Libro IV · Título II Capítulo IV. Operaciones de credito

By the contract of opening of credit, the credit grantor undertakes to place a sum of money at the disposal of the credit recipient, or to assume obligations on account of the latter, who must return the sums it draws or provide the amounts payable on its account, and pay the expenses, commissions and interest that are charged to it.

The amount of the credit shall not be understood to include the interest, commissions and expenses that the credit recipient must cover.

The amount of the credit shall be fixed, or determinable by its purpose or in any other manner agreed.

The lack of determination shall be imputed to the credit grantor, which shall be liable for the damages caused to the credit recipient by the ineffectiveness of the contract.

No agreement may be made against the provisions of this article.

The credit recipient may draw at sight, in whole or in part, on the amount of the credit.

The credit recipient shall be understood to be obliged to pay the fixed commission, even if it does not draw on the credit; but interest shall accrue only on the amounts that the credit recipient actually draws, and on the amounts paid on its account.

If the opening of credit is a current account, the credit recipient may make remittances, before the date fixed for settlement, in partial or total reimbursement of the drawings it has previously made, and shall be entitled, as long as the contract does not end, to draw in the agreed manner on the balance resulting in its favor.

If the credit grantor assumes obligations on account of the credit recipient, the latter must provide it with the funds to pay them, at the latest on the business day before their maturity.

The issuance or transfer of a negotiable instrument or of any other document by the credit recipient to the credit grantor, as acknowledgment of the debt owed by the former by virtue of the drawings it makes on the credit granted, does not empower the credit grantor to discount or assign the credit so documented before its maturity, except when the credit recipient expressly authorizes it to do so.

If the document is negotiated or assigned improperly, the credit grantor shall be liable for damages.

When the parties do not fix a time limit for the return of the sums owed by the credit recipient, the restitution shall be understood to be made within the three months following the extinction of the time limit set for the use of the credit.

The same rule shall apply to the other payments that the credit recipient must make.

If the contract sets a term for its performance, the credit grantor may terminate it early, after written notice to the credit recipient. Once the notice is given, the credit grantor shall not be obliged to make further payments or to assume the obligations of the credit recipient.

When no term for the use of the credit is stipulated, directly or indirectly, either of the parties may terminate it, by denunciation that shall be served on the other through a notary.

Discount shall be understood as the commercial transaction in which the discounted party transfers to the discounter a credit of future maturity, and the discounter places at its disposal the amount of the credit, after deducting a sum fixed by mutual agreement. The discounted party shall be liable for the payment of the transferred credit, unless the contrary has been expressly agreed.

If it concerns bills to which documents are attached, documentary bills, the discounter shall also have the rights of an endorsee for security over the corresponding representing instruments, as long as it keeps them in its possession.

Credits opened in the books of merchants may be the object of discount, provided that the following requirements are met:

1º.That the credits are enforceable at a term or upon prior notice.

2º.That there is written proof of the existence of the credit.

3º.That the discount is recorded in writing, mentioning the name and domicile of the debtors, the amount of the credits, the agreed interest rate and the terms and conditions of payment.

4º.Repealed.

The discounter of credits in books shall have the right to examine the books and correspondence of the discounted party, insofar as it refers to the transactions related to the discounted credits.

The discounted party shall be considered, for all purposes of law, as the agent of the discounter of credits in books, insofar as it refers to the collection of the credits subject to the discount, and shall have the obligations and responsibilities that correspond to an agent.

By virtue of the current account contract, the credits and debits arising from the reciprocal remittances of the parties shall be considered, respectively, as credit and debit entries in the account of each current account holder, and only the balance resulting at the closing of the account shall constitute a credit enforceable under the terms of the contract.

The circumstance that a merchant opens a current account in its accounting for another, who in turn keeps a current account for the first, does not by itself prove that a current account contract exists between them.

All transactions proper to the business of each current account holder are presumed to be included in the current account.

The entry of a credit in the current account does not imply the waiver of the actions or defenses relating to the validity of the acts or contracts from which the remittance arises. If the act is annulled, the corresponding entry shall be cancelled in the account.

If a credit with real or personal security is included in the current account, the current account holder has the right to enforce the security, for the balance resulting in its favor at the closing of the account, and up to the amount of the secured credit.

The same provision shall apply if there are joint and several debtors with respect to the credit entered in the current account.

The inclusion of a credit owed by a third party is presumed to be made subject to collection.

The creditor of a current account holder may attach the eventual balance of the current account. The attachment must be notified by the authority that carries it out to the other current account holder, who shall thereupon be entitled to terminate the account.

Transactions initiated after the date and time of the attachment may not reduce the balance of the account against the attaching creditor; but transactions resulting from the rights of the other current account holder already existing at the moment of the attachment shall not be considered new transactions, even if the respective entries have not yet been made in the account.

The closing of the account for the determination of the balance takes place every six months, unless otherwise agreed. The credit for the balance is enforceable at sight or under the terms of the corresponding contract. If the balance is kept in the account, it shall bear interest at the rate agreed for the other remittances, and in the absence of agreement, at the legal rate.

