recognized to them. . In other words, if our
systems cannot conceptually accept the figure of the owner-beneficiary in equity,
if they have established, instead, some privileges or exceptional powers, so to
speak, in favor of the beneficiary, thereby qualifying him advantageously. in
relation to a current creditor.99
Now, if the trustor can be the trustee himself and there are no interested third
parties, the scheme is simple in its analysis. But it may happen that the
beneficiary is a third party and that, as a stem, it is the income and the assets or
only the first or the last. That is, that the intended purpose, as far as he is
concerned, is fully satisfied with the sole destination of the fruits or returns or, on
the contrary, said purpose is only satisfied with the transfer of the trust assets.
But it may still happen that the interests of several beneficiaries coexist over time
and that one of them is the same trustor. Imagine the transfer of a company
whose proceeds and/or eventual disposal must fulfill a set of purposes,
simultaneously integrated into the purpose of the contract. Well, this situation
can raise conflicts of interest both with respect to the exercise of the actions and
rights that are granted to the beneficiaries, as such, and the rights of the settlor-
trustee versus those of someone who is, just, a mere trustee.
The real conflict arises, of course, in trusts for consideration, in relation to which
third-party beneficiaries do not exercise their rights as a consequence of simple
gratuitousness, but in relation to causal relationships, by virtue of which the
mechanism has been established. , either as a solution instrument or as a
guarantee instrument. And even though there are no specific definitions, it should
be clear that, in the event of a conflict, a first criterion to resolve it should favor
the position of the foreign beneficiary over that of the beneficiary-trustor,
because it would not be understandable that the rights of the former would be
called into question. by virtue of provisions established by the latter, which
could, through its exercise, frustrate the purpose on which the former counted on
its achievement.
The most burdensome situation for the trustor is not specifically reflected in the
legislation, but some examples suggest criteria that would point to the conclusion
just mentioned. For example, in some cases it is established that the trust
established through third-party fraud can be challenged and that this will be
presumed when the trustor is the sole or main trustee, if there are several.
Solution that prefers third parties, compared to the formal protection that a
beneficiary, other than the trustor, would enjoy. \00
Likewise, some legislation provides that, in the case of plural trustees, they must
be consulted to make a decision and, in case of divergence, the majority principle
will be applied. \01
The problem is complex and it is obvious that it will be the conflict judge who
must decide the prevalence, taking into account the fundamental criterion
according to which if the trust
. The mistress has the initiative to establish the business, the beneficiary has the
legitimate hope that its development will fulfill a purpose in its interest and/or
eventually that of a third party, even if it is the same constituent. In this order of
ideas, it is necessary to establish a gradual precedence, by virtue of which only
once the legitimate interest of the third beneficiary has been satisfied can the
trustor be satisfied, in the event that such circumstance has given rise to a
conflict, the solution of which is not provided for in the contract.
2.10.1. Demand compliance from the fiduciary and exercise responsibility

actions
It is the right that flows from the obvious form of the structure of the contract and
that is coupled with the possibility of exercising liability actions derived from a
possible breach. This power could also include requesting some conservatory
actions to prevent the assets from suffering loss or impairment in the hands of the
trustee, when there are reasonable reasons to fear it. Among such measures
requested from the judge and decreed by him would be that of providing security,
which as we saw is the obligation of the fiduciary in certain circumstances.
2.10.2.
Oppose preventive measures against property
This is an action that is usually allowed to the trustee by alternative means, when
the trustee does not comply with his obligation to protect the assets both
physically and legally. Indeed, in his capacity as holder of the rights
corresponding to him, he is responsible, in the first place, to present defenses, file
appeals and exercise actions aimed at preventing the assets in his possession from
being compromised. If, due to negligence or any other reason, such a thing does
not occur, the trustee is able to propose the defenses himself. Which in other
words means that, in light of this substantive provision, in the countries that
enshrine it, the beneficiary will be admitted to participate in the process not as a
foreign third party but as a person interested and legitimated in law to discuss the
claims of the actor. .
2.10.3.
Challenge voidable acts
Interesting power aimed at challenging acts that, because they were carried out
under certain conditions, may be annulled. Such acts are, in general, those carried
out by the trustee against the express instructions of the trustor or in excess of his
powers, to the obvious detriment of the trust assets or the rights of the interested
parties. The latter cases could arise when the trustee disposes of all or part of the
assets free of charge or conducts business with third parties who, because they
know the terms of the trust, can be presumed to be in bad faith, when they have
acted against the evidence arising from them.
In the opinion of some authors, this power is no different from the generic power
consecrated in favor of creditors, which under the name of "Paulian action"
allows them to challenge acts carried out in fraud or detriment to creditors, so
that things return. to the previous state and the assets are returned, if desired, to
the debtor's assets.102
In addition to this generic power of annulment, several laws also establish,

independently, the possibility for the beneficiary to claim assets that are in the
hands of a third party. Provision that has been justly criticized because the
vindicatory action or action of ownership is specific to the owner, who, stripped
of possession of one of his assets, goes against the possessor so that its restitution
is judicially ordered. Taking into account that, as we have stated, the beneficiary
is not the owner, he is a simple creditor and that in any case the return of the
assets will not be made to his assets, from where they have never come, but to the
assets of the trustee, It seems more technical to dispense with said specific power
and rather reiterate the principle that by being able to request the annulment of
certain acts, the result will be, in most cases, that the assets return to the trust
assets. In this sense, in any case, it must be understood in the countries in which
vindication is discussed.
Finally, some laws establish precise terms within which it is possible to exercise
the annulment action, which seems logical to avoid an undue situation of
uncertainty for third parties who at a given time negotiate with the trustee. 103
Despite what has been said, it cannot be ignored that the powers enshrined in
these last two paragraphs and the additional one of claiming enshrined in some
countries, recognize practically proprietary rights that would highlight the
position of the beneficiary, allowing it to play a leading role in the life of the
contract.
2.10.4. Request the removal of the trustee
This power, which constitutes an instrument to protect the trust and its interests,
is usually linked to the existence of some circumstances that leave judges with a
wide capacity for appreciation. They are, among others, the existence of interests
in the trustee that are incompatible with those of the beneficiary so that possible
conflicts may arise between them: the incompetence of the trustee in the
management of the assets that can be deduced from negative results presented in
their management or of glosses produced regarding other assignments that have
been successful and as a consequence of which he has been separated from the
management of other trusts or penalized; fraud or serious negligence in the
administration of the goods, unacceptable in light of the principle already studied
that he must be liable even for slight fault and it is a professional merchant, etc.
Removal can be requested whenever you do not comply with your obligations
but, in particular, with those that involve taking an inventory or providing
security - despite our reservations - or any others specifically indicated in the
founding act or ordered by the judge. . Such would be the case of non-rendition
of accounts when they are demanded by the trustor or required by law within
certain deadlines.
The request for removal may be preceded, as a precautionary measure, by the
appointment of an interim administrator, when circumstances indicate that the
permanence of the fiduciary at the head of the business would be very serious,
even during the simple period of the process.
2.10.5.
Review the financial statements
In some countries and as a complement to the previous powers, the trustee is
authorized to verify, on his own or through an intermediary person, visits or
inspections of the accounting books and other financial statements of the trustee,
so that he can verify the efficient way in which manages the goods that are the
object of the order.104
2.11. AUTHORITY INTERVENTION
From what has been explained throughout the chapter, it can be easily deduced
that in the development of the trust, the intervention of the judicial authority and,
by exception, of the administrative authority that replaces it or collaborates with
it in the fulfillment of certain tasks plays an important role. This is a function of
surveillance and strict control over the proper execution of the order as support
for the special trust placed by the constituents. Let's do a brief count for grouped.
2.11.1. Bank or company authorization
The activity of fiduciary is limited, as a general rule, to certain companies

designated by law and authorized, in each specific case, by a control entity.
These companies are banks, through their fiduciary or mandate sections and, by
exception, in some countries, legal entities established for this purpose. The need
to obtain prior authorization from the Superintendent to begin operating, or from
the authority that takes his place, depending on the country, is already a first
guarantee for all the parties involved.lOs
2.11.2. Authorization of resignation of the trustee
We saw that there is a tendency to make acceptance mandatory. When it is

optional, however, it is generally prohibited to renounce the commission without
a fully justified reason in terms of the law. Well, said cause must be efficiently
proven before the authority so that the fiduciary cannot separate from his
position, until the express authorization that authorizes him to do so is produced.
106
2.11.3. Absolution of queries
One of the most dynamic functions that can be assigned to the judicial or
administrative authority is to respond to queries raised by the fiduciary, when the
authorizations received are vague and need to be clarified, in a specific case;
generally, when they are insufficient in practice to fulfill the purpose imposed in
the constitutive act and when, due to factual circumstances, the trustee is
constrained to have to act, even against the express will of the trustor. In all of
them and in other similar ones, the operation of the trust would be impossible
without the possibility of obtaining an authoritative opinion that, as such,
legitimizes and supports from that moment on the actions carried out by the
trustee. it?
2.11.4.
Imposition of certain obligations
It is also up to the authority to impose on the fiduciary certain obligations that do
not flow naturally from his appointment but that are convenient in certain
circumstances such as the preparation of an inventory or the provision of surety.
Likewise, as a discretionary power or obligation imposed from the beginning on
the fiduciary, it is up to the authority to demand the presentation of periodic
reports on the performance of the tasks, without prejudice to carrying out the
visits that normally correspond to its functions as general authority of control,
when these coincide in your head. 108
2.11.5. Removal of trustee and appointment of interim administrator
We know that the fiduciary can be removed at the request of an interested party
in the face of certain assumptions provided for by law and that generally refer to
his incompetence to manage business or the fraudulent or harmful manner in
which he does it. In all cases of improper management, the removal must be
decreed by a competent authority that qualifies the charges and evaluates the
defenses of the fiduciary entity. As we saw, in some countries the petition may be
preceded by a request for the appointment of an interim administrator, as a
preventive measure in certain circumstances.109
2.11.6.
Indication of rates
In some countries it is possible that an additional form of intervention by the
authority consists of the possibility of setting rates for the services provided, a
task that is not always easy given the large number of possible orders and the
very varied modalities they can take. llo Indeed, as we have said on some
occasions, the trust business is, above all, a container to which each interested
party adds content. It is an instrumental mechanism to carry out legitimate
purposes, using the particular competence of the fiduciary. Therefore, given that
possible businesses result from the combination between the transfer of an asset -
any type of asset that is in commerce, including corporal and incorporeal assets -
and the indication of a legitimate purpose, their number is theoretically infinite.
and its enormous practical possibilities. It is therefore not easy to achieve a
homogeneous criterion that supports the establishment of rates. On the other
hand, as long as the particular modalities of the business are not typified - and
frequently they are not - it turns out that the commercial names do not reflect a
uniform content in terms of the services included. For example, the expression
"real estate trust" is not univocal and may have substantially different scope
between one trust company and another, or for one business or another.
Finally, the contemporary trend finds the establishment of public rates highly
inconvenient, believing that the best prices and qualities are obtained from
competition.
2.12. CAUSES FOR EXTINCTION OF THE TRUST BUSINESS
Although not all legislations mention the same causes, we point out below those
that are the most general or are derived from the application of logical principles
to the contract.ll1
2.12.1. Fully realize your goals

Since the trust is established to carry out a specific purpose, once it is fulfilled
and is not susceptible to being repeated over time, the trust comes to an end. A
sum of money is transferred for the construction of a housing complex, including
the sale of its units. Once the business is concluded, the trust ends. Something
different would happen if the purpose were the construction of housing
complexes. Its extinction in this case will depend on the maximum terms
indicated.
2.12.2. Absolute impossibility of realization

The same thing happens if it is impossible to do so, in different cases, of which
the most important could consist of the total destruction of the assets subject to
the trust when it is due to force majeure or fortuitous event and not due to the
fault of the trustee, and even in this event if the compensation at your expense
does not allow the purpose provided for in the founding act to be carried out.
Such would be the case of a trust consisting of the conservation for public
consultation of documents of great historical value, which are destroyed through
the fault of the trustee. The money paid by him as compensation would not allow
the purpose to be fulfilled due to material theft. A different thing will happen if
the trustor has transferred real estate so that the proceeds can be used to support
the education of some relatives, because, in the same case, the compensation
money will, in any case, allow the intended purpose to be achieved.
2.12.3. Expiry of the term or the maximum has elapsed

If a deadline has been established for carrying out the assignment or if the
maximum period established by law elapses, in the cases in which it is
applicable, the trust ends.112
2.12.4. Compliance with the resolutory condition

We are also faced with a cause for extinction if the existence of the trust depends
on the occurrence of a future and uncertain event and this occurs.
2.12.5.
The suspensive condition becomes impossible or is not fulfilled in a timely
manner.
This cause has frequently been invoked by legislation with evident lack of
technique, since if the birth of the trust depends on the occurrence of a future and
uncertain event and this does not occur, it must be concluded that it never came
into existence and not that it is extinguished by said cause. In this sense, the
authors have fairly formulated criticism and some projects contemplate the
modification of the cause to say that the trust "dependent on a suspensive
condition will not come into existence if the condition is not carried out within
the term indicated in the constitutive act, or Failing that, within twenty years
following the date of said act."ll3
Some legislation establishes that if it incontrovertibly turns out that the condition
cannot be met within the stipulated period, it will be considered met from the
date of acceptance by the trustee. 114
2.12.6. Death of the trustor or beneficiary

It operates when it has been indicated as a cause for termination in the constituent
act and in any case, in relation to the beneficiary, when he or she dies without
substitutes having been designated, all within the restrictions that we have
already had the opportunity to analyze. 115
2.12.7. Dissolution of the trust entity

Produced by any cause provided for by law, such as, on its part, the termination
of the term provided for in the social contract, bankruptcy or administrative
liquidation that leads to the same purpose, etc. Causal, of course, conditional on
the fact that the existence of substitute fiduciaries has not been foreseen in the
founding act or that according to the legal system it is impossible to proceed to
designate a replacement.
2.12.8. Action of creditors prior to the conclusion of the business
Since the general principle is that all trusts created by fraud of creditors can be
challenged, if the action attempted by them is successful, the trust comes to an
end. Furthermore, remember that in many laws the assets of the trust constitute
an autonomous patrimony, but in some they must serve to respond to creditors
for obligations contracted prior to the date of its constitution and in all those that
arise subsequently, as a consequence. of the development of the assignment. If by
virtue of such circumstance the assets of the trust are seized and auctioned, due to
subtraction of material it will have to come to an end.116
2.12.9. Declaration of nullity of the constitutive act

Like any legal transaction, the trust requires compliance with a set of
requirements for its existence and validity. Because it lacks any, it may be
ineffective, in the broad sense, either if it is considered non-existent, or if it is
declared null, absolutely or relatively, or if it is considered unenforceable against
third parties. Consequently, if the actions aimed at declaring that the trust is
ineffective, in the broad sense mentioned, are successful, the respective ruling
will say that it never existed or will terminate the contract.
2.12.10. Revocation of the trustor

Cause that, as we have seen, corresponds to the right that the vast majority of
legislation establishes in favor of the trustor, to reserve this power in the
constitutive act, putting an end to the legal transaction. It is interesting to note
that some legislation provides that in this case the rights of third parties who have
contracted with the trustee within the terms of the trust must be guaranteed. 117
The previous conclusion seems obvious, even if there is no express provision on

the matter. In effect, and especially in the case of onerous trusts, it cannot be
conceived that the constituent who has received or will receive compensation for
the rights he transfers, can unilaterally revoke the business to the detriment of the
third party who, in this way, would be completely unprotected. And this is even
in the event that the trustor is simultaneously a beneficiary, as we saw above.118
2.12.11. Mutual agreement of trustor and beneficiary

If the trustor has not reserved the power to revoke and the beneficiary has
accepted the constitution of the trust in his favor, he cannot terminate it without
the agreement of the beneficiary and respecting the rights of the trustee such as
the payment of the remuneration due.
2.12.12. Failure of the trustee
That may be due to different causes such as resignation, for a just cause, removal,
resulting from actions taken by someone who has a legal interest, etc., provided
that there is no possibility of replacing it in accordance with the constituent act or
legal prescriptions.
2.12.13. Renunciation of beneficiaries

In some legislations it has been established that if the beneficiaries expressly
renounce the rights derived from the trust, this is sufficient cause to terminate
it.119
2.12.14. Confusion of the status of sole trustee

with that of sole trustee
Against the overwhelming majority trend, some legislation establishes the
exceptional possibility that the trustee can become a trustee, so that in that
circumstance the assignment ends. 120 In any case, such a possibility is more
remote in systems in which the fiduciary is a financial entity than those in which
the function can be performed by any natural or legal person.
2.13. TRUST MODALITIES IN BANKING OPERATIONS
It is essential to note that the possibilities of banks result both from the
development of the powers enshrined in numerous legislations under the name of
fiduciary assignments, and from trust or commercial trust business itself. We
already warned in chapter XIX that a good number of assignments can be carried
out with the support of a simple contract, generally a mandate, where the trustee
(bank) undertakes with the trustor (client) to carry out on his behalf and in his
name a certain legal business or other management in your interest. There is no
transfer of property, which constitutes the trustee as the owner of the assets
against third parties, but simply a provision of resources to be able to fulfill the
purpose intended by the trustor.121
In other words, it can be stated that the fiduciary sections of banks and trust
companies, in countries in which there are powers to carry out fiduciary tasks
and, on the other hand, carry out fiduciary business, are able to carry out on
behalf of their clients practically all types of legal businesses and the modality
used will depend on the different circumstances that the constituent takes into
account at the time of entering into the agreement. Therefore, when studying
immediately some of the most representative modalities of trust business, it
should be noted that, strictly speaking, its celebration does not always imply the
existence of a trust or commercial trust business but, on many occasions, it can
constitute Just a simple fiduciary assignment supported by a mandate or,
generically, management contract. We will emphasize, in any case, since this is
the purpose of the chapter, on those trusts that in themselves can take on the
typical form that we have studied.
On the other hand, it is worth highlighting that the growing importance of the
trust or commercial trust is a function, in summary, of the economic situation of
recent years, the fundamental characteristics of the business and the
achievements developed, true thermometers on the activity achieved by the
company. figure. 122
Regarding the first aspect, it should be noted that in countries in which the
principle of specialized banking applies, credit establishments must limit their
activities to those specific ones permitted by law. Additionally, the high cost of
money has led to a progressive reduction in profit margins and has forced banks
to encourage income derived from the provision of services. In both
circumstances, banks find in this business the possibility of expanding services
and developing activities that, in themselves, would not properly correspond to
those permitted by their purpose, but which are acceptable when they correspond
to the fulfillment of orders received from their clients.
and in relation to its very structure, there is no doubt that the circumstance that
the assets constitute an autonomous or special patrimony and that everything in
the contract is aimed at the fulfillment of a purpose, that is, it has an essentially
finalist design, explain the event. for which the figure has been used by
commercial banks and is beginning to be used, fortunately, by development
banks. 123
2.13.1. Management Trust

Different reasons can lead a person to want to relieve themselves at a given
moment from the administration and direct management of their assets: their age,
which does not allow them to dedicate the same energies to their businesses, their
dedication to philanthropic or political activities, or their frequent trips, etc.
Therefore, a very interesting way to use trust services is to transfer your assets to
the credit institution that gives you not only the security of being a serious and
specialized institution but also being subject to rigorous controls by the State. Its
knowledge of the financial world and the stock market, the fact that it usually has
highly qualified executives and its links with different sectors of economic life,
allow it to be managed in unbeatable conditions. With the advantages and
prerogatives that we already mentioned when talking about autonomous assets, in
the sense that it escapes a series of vicissitudes related to the activity of the
constituent.
An application of this modality that serves individuals but allows the trust to be
put at the service of the public sector, is linked to what are known as
"administration and payment trusts." In them, the central purpose of the
assignment is linked to the development of contracts, especially public works or
construction, in which progress gives rise to the obligation to make payments to
contractors, which are channeled through this means. The contracting party,
public or private, places in the hands of the trustee the necessary funds for the
progressive payment of the work and he undertakes to make the disbursements
against verification of the requirements that have been indicated in the contract as
prior compliance for the required ones, as could occur with the presentation of
invoices duly endorsed by a construction inspector.
As the resources often come from credits granted by third parties, these are the
most interested in disbursing them directly into the hands of the trustee, who
gives them the peace of mind of their proven administration and that they will be
dedicated to the payment of these works and not of others or for different
purposes. This occurs, for example, in road concessions that require significant
credit leverage, which makes it equally important to know that the same trustee
will be in charge of collecting the funds generated by the exploitation of the work
and with it paying the various creditors, including the financial.124
2.13.2. Investment trust