The actions for the rectification of any error of number, of calculation or for duplications or omissions in the account shall prescribe within six months, from the date of the closing of the account.

In the absence of an agreed time limit, either of the current account holders may, at each closing period, terminate the contract by giving written notice to the other at least ten days before the closing date.

The death or supervening incapacity of one of the current account holders does not imply the termination of the contract, except when its heirs or representatives, or the other current account holder, opt for its termination.

By virtue of the repurchase agreement, the repurchase buyer acquires ownership of negotiable instruments for a sum of money, and undertakes to transfer to the repurchase seller ownership of an equal number of instruments of the same kind within the agreed time limit, against reimbursement of the same price, which may be increased or decreased in the agreed manner. The repurchase agreement shall be perfected by the delivery of the instruments in the manner required for negotiable instruments.

The repurchase agreement must be recorded in writing, stating the full name of the repurchase buyer and of the repurchase seller, the class of instruments given in repurchase and the data necessary for their identification, the term fixed for the maturity of the transaction and the price or the manner of fixing it.

If the instruments confer an option right that must be exercised during the repurchase, the repurchase buyer shall be obliged to exercise it on account of the repurchase seller, but the latter must provide it with sufficient funds at least two days before the expiry of the time limit set for the exercise of the option right.

Unless otherwise agreed, the accessory rights corresponding to the instruments given in repurchase shall be exercised by the repurchase buyer on account of the repurchase seller, and the dividends or interest paid on the instruments during the repurchase shall be credited to the repurchase seller and settled at the maturity of the transaction. Refunds and premiums shall be for the benefit of the repurchase seller, when the instruments have been specifically designated when the transaction is made. The right to vote, unless otherwise agreed, corresponds to the repurchase buyer.

When during the term of the repurchase a call on the instruments must be paid, the repurchase seller must provide the repurchase buyer with the necessary funds at least two days before the date on which the call is to be paid. If the repurchase seller fails to comply with this obligation, the repurchase buyer may proceed immediately to settle the repurchase.

If the transaction is not settled or extended on the first business day following the expiry of the time limit of the repurchase, it shall be deemed abandoned and the party in whose favor a difference results may claim it.

Order letters of credit must be issued in favor of a determined person and shall not be negotiable; they shall state a fixed amount or a maximum the limit of which shall be precisely indicated.

Order letters of credit are not accepted and are not subject to protest; they do not confer on their holders any right against the persons to whom they are addressed.

The taker shall have no right against the issuer, except when it has delivered in cash the amount of the order letter of credit, or has satisfied its amount in another manner, in which cases the issuer shall be obliged to return what it received if the letter is not paid for a cause attributable to the issuer, and to compensate the damages. If the taker has given surety or has otherwise guaranteed the amount of the letter, and the letter is not paid for causes attributable to the issuer, the latter shall be obliged to pay the damages.

The damages to which this article refers shall not exceed one fifth of the amount of the sum that has not been paid, in addition to the expenses caused by the granting of the guarantee.

The issuer of an order letter of credit, except in the case where the taker has delivered in cash the amount of the letter or has satisfied it in another manner, may revoke it at any time, making it known to the taker and to the person to whom it is addressed.

The issuer of an order letter of credit shall be obliged toward the person on whom it issued the letter, for the amount that this person pays by virtue of the letter, within the limits fixed in the letter.

When no other is indicated in it, the time limit of an order letter of credit shall be one year, counted from the date of its issuance. After the time limit indicated in the letter, or in its absence, after the one indicated in this article, the letter shall be cancelled.

The taker must reimburse the issuer all the amounts that the latter has paid by virtue of the letter, plus the legal interest on those amounts; these sums shall be paid as soon as the issuer has made them effective, unless otherwise agreed.

* Added by Article 2 of Decree Number 33-2003 of the Congress of the Republic of Guatemala. * Repealed by the Joint Cases Number 994, 995 and 1009-2003 of the Constitutional Court.

By the documentary credit contract the credit grantor undertakes, vis-à-vis the credit recipient, to assume on account of the latter an obligation in favor of a third party and in accordance with the conditions established by the credit recipient itself.

If the irrevocability of the letter of credit appears in it, it may not be modified or rescinded without the conformity of all interested parties.

The bank that notifies the beneficiary of the opening of the documentary credit shall not be bound by the notification alone. If it confirms the credit, it shall be jointly and severally bound.

The credit grantor may only oppose to the beneficiary the defenses arising from the commercial letter of credit and the personal defenses that it has against it.

The beneficiary may only transfer the documentary credit if it has been expressly empowered to do so.

Banks shall be liable to the credit recipient in accordance with the rules of mandate, and must scrupulously take care that the documents that the beneficiary presents have the regularity established by commercial usage.

When a letter of credit is used as a means of guaranteeing to the seller the payment of the price of goods represented by documents, the issuer or its correspondent shall not make the payment until it has satisfied itself that the documents representing the merchandise are apparently in due form.

In this case, the letter of credit constitutes, by its nature, a transaction independent of the contract of sale.

If the letter of credit does not indicate a maturity date, the credit shall be understood to be in force for six months, counted from the date of the notification to the beneficiary.