It is, if you will, generically a modality of the previous one, with which, in
addition to the simple administration and management of his assets, the trustor
seeks to allocate them to certain activities from which he can derive interesting
returns. Perhaps, to see it from another aspect, assets and businesses are managed
that will remain unchanged as such (a business is operated, a property is rented,
etc.), while the liquid resources received or the assets themselves are invested
through their transformation, disposal and replacement (the business
establishment is sold and a hotel or the shares of a textile company are
purchased). It is important for the management of certain resources for specific
purposes such as those resulting from the constitution of an employee fund in a
company, formed by the savings of its members, where there is not only efficient
administration, discharging the fund from the difficulties inherent to its
management, the mutability of its boards of directors, the different capacity of its
officials, etc., but satisfactory returns can be obtained from the placement of
resources and an adequate distribution of them for the purposes of the institution
or of the constitution of the fund.
Likewise, it can be used for the management and investment of so-called social
welfare funds, such as company pension funds or sickness or aid funds for certain
calamities or situations, in relation to which the company can also separate itself
from its cumbersome handling to deliver it to the trustee. In some legislation, the
expression has been restricted to refer to trusts that have the purpose or make it
possible during their development to invest sums of money. 125
In all these cases, the management by a credit institution can be combined with
the intervention of the interested parties, through the constitution of investment
committees that, for certain events or for the placement of certain sums above
established levels or simply as advisory bodies , can intervene with the
participation of the constituent and their representatives or company officials and
beneficiary employees, when it comes to the funds we have just mentioned.
In relation to investment trusts, there are all imaginable possibilities regarding the
way of allocating resources, ranging from one in which a specific and invariable
destination is indicated to the trustee, to the broadest one in which it is left to his
absolute discretion. the management of the resources received.126 Banks
generally seem to be interested in having some guidelines regarding the way in
which they should use them, since the degree of their responsibility ultimately
derives from their existence.
It is not the same, in effect, to fulfill a precise and determined assignment, easily
verifiable, than to commit to placing resources in activities left to one's free
choice, but where the evaluation of risks becomes one's own responsibility that
makes it more difficult reconcile the desire to obtain high returns for your client
with the need to place resources in safe activities. For this reason, the existence
of an investment committee, whether with simply advisory functions or with
some decision-making functions, seems to be attractive to the credit institutions
themselves, knowing, however, that its function cannot go so far as to ignore the
central role that is reserved. to the fiduciary, as we noted above, nor does
compliance with his decisions automatically free him from responsibility.
It is understood that as soon as the bank fulfills the order in accordance with the
instructions provided in the contract, the vicissitudes of the investment are borne
by the constituent or affect the beneficiary, provided that there is no fraud or fault
on the part of the fiduciary that allows liability to be deduced in the management
of assets. But, in principle, it is not up to the fiduciary to guarantee the results of
his efforts, from which it can be concluded that his obligation is fundamentally
one of means and not of result. Of course, there are intermediate possibilities in
which, for example, the constituent tells the trustee that he must invest his
resources in fixed income papers of no less than a certain annual percentage or in
shares tradable on the stock market whose dividends at the time of the operation
are not lower than a certain rate. Except, then, for similar possibilities, it seems
reprehensible, as the legislation of some countries actually establishes, that the
fiduciary can guarantee a result, assuming the financial risk of the operation.
In practice, the investment of monetary resources, as an object of business, has
made it possible to distinguish several investment possibilities from two large
groups: that of individual trusts, improperly but commonly called specific
destination trusts, and that of collective trusts or better, of collective
administration. Let's look at them below.
2.13.2.1.
Individual Trusts
They correspond to the simplest way by which the client transfers sums of money
to the trustee or establishes the general rules in which he may do so in the future,
with the purpose of investing them in accordance with his instructions.
2.13.2.2.
Collective administration trusts
These are typical investment funds, managed depending on the country by
different entities, including, of course, banks but also stockbrokers or special
purpose companies created for this purpose. Even though the experience in real
estate and real estate funds was not always positive, since in different times and
countries there were setbacks due, in many cases, to administrative deficiencies
or bad faith, we must start from the basis that an adequate distribution of a
portfolio, managed by an institutional investor, is of obvious interest to potential
savers and is one of the functions that fiduciaries have always had in the world.
Managing portfolios is, in effect, making a permanent selection of risk, which
constitutes the first and main professional burden of a banker.
Recent growth has been significant, starting with developed countries, which
have found in the creation of mutual funds an excellent investment alternative for
savers and for the treasuries of large companies and individuals, allowing for
short-term returns. usually better than those coming from other investments.
Among other reasons, the deregulation processes, which have introduced,
sometimes, in a disorderly manner, novel mechanisms against inelastic banking
operation schemes, have allowed the diversification of funds that in the United
States, Europe and Japan have reached numbers very appreciable.127 In
Colombia, whose experience we have followed closely within the framework of
the trust contract, they result from the recognition of two possibilities: ordinary
common funds and so-called special ones.
to)
Ordinary common funds
Strictly speaking, they should be presented in the singular since a fiduciary is not
allowed to have more than one. In essence, it is a short-term money market fund
that obliges the trustee to invest the resources raised in credit-related papers
issued by state or banking entities or specially supervised, establishing
percentage investment limits that allow diversifying the risk of issuers and that
competes, as a financial product, with various ways of remunerating short-term
investments, such as term deposit certificates issued by the same banks and
savings accounts, to give two examples.
The reason for the initially mentioned restriction is, in our opinion, that in
accordance with current regulations the fund plays a residual fundraising role, in
that it is expected that any sum of money that is generated or originates in the
other businesses fiduciaries that are managed, must go to the Common Fund, if
nothing else has been provided and as long as it is possible to apply it to its own
purpose. Think of a real estate project that receives in cash the value of sales
promises of the units under construction that will be used, with other resources,
to pay the budgeted expenses and investments. Well, while they are applied in
this way, they remain in the background obtaining, of course, the profitability
that the placement of the portfolio yields. This has allowed us to obtain two clear
advantages. From the point of view of its function, it prevents the fiduciary from
remunerating liabilities with a bank rate and falling into the temptation of
intermediating, limiting itself to recognizing the variable return that the fund
produces. But, simultaneously, it authorizes the fiduciary to use in its marketing a
suggestive argument in the sense that its clients' resources will never be idle,
whatever the type of business in question.128
b)
Special common funds
They are the others, that is, those created at the initiative of the bank or built at
the request of its client, differ from the ordinary ones, either because of the
composition of their portfolio, or because of the restriction of access that is
limited to a single type of investors. , or due to the special conditions of access,
liquidation or withdrawal that are established, if not due to the combination of
one or several factors. Their offering usually corresponds to the identification of
various customer needs, depending on whether they are rentier savers or more
seasoned investors or even speculators in different markets. It will be based on
the diverse profiles of the clientele that different funds will be offered to invest.
We will refer to some to illustrate the possibilities:
c)
Benefit trusts or pension funds
The increase in these countries, either by legal means or by collective
agreements, of the so-called social benefits or benefit burdens borne by
employers, even though it leads, in practice, to companies using their reserves as
working capital, makes it advisable , in the future, the management of the
respective monies by entities that, by virtue of their in-depth knowledge of the
market and investment possibilities, manage them with enormous advantages,
both for the company and for the workers. And not only because of the eventual
returns that could be obtained, which would undoubtedly be much higher than
those obtained by the same company, but because in the event of a possible
negative development of business activities and the possible failure of the
company, the existence of Funds kept safe, liquid and properly managed,
constitute obvious peace of mind for the employer and, especially, for the worker
beneficiaries.
And in fact, even though the laws usually grant them a privilege as creditors
against the eventual mass of a bankruptcy, it is no less true that
The right becomes nominal or difficult to realize when assets are scarce,
immobilized or with little demand in the market. 129 And if this happens when
the workers are privileged creditors, the risk increases when the pension reserves
are invested in shares of the same company, since, in that case, they end up
running the risk of the partners who will only be paid after the satisfaction of
external liabilities, if there are still assets by then.
But the mechanism is not only important for the reasons stated above. The
growing difficulties that many countries face in managing their social security
programs administered by the State or by public law entities, have turned their
eyes towards private or mixed mechanisms through which recipients can be
guaranteed the coverage offered. , both in the field of pensions and in the field of
credits for certain purposes or health programs. And for this purpose, there is no
more useful instrument than establishing trust funds for that purpose.
d) Trusts in foreign currency
They are established in local currency but with the exclusive purpose of investing
in financial assets abroad. They offer small and medium-sized investors the
possibility of accessing other markets, through funds that meet the minimum
amounts necessary to operate profitably in them and that no one, individually,
would be able to reach.130
e) Other Funds
Some others could be mentioned, by way of illustration, such as special funds for
home acquisition; stock funds or investment funds of this type; "country" funds,
which raise resources abroad to invest locally, whose careful regulation should be
drawn to, as they have been a frequent instrument for the investment of the so-
called "swallow capitals", since they fly away at the first hint of crisis and
privatization funds, created to raise capital and participate in processes of this
nature.
2.13.3.
Guarantee trust
It constitutes one of the most interesting possibilities of trust business. It occurs
in all those cases in which the debtor transfers assets to the trust entity in order to
support the fulfillment of a main obligation in favor of a third party so that, in the
event that it is not satisfied in a timely manner, the debtor proceeds to sell them
and allocate your proceeds to the cancellation of the debt. Due to this aspect, it
presents undoubted advantages in relation to traditional forms of guarantee, such
as pledge and mortgage, since the creditor does not have to submit to judicial
procedures aimed at auctioning the assets, but rather in compliance with the order
received from his customer, the bank proceeds to sell or liquidate them and
satisfy the obligation. With advantages not only for the creditor, as one might
think, but even for the debtor, since what happens in practice when a guarantee
must be auctioned is that the minimum conditions of the auction result, not
infrequently, in the asset being auctioned. for values much lower than the
commercial ones, with which both parties are harmed and the debtor sees the
possibility of receiving the balance disappear.
Consequently, the intervention of a fiduciary entity is a guarantee for both parties
because using an agile and expeditious system it ensures obtaining the best price
and payment conditions for the goods in its possession.
A form of guarantee trust can be presented when a debtor in a bad business
situation and with difficulties in managing it, calls his creditors and, instead of
using a judicial procedure such as preventive concordat or being forced into a
bankruptcy of creditors or a bankruptcy, depending on the case, agrees with them
to deliver the assets to a trust entity to manage them, restore the balance of the
company and proceed to cancel the obligations as the recovery occurs. The key to
success will be to bind all creditors or the vast majority, taking care that the
dispositive decisions and agreements grant identical conditions to creditors of the
same category, so that no one can rightly feel sorry that the debtor has disposed
of all or part of his assets at a "suspicious time" in favor of a group of creditors,
thereby deteriorating the composition of the estate and the fate of the others.
Of course, as we warned, in guarantee trusts and in others mentioned, it is
possible that the assignment is carried out not by virtue of a fiduciary transfer but
by a simple fiduciary assignment. Think, for example, of the granting of credit
made by a financial institution that requires its debtor to constitute a guarantee
formed by a percentage of the debt in securities accepted in favor of the debtor
and that must be endorsed as a pledge to the creditor. . In this case, the credit
granting entity may not have interest in managing the collateral portfolio, which
in practice will constitute a revolving fund, and prefers that a third fiduciary
entity be designated so that it receives the securities endorsed as pledge from the
debtor. , returns them as their expiration approaches and demands, in exchange,
those necessary to replace them and, at a given moment, in the event of non-
compliance, proceeds to collect them from the acceptors and allocates the
resources to the payment of the costs, interest and principal debt. 131
This type of trust has deserved some objections because it is believed that it
becomes a mechanism for the creditor to take possession of the property received
as collateral; the fiduciary is placed in a position to exercise jurisdictional
functions and, finally, the debtor is deprived of the legitimate exercise of the
right of defense. However, both in the doctrine and in the jurisprudence in
Mexico and Colombia, to cite two representative examples, there are arguments
that, in general terms, would be applicable in other latitudes, because it has been
noted that the situation is not a controversial situation. that must be judged by the
fiduciary, but the simple factual circumstance that, on a certain date, a payment
has not occurred. Therefore, in the management that the fiduciary must carry out,
there is no field for subjective qualification on the conduct of the parties but
simply, on the circumstance of not having made the payment.
But, furthermore, it is not a question of the creditor disposing of the property
received as collateral for himself and before him, but rather that such property
has been previously transferred by the debtor to the trustee, in a deliberate and
conscious manner, entrusting him with a certain management that can be
translated Surely, in the sale of the asset and in the payment to the creditor, but
even in the fulfillment of other purposes, if the sum allows it.
and finally, it does not seem that there is actually a deprivation of the right of
defense if it is noted that the early waiver to dispute any accessory circumstance
has an eminently patrimonial and dispositive content, such as that which would
be implicit in a transactional agreement that provides for such a thing. To which
should be added the circumstance that if the trustee does not adequately comply
with the instructions of the debtor trustor, the latter will be in a position to
demand his responsibility and, of course, the corresponding compensation for
damages. In other words, the power to invoke his arguments does not disappear,
but he must do so before the person to whom he entrusted the management.
But, naturally, even though we fully share the arguments in favor, we must admit
that the questions that arose compromised, at some point, the better and broader
development of this figure, in some countries. l32
Experience has shown excellent results from its application, although there have
been no shortage of problems, which seems completely understandable to us for
a young and growing figure. Perhaps the first has been linked to its use on the
eve of economic crises, because when many debtors defaulted, it has been
necessary to put into operation the procedure planned for the liquidation of assets
and payment to creditors without this being possible. always be obtained
peacefully or with the expected speed. Among the main aspects that have
contributed to this happening we could mention the following: the mechanism is
or aims to be expeditious but cannot improve the quality or the market of the
goods that are transferred as collateral. If a property is poorly located, or has
legal problems, such as being invaded or being the subject of debates over its
ownership, or not being able to obtain the required licenses for a type of
development that was taken for granted, in all of these examples and in all the
similar, the asset will not intrinsically improve as collateral by being transferred
to an autonomous estate. And then, when it is put up for sale, you will face all the
marketing difficulties that you would have had to endure if the deal had not gone
through. Furthermore, if the real estate market is simply depressed, no serious
offers will be presented, but it will be as a consequence of such circumstance and
not the ineffectiveness of the trust that the sale cannot be achieved.
Another common problem may be linked to the fair valuation of the asset. It is
obvious that the appraisal carried out must be serious and reliable, as it will be
the basis for determining the maximum amount of credits that the estate can
support. If professional appraisers are not chosen who inspire confidence that a
fair price has been obtained, there is an enormous risk that when it is to be sold it
will turn out that the commercial price is lower, even significantly, than the one
that had been taken into account when issuing it to third parties. warranty
certificates. In such an event, the fiduciary will be exposed to liability claims, if it
did not act with the required prudence in the appointment of the appraiser or if it
overlooked gross errors or omissions in the expert's work. This has made it
advisable in practice to make the valuation known in advance to the creditors,
potentially recipients of the guarantee, to obtain their acquiescence, given that
they are the ones who bear the credit risks themselves.
Finally, without being exhaustive, there are many procedural aspects that can be
omitted or poorly regulated, with very negative effects on the fate of the trust.
For this reason, it is necessary to clearly define the way of carrying out future
appraisals, the way of putting the assets up for sale, the possibility of
progressively reducing the offer price, in the event that no buyer appears, the
hypotheses and the price for the which the creditor is obliged to receive the asset
in payment of the debt, the management of the differences between its price and
that of the former and, in short, all the elements that give clarity to the actions of
the fiduciary and, above all, do not allow space for subjective qualifications that,
in some way, lead to making him a judge of the behavior of the parties.
For this reason, we have maintained that the guarantee trust constitutes a typical
example of a collaboration contract in which the interested parties must adopt a
proactive position, that is, they cannot limit themselves to being spectators of the
development of the contract, but rather main actors who give their opinion,
instruct and they decide, when it is their turn.
A traditional position, shared by a good part of the legislation, does not conceive
that the guarantee trust is granted in favor of the fiduciary himself, under the
premise that he should never be able to become the owner of a trust asset, as a
consequence of the contract. . In addition to the legal restrictions that are usually
enshrined, there are obvious reasons for good judgment to avoid conflicts of
interest and an eventual legal transgression, because there would be a way for the
creditor to dispose of the pledge. We have maintained, however, that the situation
is less conflictive if it involves receiving an asset as collateral, when one of the
creditors is the parent company of the fiduciary or a closely related company.
Although we think that a neutral regulation, that is, one that does not make
differences between that entity and the other creditors, should overcome the
negative effects of a possible conflict, we think that if it can be avoided, it is
more convenient to refrain from doing so.133
2.13.4.
Testamentary trust
In testamentary trusts, there is the possibility of appointing the trustee in this way
so that, upon the death of the deceased, he or she receives all or part of his or her
assets with the aim of using them to fulfill certain purposes, either
- cultural nature, already for the benefit of some people, relatives or not of the
deceased. and we say that all or part of his assets because it must be taken into
account that in accordance with the rules on inheritance, it is not always possible
for the deceased to dispose of all his assets in favor of a third party, but he must
respect the rights corresponding to his forced heirs, so that, if there were any, the
testamentary trust would have to be reduced to the part of which he could freely
dispose.134 There are numerous possibilities that in practice arise with the very
destination of the assets, such as It happens of course in administration and
investment trusts, but in this type they are usually linked to the maintenance of
relatives, their education, hospitalization expenses, if they are sick people, etc.,
always with the possibility that be transferred to them later, when the causes of
helplessness or incapacity cease, if these are the hypotheses that justified the
assignment.
2.13.5.
Insurance trust
It can be linked to the previous one, in a certain way, and be established by
designating the fiduciary entity as the beneficiary of life insurance, for example,
so that upon the death of the client the amount paid is used for purposes that,
ordinarily, will be similar to those that we just mentioned.
Another hypothesis that could be imagined would be to designate the trustee as
beneficiary of damage insurance, so as to guarantee, by this means, that in the
event of the eventual loss of an asset, the sums received as compensation are
effectively and timely allocated to its replacement, so that, for example, the
industrial or commercial process of which it is part is not interrupted or is only
interrupted for the minimum time required.
2.13.6.
Development trusts
Characterized by the presence of international or governmental credit entities and
by the application of resources to purposes of community interest or
development, linked to programs that are especially interesting for countries in
the developing world, whether the resources come exclusively from state
contributions, as when it comes to mixed funds in the so-called co-financing
programs, in which state resources or international entities, and those of the
private sector, participate.
In developing these possibilities there are funds administered by the Inter-
American Development Bank, the World Bank, and the central banks of different
countries.135
2.13.7. Real estate trusts
Even though they may participate in the generic characteristics of administration

and/or investment trusts, the truth is that one of the areas in which the trust has
proven to be most attractive is in the development of real estate projects in which
the presence from numerous parties, with different and often conflicting interests
and the need to provide sufficient guarantee to all those involved, explains its
enormous success. Simply think of the development of an urban land on which a
plural number of buildings are planned to be built and in relation to which it is
necessary to make contacts, both with the specialized credit entities that provide
long-term resources, as well as with the interested in construction who would
even be willing to advance funds to pay part of the price, contracting plans; with
the construction engineers and the cakulistas; with the municipal entities that
must grant permits; with government control entities; with the owner of the land
of course, etc. Well, the presence of all these interested parties can be reconciled
with advantage when a specialized entity supports the ownership of the property
in its head and offers, therefore, full security that there is a balanced and
professional scheme so that the contract is developed in the correct manner. and
terms that have been agreed. 136
The development of this figure has made it possible to recognize different
modalities that, on the one hand, are differentiated by the degree of participation
of the fiduciary,
. whose obligations could range from the complete ones that correspond to the
previous scheme to the simplest ones of managing the monetary resources used
in the real estate project, to guarantee their timely and exclusive use. Likewise, it
has allowed projects to be carried out both at a fixed price, for the final
purchasers of the units, in which case the inherent financial risks must be borne
by the constituent, which must have the required capital capacity, and to develop
projects at cost or at variable price, in which the participants associated with the
fate of the project aspire to benefit from a reduction in costs, compared to the
prices they would obtain in the market, as will surely be reflected in the budget,
but they must bear the risk in their heads. of the opposite happening. The fixed
price modality has been used, fundamentally, to carry out plans at a popular level
while the latter are reserved for programs for participants with significant
income, who can precisely measure the risks inherent to a variable cost program.
In the so-called classic real estate trust, because it is the most used scheme, it is
possible to recognize three different stages. The previous or preliminary aimed at
reviewing the basic documentation, such as titles, permits from the authorities,
plans and feasibility studies, but, above all, to obtain potential investors, that is,
the people who would be willing to "buy" in plans and that using the fiduciary
scheme, they can do so from that moment on without any risk. In effect, their
connection will initially entail committing to put the sum that, according to the
flow of funds of the project, is planned as the initial payment of the investors,
which will be deposited in the ordinary common fund, or invested profitably, if it
does not exist, with instructions irrevocable that, if at the expiration of that stage
the conditions set out in the project are met - and only in that case - the resources
with their returns will be transferred to the project fund and the next stage will
begin.
Now, in our opinion, the most interesting contribution that has been achieved
with this scheme is to establish as a necessary condition that of obtaining a
"commercial balance", which we have called that instead of financial to indicate
that it is not about obtaining sufficient bank credits to carry out the project, but to
commit a sufficient number of interested parties who will not only contribute to
the flow through the payment of part of the price during construction, but, more
importantly, ensuring the minimum number of buyers that guarantee the recovery
of construction costs, so that the unsold units reflect the expected profit. If the
market does not react as quickly as expected in relation to them, profits will be
affected and may even be lost, but the fate of the project will not be
compromised. The second corresponds to the actual development of the work and
will be characterized by the execution of work and supply contracts, under the
direction of a work management team, which on some occasions is assumed by
the trustee, and with the supervision of an intervening engineer. And the last one
involves the liquidation of the project, including the deeds of the resulting units,
the processing of subrogations before the financial entities that have granted
credit for the construction and that are now replacing it with individual long-term
credits for the buyers and the final accountability, typical of trust businesses.
This complex scheme has been largely abandoned due to the enormous demands
of infrastructure and internal organization that it imposes on the fiduciary when
venturing into an activity that, naturally, is not theirs and that can generate severe
liability, due to the many obligations that usually arise. assume Instead, there is a
tendency for the latter to play the role of administrator of the resources, to ensure
that they are allocated to the project, which is no small feat for the investors, and
to participate in the required supervision and contracting, through committees of
management of which he is usually part, with voice but without vote. m
In some countries, trusts established by the government are of great importance,
not only designating credit institutions as their fiscal agents but, for example,
entrusting them with the management of funds intended for the granting of direct
loans or networks of credits granted by the financial entities with a specific
purpose. Likewise, it is possible to allocate resources to establish a trust for the
execution of a specific work that, due to its long scope and high cost, presents
complex aspects that can be controlled and managed advantageously by a
specialized entity such as a bank.138
In some countries, trusts established by the government are of great importance,

not only designating credit institutions as their fiscal agents but, for example,
entrusting them with the management of funds intended for the granting of direct
loans or networks of credits granted by the financial entities with a specific
purpose. Likewise, it is possible to allocate resources to establish a trust for the
execution of a specific work that, due to its long scope and high cost, presents
complex aspects that can be controlled and managed advantageously by a
specialized entity such as a bank.138
Despite its multiple applications and obvious advantages, the public trust has
been the subject of important debates, most of the time because it is considered,
in the voices of its critics, that through its constitution contractual and even
budgetary limitations that may be overlooked. They are mandatory for state
agents. In truth, we have censured any form of misuse of the trust and we have
insisted that it cannot be used to attempt, through an oblique means, to carry out
businesses or operations that would be prohibited to the trustor for reasons of
public order or good customs. But from there to generically disqualifying its use
by the State, there is an enormous distance, since experience shows, on the
contrary, that its use is growing and sustained, since there are many contributions
that can be made with the use of this instrument to the good. management of state
assets. 139
2.13.9.
Nationalization and privatization trusts
An interesting modality found in some countries is that in the nationalization
processes of companies aimed at allowing them to participate in expanded
markets, such as in regional groups or enjoy some advantages from the tax point
of view, participation in the exports, etc., difficulties may be encountered in
selling, with the desired speed, part of the shares constituting the capital because
there is no market among national investors at that time or the prices on the stock
exchanges do not seem convenient, etc. Well, in this hypothesis, a very
interesting solution has been found to sell or transfer the necessary shares
required by law to a trust entity so that it fulfills the task of gradually placing
them among national investors, so that in the end the proportion required by law
to have a company as national.14o
Likewise, its use to support the reverse process is interesting, that is, that of
privatization of state assets, when political evolution and new economic concepts
have turned in the direction of reducing the size of the State, especially in
industrial or commercial sectors where It is assumed that there may be a better
performance of the private initiative. The approach, of course, is not peaceful and
gives rise to heated debates when it comes to the provision of traditional public
services, since left to simple private initiative and management, there is a risk
that, at a given moment, they will not be able to solve the problem. community
demand and the State is in real trouble to make up for the deficiency, since doing
so from the budget would end up subsidizing, in this way, a private businessman.
141
Since this is not a book on banking techniques, there is no room to analyze

innumerable hypotheses and mechanisms applied in fiduciary businesses, but we
do not want to end without repeating that, given its structure and the great
flexibility that results from being able to allocate assets for any lawful purpose,
they are innumerable that practice provides and the very interesting combinations
that result from the needs found at a given moment.
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59. El Salvador, art 1233 C. Co.
60. Autonomous heritage: Colombia, art. 1233 C. Co.; Costa Rica, art. 634 C.
Co.; Bolivia, art. 1410 C. Co. Affected heritage: Mexico, art. 386 LGTOC;
Honduras, art. 1048 C. Co. BEHRMAN, op. cit., p. 19. GIRAlDO, María Helena;
SAN IN, Nora, consider that the assets constitute a special or reserved patrimony,
and not an autonomous patrimony as established by C. CO., because in doing so
"he incurred a terminological and conceptual imprecision", op. cit., p. 117 V.
supra. Chap. XXII, note 48 of this chapter.
61. Colombia, art. 146 No. 7 EOSF
62. Colombia, art. 1238, C. Co. Circular 007/96 T.
63. V., SS. Venezuela, art. 4th L. of F.
64. Costa Rica, art. 660 C. AC.; Colombia, art. 1242 C. AC.; Bolivia, art. 1422
C. AC.
65. Mexico, art 358 C. AC.
66. Mexico, art. 394 LGTOC; Honduras, art. 1050, 1 C. AC.; Guatemala, art.
789, 1 C. AC.; Costa Rica, art. 661, a. C. Ca.; Colombia, art. 1230, 1 C. AC.;
Bolivia, art. 1413.1 C. AC.
67. BATIZA, ap. cit., p. 301. Colombia, art. 1368 C. c.
68. BATIZA, op, cit., pp. 303/3. Colombia prohibits "the benefit granted to
various persons successively", art. 1230, 2 C. Co. In the same sense, Costa Rica,
art. 661, b. c. Co. and Bolivia, art. 1413, 2 C. Co.
69. Examples of the first group are: Venezuela, art. 9° L. of F., limit for legal
entities: 30 years; Costa Rica, art. 661 C. Co.; Honduras, art. 1050, 3 C. Co.;
limit for non-excepted legal entities: 30 years. Panama does not indicate a time
limit. Examples of the second group are: Guatemala, art. 790 C. Co, those that
are established for more than 25 years are valid, but will be reduced within that
period, except in exceptional cases; El Salvador, art. 1236 C. Co., maximum
term: 25 years, with exceptions; Colombia, art. 1230 C. Co., maximum term: 20
years, with exceptions.
70. Costa Rica, art 647 C. Co.
71. Colombia establishes that "The trust business may not serve as an instrument
to carry out acts or contracts that cannot be entered into directly by the trustor in
accordance with legal provisions." eE 007/96 Title v. The Banking
Superintendency has censured such attitude on different occasions (see, among
others, concept DB 777 of 1987).
Chapter XXIII
SECURITIZATION
1.1. THE VARIOUS REGIMES
The independent treatment of this issue is due to the fact that not in all countries
it is linked to banking activity, but more directly to the capital market and,
consequently, it is regulated by provisions of the Superintendency of Valares or
the specialized entity. Let him do his thing. For this reason, the professional
agent that constitutes the axis of operation is not always an entity in the banking
sector, "strictu sensu", but rather one of those that act under the orbit of the stock
market. 1 But, furthermore, the fiduciary scheme is not the only one that allows
securitization to be carried out, although, without a doubt, it is the one that best
suits the purposes of the process.2
1.2. THE ENVIRONMENT
The development of securitization, securitization or securitization, which is

known by these various names in our countries, has been the result of a process
of maturation of the capital market, by virtue of which entrepreneurs stopped
going directly to financial intermediaries. to demand resources from institutional
investors and individuals in general. It was, therefore, the result of the process
that allows for different solutions to meet the capital requirements of a
businessman, starting with the request for contributions from his partners, and
which goes through taking traditional credit, until reaching the issuance of debt
in the market, among which the most important, the privileged shares and the
bonds that we have discussed in chapter VIII, until reaching this relatively recent
instrument. In fact, with the exception of the United States, the developments in
the main European countries occurred very few years before, for example, in
Colombia the first regulations on the matter were issued.
However, it was not enough that a culture of issuance of documents had been
created in the capital market; it was also necessary to have specialized takers who
were in a position to absorb massive and permanent issuances of documents. And
this has happened in recent years, especially due to the strengthening of the trust
companies themselves or the entities that manage investment funds and, very
especially, from the appearance of pension and severance fund management
companies, because all They are natural medium and long-term investors. To
which are added the provisions that have been encouraging the development of
the figure in our countries.
1.3. NOTION
We have said that through securitization it is possible to transform fixed or

slowly rotating assets into cash, or flows whose income is expected, through the
issuance and placement on the market of homogeneous securities, backed by
autonomous assets constituted in the transfer. prior to those.
The mechanism, without a doubt, is typically fiduciary, because it involves the

transfer of assets to an agent, so that with the support of the assets formed by
them, they issue debt papers.3
2.
PARTS INVOLVED4
2.1.
ORIGINATOR OR CONSTITUENT
It is the person or entity that has mobilizable assets, such as those that we will
mention later, normally characterized because they are slow-moving assets, as
can occur with the medium and long-term portfolio or immobilized assets such as
real estate, or mere expectations derived from the operational capacity of the
company, by virtue of which it expects to receive income in the future derived
from its activity. In all these cases, whether they are slow-moving assets, whether
they are immobilized assets or just assets that are about to be entered, their
transformation into cash relieves the structure of the balance sheet and increases
the cash flow, with the obvious advantages that this means.
From the accounting and financial point of view, the securitization operation
involves the transfer of assets registered in the asset and its initial replacement by
a record of the investment in the trust, from which and as the papers are placed in
the market, these fiduciary rights will be replaced by cash and banks. In other
words, the initial transfer of assets does not immediately convert them into cash.
There is, above all, an expectation, even if the placement occurs practically
simultaneously. In the interregnum, the fiduciary investment account reflects the
credit position of the originator against the assets managed by the issuer, until all
the papers representing the mechanism end up being placed in their entirety.
Naturally, when it comes to securitizing expected flows of funds, the contract
will be recorded in memorandum accounts, since there are no pre-existing assets
and its execution will affect, in due course, the income statement.
2.2. MANAGING AGENT OR ISSUER
It is, without a doubt, the axis of the process. If we start illustratively from the
well-known scheme, it is the fiduciary entity that receives the assets for the
constitution of an autonomous estate with the characteristics widely explained in
the previous chapter. Normally, they can only be entities that have received
authorization from the State.
Among the main obligations it assumes, as its name indicates, are to obtain the
required state authorizations, issue and place the resulting documents on the
market, and respond to third parties with the management of the assets and the
products produced by the entity. payment, both of the returns and of the capital,
when the time comes for its redemption. It is also, from this point of view, that
the management agent or issuer constitutes the reference point of the operation,
compared to third-party investors and other agents or entities that participate in
the issuance process.
2.3.
THE ADMINISTRATOR
Unlike what normally happens with trust businesses, securitization has generated
the appearance of a new actor on the scene, the administrator of the assets, which
can, of course, be the same trust entity, but which can also be a third party. under
the responsibility of the latter, or even the originator himself.
The fact that one of the most desirable securitizable assets in the markets is made
up of a portfolio makes it explainable in practice that they remain under the
ownership and administration of the originating company. In effect, consider that
this portfolio is widely distributed geographically, assigned to different offices
responsible for the relationship with clients and that, therefore, it would not make
sense to physically transfer it to the fiduciary or administrative entity, so that it
would have to be duplicated. burden of managing the portfolios, their collection
and collection. Naturally, this will entail the constitution of specific guarantees or
the establishment of mechanisms that provide sufficient peace of mind to the
management agent, regarding the moral and economic solvency of the
administrator, since otherwise enormous risks would be run for third parties, for
which the administrator would be responsible. .
2.4.
THE PLACER
As usually happens in the placement of papers in the stock market, they are
entities specialized in securities brokerage, which, with sufficient advance notice
and within the complex structuring of the business, assume the role of placement
in the hands of institutional investors. This management, which is known as
"Underwriting", involves the existence of different degrees of commitment. From
the one that would simply be limited to offering the papers in the market under
the expression of their "placement by the best effort" to the one that is technically
more attractive for issuers, and is the firm takeover of all or part of the issue,
either to be kept in the broker's portfolio, when the rules allow it to have its own
position, or to be relocated among market investors.
In other words, although the papers can be placed directly by the issuer, they
frequently use the collaboration of experts through a commission contract.
2.5.
THE STRUCTURER
The process of issuing and placing papers through securitization is not simple.
Like any debt issue, it involves a financial analysis that is particularly sensitive to
the market and its expectations in the short, medium or long term, depending on
the issue. Most especially, you must get the configuration of the papers right, as
regards the currency, term and nominal values, and of course, for their financial
remuneration, and whether interest rates are offered, whether they are placed
through a discount. For this reason, a structurer, normally known as an
"investment banker" who, in consideration, precisely, of the needs of the
company, and after the study, usually also intervenes and does so before the
operation is set up. of the different options or alternatives to strengthen its assets
- which may have gone through considerations of possible mergers, acquisitions,
spin-offs, etc. - recommends and/or participates in the market study, by virtue of
which the characteristics of the issue are defined projected.
2.6. THE RISK RATER
Under the thesis that has become axiomatic in recent years, that the best control
of collective debts is produced by an informed market, which has translated,
among other things, into the demand for careful "disclosure" of the balance, the
participation of professional risk rating agencies has been resorted to, that is,
companies specialized in evaluating paper issues and assigning them a reference
rating to go on the market, but which could be reviewed throughout its life. 6
Two observations seem to be interesting in relation to these entities. Firstly, they
do not properly rate the issuer, but rather they rate the respective issue. This
means that, at any given time, it may happen that an issuer, think of a sovereign
risk or a major corporation, has several placements of papers on the market
simultaneously. And that they, even, are both bonds and results of securitizations.
Well, in relation to the latter, the originator, transmitter of the assets, nor the
issuer or administrator of the resources is qualified, but rather the quality of the
issue, due to the particular characteristics that distinguish it, both in terms of
what it says with the assets that constitute the autonomous equity, as well as with
what concerns the leverage or coverage mechanisms, which we will prefer later,
and which constitute a fundamental piece to define the final quality with which
the papers come to the market.
On the other hand, two rating levels are usually established, what is known as
"investment grade" which reflects low levels of risk and what is called
"speculative grade" which by definition entails a risk for the investor. Although
issuers frequently seek to improve assets to achieve a high rating, within the first
grade, this does not exclude the issuance of papers whose rating is speculative
since they are also required to form the fund portfolios that, through placing part
of their resources in papers of this type, increase the average yield of their
placements, with the higher profitability that they usually provide.7
The often large fluctuations of the stock markets in the world, and the bankruptcy
of large companies, have generated numerous doubts about the good behavior of
companies listed on the stock exchange, despite being subject to the opinion of
renowned auditors, often international, which is why there are many debates that
have arisen about the effectiveness of controls and the quality of their opinions
regarding the health of companies and the trust they can deserve from the public.
For this reason, emphasis must be placed on the convenience of the rating
agencies' actions being particularly careful, since due to the circumstances
presented it is necessary that their opinion constitute true and solid support for
decision-making by investors.
2.7.
THE INVESTORS
And of course, this entire setup would be meaningless if it were not accompanied
by the presence of investors, as we already mentioned. But it is obvious that even
if the market for individual investors were strong, and in most of our countries it
is not, sustained placements of securitizations will only be possible to the extent
that large institutional investors, such as the companies themselves, are
strengthened. fiduciaries already mentioned, pension and severance fund
administrators and insurance companies8 or foreign investment is permitted.9
3. INSTRUMENTS
3.1. FIDUCIARY MECHANISMS
We already warned, but we mentioned it so as not to lose the order of the

presentation, that the placement can be made by trust companies through
autonomous assets or the constitution of special funds, managed by them, based
on a contract, whose structure It seems to be particularly well suited to achieving
the purpose sought by the originators, or even by securitization companies
created for special purposes. 10
3.2.
STOCK FUNDS
But they can also result in the creation of securities funds managed by
commission agents or stock agents. II
4.
TITLES
Normally, the securities issued can have a triple possibility: first, securities with
credit content by virtue of which the issuer is obliged to pay determined sums for
capital and interest; secondly, what we have called participation or associative
titles to indicate that the investor participates in the profit or loss results of the
respective business, and finally, mixed titles that allow combining characteristics
common to one or another modality. 12
Normally, such negotiable documents will be considered securities as long as
they are registered in the national registry of securities and intermediaries, with
the exception that the holder cannot exercise return exchange action against the
issuer.
As far as its circulation law is concerned, the titles can be nominative or made to
order - bearer titles are not normally accepted - and their redemption period is
usually established by law, D
5.
MOBILABLE ASSETS
Begin by noting that in the experience of the United States and Europe, the most
significant manifestation of securitizations relates to expected flows and the
mobilization of portfolios. It is practically unthinkable that such a thing could be
done from real estate assets. When this is allowed, and this is the case of some
countries in Latin America, it constitutes one of the most interesting
developments that can be attributed to this mechanism. 14
5.1.
PORTFOLIO AND DEBT SECURITIES
To refer in principle to that generated by private entities, which includes all
forms of debt securities. If credit institutions are by definition the largest
portfolio generators, it will not be difficult to understand why the financial sector
itself is the first potential originator for the mobilization of these assets.
Given the importance it has in positive regulation, we will dedicate a point later
to its presentation in detail.
5.2. PUBLIC DEBT

Characterized exclusively by referring to liabilities placed in the markets by so-
called sovereign issuers.
5.3. ESTATE
It constitutes, as we anticipated, one of the greatest novelties compared to what
occurs in the vast majority of countries. And it has the enormous advantage for
companies, to be able to reduce their immobilizations and convert them into cash
with obvious benefits for the structure of their balance sheet and their cash flow.
As in the case of the portfolio, we will make particular reference to the topic
later.
5.4.
CASH FLOWS
These are those expected as a consequence of successive contracts, and they
constitute, especially in the North American experience, one of the most dynamic
examples. Under this section, it is possible to consider securitizations, for
example, of billings expected by public service companies or billings expected
by credit card issuers or income derived by public works concessionaires
recoverable through tolls, to present some of the most representative
examples. .fifteen
5.5.
LEASING CONTRACTS
Here your consideration could fit within the previous point. In effect, what is
mobilized in the leasing contract is precisely the expected cash derived from the
leasing contract. Therefore, the transfer, for the constitution of the autonomous
assets of a plural number of leasing contracts, rather than contributing to the
contractual position, means contributing to the credits derived from such
circumstance.
There is a technical problem that has arisen with leasing contracts, because some
people have argued that the contracts should be transferred to the autonomous
estate, so that there is both the asset at the head of the estate and the possibility of
receiving the salvage value at the end of the lease. contract, in which case it
would be necessary to have ownership of the asset. We do not find it necessary,
in any way. Ultimately it is just a matter of transferring a flow of funds to the
assets at their net present value, that is, discounted with a rate owner of the
equipment, but the obligations related to the sale option in favor of the lessee.
5.6.
MONEY RESOURCES
A very curious securitization system has been established in our country, by
allowing instead of transferring assets to constitute an autonomous patrimony and
thereby converting them into liquidity, money is transferred to acquire the assets
that constitute the patrimony, based on which debt papers are issued.16
5.7. OTHERS AUTHORIZED BY THE CONTROL ENTITY
So that the possibilities are not exhausted, and taking into account the
dynamics of the markets, some legislations have provided for the securities
regulator to be the entity that can authorize the issuance based on assets other
than those just mentioned, or that limits the possibility of doing so with respect to
anyone in a
given moment.17
6. PROCEDURES AND EFFECTS
In accordance with the regulations, the placement of papers produced by a

securitization, follows the same procedure as all the papers that may be placed by
public offering and culminates with the registration of the same in the Public
Registry of Securities and Intermediaries, which among others things, enables it
to be traded through stock exchanges.
Normally, these documents tend to enjoy the characteristics and privileges that
the law prescribes for securities.18
7. PORTFOLIO SECURITIZATION
7.1. BANKING QUALIFICATION CRITERIA, THE BASEL COMMITTEE
At the time, we are referring to the activities that the so-called Basel Committee
has developed since 1975, in matters of high importance for banking regulation
and very particularly in relation to what have been called fundamental or basic
standards of prudential regulation. Among them, those that lead to defining a
uniform portfolio classification in five groups that range from the normal
portfolio type A to the irrecoverable E portfolio have particular recognition,
within the three major classification categories that divide it into consumer
portfolio, commercial portfolio and mortgage portfolio.
The application in internal legislation, since before Basel recommended it, but
without a doubt, with a great tendency towards homogenization, after its
recommendations have been produced, has led to the portfolio that makes up the
credit portfolio of the entities banking, is qualified with these criteria, which are
translated into a series of effects, such as the regime of accrual or reversal of
interest and the constitution of provisions on capital, depending on the
progressive deterioration that the portfolio is having, and which must be reflected
in the corresponding grade.
Well, maintaining a portfolio of less attractive profiles for a long period of time
can be highly inconvenient for the presentation of a banking entity's balance
sheet. Therefore, the possibility of taking it off your balance sheet can justify,
even the payment of a price, financially necessary to carry out and produce what
we have called "the miracle of securitization" by virtue of which, it is possible to
transform a bad portfolio into an excellent role, with obvious advantages, both
for the originator and for investors. How is this achieved? Through the use of
internal or external coverage mechanisms that guarantee or make effective the
expected flow, which will be carefully verified by the risk rating company.
To this end, a historical study of the portfolio that intends to be securitized is
essential, in order to measure its intrinsic risk and its loss ratios, obtained from
which it is possible to cover them through such mechanisms, thereby affecting
the behavior of the portfolio. , which could in fact be mediocre, if it is constituted
by that rated, for example, at C, the projected flow improves, due to the
contribution derived from the coverage mechanisms, with which the combined
result is sufficient to meet the remuneration offered to the investor. In other
words, if the definition of the level of expected risk is done correctly, it will be
possible to neutralize the negative effect of that factor, thereby making the risk of
the securitization different from that of the transferred portfolio.
For example, we constitute an asset of one billion pesos, made up of 50% by
securities rated B and 50% by securities rated C and hypothetically we imagine
that the accident rate of the former is 2% annually and the of the latter 6%, from
which the combined expected accident rate is 4%. Let us assume that in
accordance with current regulations, it will be possible to cover the accident rate
by applying a coverage coefficient of 150%, so, in our example, the total
coverage should be equivalent to 6% of the assets, that is, sixty million. of pesos,
with which it is expected to cover the forty million pesos (4%) that historically
must be lost and an additional twenty (2%) are assigned in the event that the
behavior is worse than expected. Well, it can be obtained as
. we anticipated through the mechanisms mentioned below. 19
7.2. COVERAGE MECHANISMS
7.2.1. Internal mechanisms

Among the main ones that legislation and scholars recognize, we can mention the
following:
7.2.1.1. Subordination of the issue

In this case and always based on the numerical example presented above, we
would then have that of the one billion pesos issued, the originator would retain
sixty million pesos in its portfolio, and would subordinate its collection to the
effective payment to the investors taking the other nine hundred. forty, so that, if
at a given time, the behavior of the capital collection of the portfolio did not
generate nine hundred and forty million pesos to pay third parties, he would put
his resources up to the entirety, that is, up to sixty million pesos to ensure the
difference. Naturally, from that moment on and if the behavior were so far from
what was expected, that even with those resources the payment of third parties
could not be met, the risk in this case would be theirs exclusively.
7.2.1.2.
Portfolio overcollateralization
It is also possible, even when the mathematical example is not exact, because it is
only a question of giving an order of magnitude, to think that securities are
placed for a billion, but portfolio ownership is transferred for a thousand and
sixty, in which case the excess would be allocated to erase the possible deviation
in the behavior of the collections.
7.2.1.3.
Excess cash flow
It may happen, and this frequently occurs in the markets, that securities are
transferred whose intrinsic yield is higher than that obtained at that moment, with
which the cash flow generated by the collection of the transferred securities is
higher than that demanded for payment. to investors, in a difference that is
equivalent to 6% of the value of the total, as we have just accepted to illustrate
the example.
7.2.1.4.
Wallet replacement
It is also possible that the originator undertakes to replace a portfolio, whose
accident rate corresponds to that expected and to the additional coverage margin,
so that, to the extent that this occurs, a substitute with the same initial rating is
transferred, in the understanding that possible deviation is being protected in the
percentage definition of coverage.
7.2.1.5.
At the originator's discretion
In this case, in reality, it is a precarious guarantee, because the assets as such only
have a credit right against the originator, which, as in the previous case, leaves
third parties free, in the first hypothesis to the existence of a portfolio. sufficient
and in the second, to the economic capacity and the ethical decision to honor
their commitment. Needless to add, then, that these last two will not be accepted
except when they are originators of exceptional quality, because whether the
coverage fulfills its purpose depends to a high degree on their compliance.
7.2.2.
External Mechanisms
7.2.2.1.
Vouchers or guarantees from financial institutions
Naturally, if these are first-class entities, this is the best coverage mechanism. We
already analyzed the notion of signature credit and the scope it has in
empowering banks to guarantee obligations of their clientele.2O
7.2.2.2.
Credit lines or openings
This involves the originator obtaining from its bank a line of credit up to the
amount of coverage, sixty million in our example, which can be used at the
initiative of the issuer to cover the portfolio's claims with disbursements.
7.2.2.3. Credit insurance
For usually exceptional events, where legislation allows it, credit insurance
would also be appropriate. In this case, it would no longer be a question of
knowing the solidity of the bank, but of the insurance company that granted it.
7.2.2.4. Deposit of money as guarantee
Naturally, the best support would be provided by the constitution of a cash
deposit, for the amount of coverage that could be applied for the purpose that
justifies it.
7.2.2.5.
Irrevocable guarantee trust contract
This would be another way in which fiduciaries would play a role in relation to
securitization. In effect, it would involve the originator transferring other assets
or even portfolio, to a trust entity, with the irrevocable order to allocate the
proceeds of its collection to the required coverage.
8.
REAL ESTATE SECURITIZATION
In the countries where it is allowed, we have already said, it constitutes one of
the most attractive possibilities. And when combined with what we have called
classic real estate trust, it leads to offering a very varied portfolio of options, both
to property owners and potential investors, through the development of products,
which precisely, due to their variety, serve different potentially investing market
segments.
8.1.
THE CLASSIC REAL ESTATE TRUST
We just referred to it. It is enough for us to note here that by virtue of this real
estate model it is possible for the owner of a plot of land to contribute it along
with the feasibility studies, and for example the plans, to develop a real estate
project with the resources contributed by adherent trustors. , interested in the
acquisition of the units that are finally obtained. This would allow, and we will
take this example in all cases, to build a building worth a billion pesos. Under
this traditional scheme, the first resources obtained from third parties, during the
previous stage, were used to pay the value of the plot of land and the studies.
This seemed logical, but since there was no easy control over the value of the
first, it could result that investors bought it for a high price, which would only
have been achieved as a consequence of the valuation resulting from the project
becoming a reality, that is, at final, with which they paid the owner an unearned
value in advance. In this case, the promoter, frequent owner of the property,
disappeared from the scene, and the project was freed from the joint efforts of the
trustee and the investors, who ended up carrying it out with the credit resources
and periodic contributions of the latter, without that in the end the price paid was
especially advantageous compared to having purchased it directly from a builder.
8.2.
REAL ESTATE GUARANTEE SECURITY
Under it, a property is transferred, in relation to whose value a percentage can be
issued in securities to be placed with third parties, who receive a return with the
support of knowing that, in the event of non-payment of interest or capital, the
trustee will liquidate the asset and proceed with its proceeds to pay off the debt.
We say that the issuance is made for a percentage, imagine for 80% of the value
of the property, which we assume is one billion pesos, because in every
guarantee business a margin is usually established between the value of the assets
and the debts they support. . This is what has traditionally happened with
mortgages, and it is the part that inspires this matter, the guarantee trusts.
Therefore, in the example we have taken, papers are issued for eight hundred
million pesos, imagine, with a three-year term, with a return of 10%, let's
assume, so if the market capture rate is 8 or 9% constitutes only a small incentive
for a conservative investor, who finds a satisfactory guarantee in real estate
support.
8.3.
REAL ESTATE SECURITIZATION OF PARTICIPATION
This is what we have called it, because titles are transferred that grant the
participant an association or risk in the results of the exploitation of the asset and
its subsequent disposal, a product in relation to which the main benefit expected
by the investor is constituted by the valuation. expected of the property during
the term of the contract. Let's imagine that the same property worth one billion
pesos is transferred to an estate and securities are placed for their nominal value
for five years, after which the investor expects the property to be sold to third
parties or repurchased by the originator or acquired. by a pre-established
mechanism that ensures its sale, and the price obtained grants, as a result of the
valuation, a remuneration higher than the ordinary profitability.
But the most common and interesting thing about this product is the possibility of
issuing mixed titles. A classic example will be the transfer of a leased property to
a leading company, to issue five-year securities in which the participants receive
a monthly percentage as a return, let's imagine 6%, which can be paid with the
income. of the rent, but they play with the expectation of obtaining an
appreciation of the property.
8.4.
SECURITY OF CONSTRUCTION PROJECTS
This allows the owners of a plot of land, for example, with projects, plans,
feasibility studies, etc. They contribute them to constitute an autonomous
patrimony and issue papers in the market to obtain the resources directed to the
construction, with a fundamental difference compared to the classic trust, and
that is that the constituents contributing the assets have to remain until the end of
the project, retaining in their possession the titles that correspond to their
contributions, which are otherwise subordinated to the results of the operation.
This mechanism, which also allows the issuance of mixed securities, for which
the investor is paid an interest rate that will be lower for the builder than what he
would have to recognize in the market for equivalent funds, is important in
which, from the market point of view, is substantially different from the classic
real estate trust. In fact, and in the same example that we are studying, if a
property is made through a classic real estate trust to build five apartments of two
hundred million pesos each, it is necessary to look for high-income people who
are looking for a home of that type to purchase it. guy. But if what is done is a
securitization and securities are issued for one million pesos each, then what it is
about is marketing them among investors who can be investors even for small
values, and whose expectation is linked to obtaining a combined profitability. ,
between what you receive monthly interest and the profit that can be obtained at
the time of the sale of the property, imagine for our example, 18 months later.
This may even be higher than what you would obtain in a participation real estate
project, because while in the latter the building is constructed, in the real estate
project there is naturally the risk of its development, and naturally of the market
it has for the sale of the apartments upon completion.
And in fact, as it is possible to place small value securities, a different marketing
system can be chosen, for example, through the so-called "briefcase sellers" who
look for an investor who is thinking about profitability above all, which does not
exclude that at a given moment, one of them will make investments for two
hundred thousand dollars, because they also aspire to keep an apartment once the
project is completed.
But, as is obvious, while in one case it is about looking for potential home
buyers, each of whom must invest two hundred million pesos, in the other it is
just about looking for investors who find
They provide interesting support in the home and can invest from one million
pesos onwards.
8.5.
SECURITY THROUGH REAL ESTATE FUNDS
In this case, what is received is money to invest in a real estate fund, which in
turn places the resources in real estate assets, in papers issued in real estate
securitization processes and in other similar products. Therefore, through
securitization, what is obtained is a fund with diversified risk in the real estate
sector.
But the interesting thing about this range of possibilities is that, as we
anticipated, it represents a very wide diversity, on the one hand for those who
have lots
. of land, construction projects or completed properties, and another for investors
who also find options in terms of term, risk and therefore profitability. The
summary table that we present below fully illustrates what we have been
reaffirming. Indeed, it is clearly seen how, for example, and thinking in the case
of the owner or administrator of a fund to take all the events, the mechanisms
allow them to obtain resources as collateral or to sell their apartments, or to
complete what is missing. For the construction.
Let's see what happens. In 1, the owner sells his lot, in cash or in installments and
the investor ends up buying an apartment that pays for installations.
In 2, the owner obtains a three-year loan for 80% of the value of the property and
the investor obtains a return slightly higher than the bank, with the guarantee of
the same property. In 3, the owner sells the property for 100% of its value with
the risk for the investor of ending up receiving a reduction in interest, if the asset
does not register an appreciation at the end of the period, but with the natural
expectation that, in Otherwise, you may obtain a combined profitability higher
than that of the other options. In 4, the owner obtains resources against the
project for 70% of its value, but has to sell it in the end, since investors, more
than in an apartment, are thinking about a medium-term investment, in which
they will receive a lower rate to that of the market but, as in the previous case,
trusting that the apartments are sold in a timely manner and with the appreciation
they surpass it. Finally, in 5, the management of real estate funds offers third
parties a diversified and therefore less risky investment and a variable interest,
which can be slightly above the banking market rate.
9.
SECURITY IN CONCESSIONS
Let's make this brief comment of interest for concession contracts. They have
experienced an important contemporary development, in view of the fiscal
difficulties, which mean that governments do not have sufficient budgetary
resources to undertake important public works. For this reason, it has returned to
a concessional system, by virtue of which individuals are invited to receive a
project on the concession system, by virtue of which they, with their own
resources or with those obtained in the markets, carry out the infrastructure
project and then commit to managing and maintaining it, paying for their
investments and the expected profitability with the product of the income
generated by the work. If we think of a classic example, it would consist of the
construction of a highway, under the toll system. Now, in a project of this nature
there are usually two clearly distinguished stages. A first, for the physical
construction of the work, which can take a few years, where it is not difficult to
obtain resources from banks, local or international. But it is not equally easy to
obtain financing for the exploitation period of the work, which can easily be
fifteen or twenty years, to mention a reasonable figure. So the business is set up
on the basis of assuming that, once the project is completed and the right to
progressively collect tolls has been acquired, it will be possible to securitize all or
part of the expected cash flow, and in this way pay the contracted bank credit,
leaving with the financial burden of addressing the medium and long-term papers
issued for this purpose.
In this scheme, by the way, the fiduciary plays a fundamental role, not only as the
originator of the papers with the functions that correspond to the person who
plays this role, but also because the relationship with the providers of financial
resources, with the contractors and subcontractors of the work, and even with the
State, when it has provided resources for the project, it depends on the judicious
management that the trust company makes of the cash flow generated. And from
that point of view then, it intervenes long before the securitization, receiving the
resources of the loans, authorizing the disbursements, rendering accounts to the
creditors and playing the role of an administration trust, as we saw in the
previous chapter. .

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BANKING CONTRACTS

Sergio Rodríguez Azuero

First reprint of the fifth edition 2003 Fifth edition 2002

Founding Partner of Rodríguez-Azuero Asociados SA

He was Manager of the Colombian Banking Association, Vice President of

He was part of the Commission appointed by the National Government in 1982

He is "Knight of the Legion of Honor" of the French government, Corresponding

1. CONTENT OF THE BOOK

2.5. SPECIAL SUPPORT ENTITIES

6.1. PAY THE INTEREST

7.4. FOR YOUR DESTINY 508

7. TERMINATION OF THE CONTRACT

2. TRUST OR COMMERCIAL TRUST

2.7. OBLIGATIONS OF THE TRUSTEE

2.8. RIGHTS OF THE TRUSTOR OR TRUSTOR.

2.13. TRUST MODALITIES IN BANKING OPERATIONS

6. PROCEDURES AND EFFECTS

PRESENTATION TO THE FIFTH EDITION

Bogotá, April 2002

PRESENTATION TO THE FIRST EDITION

AS A PROLOGUE TO THE FIFTH EDITION

PROLOGUE TO PREVIOUS EDITIONS

FERNANDO LONDOÑO Hoyos

A better understanding of the book will be possible in light of the following

1. CONTENT OF THE BOOK

1.1. COMMERCIAL BANK CONTRACTS

Difficulties of this kind would have to be resolved by arguing "ad absurdum." In

1.2. CONTRACTS THAT DEVELOP THE CORPORATE OBJECT

Now, having defined in principle the banks whose functions allowed us to

To conclude, it is necessary to talk a little about the methodology or, perhaps

If an elementary method were used to investigate the notion of Law, it

1.2. PUBLIC RIGHT AND PRIVATE RIGHT

1.2.1. Public Law

Public Law is understood as the set of rules that regulate the

1.2.2. Private right

1.3. COMMERCIAL LAW

1.3.1. As part of Private Law

The distinction between a civil and commercial contract can be of enormous

A final note on the content and notion of Commercial Law allows us to

1.3.3.1. Customary character

In this regard, it must be remembered that the classification of the merchant as a

1.3.3.3. Trend towards internationalization

This principle is perfectly logical if it is noted that the commercial dynamics

1.3.3.5. Particular content of formalism

1.3.3.6. Publication trend

This phenomenon or characteristic, which could rather be predicated of Private

1.3.3.7. Law of acts carried out massively

2.1.1. Active subject and passive subject

2.1.2. Natural person

In contemporary Law, a natural person is understood as any individual of the

2.1.3. Legal person

The recognition and existence of legal entities have been long

a) The simple participation of private will, expressed in the manner provided by

b) In order to exist or be able to function, it is necessary, in addition to being

c) In order to exist or operate, it is necessary that, in addition to having been

It should be noted that, in the case of financial entities, forced liquidation

2.1.4. Personality attributes

A set of attributes or qualities are predicated on the personality of legal subjects