Legal Definitions - acceptance au besoin

Acceptance au besoin refers to a specific instruction included on a bill of exchange (a type of written order to pay money). It designates a secondary party who agrees to accept or pay the bill if the primary party (the drawee) refuses to do so when the bill is presented. Essentially, it acts as a backup plan to ensure the bill is honored, providing an alternative acceptor in case of default by the main one. This secondary party is often referred to as a "referee in case of need."

• Example 1: International Trade Transaction

  A textile manufacturer in Italy sells a large shipment of fabric to a clothing retailer in the United States. The Italian manufacturer draws a bill of exchange on the US retailer's bank for payment. To mitigate risk, the Italian manufacturer includes an "acceptance au besoin" clause on the bill, designating a specific international bank branch in London as a secondary acceptor.

  This illustrates "acceptance au besoin" because if the US retailer's primary bank refuses to accept or pay the bill when presented (e.g., due to insufficient funds in the retailer's account or a dispute), the Italian manufacturer can then present the bill to the designated London bank. This London bank, having been named as the "referee in case of need," would then be obligated to accept or pay the bill, ensuring the Italian manufacturer receives payment for the fabric.

• Example 2: Domestic Supply Chain Security

  A construction company in Canada purchases specialized equipment from a supplier. The construction company issues a bill of exchange to the supplier, naming its primary commercial bank as the drawee. To provide an extra layer of security for the supplier, the construction company adds an "acceptance au besoin" instruction, naming a different, well-established financial institution with whom it has a prior arrangement.

  Here, "acceptance au besoin" comes into play if the construction company's primary bank, for any reason (e.g., a temporary freeze on the company's credit line or an administrative error), declines to accept the bill. The supplier can then present the bill to the secondary financial institution. This institution, acting as the "referee in case of need," would then honor the "acceptance au besoin" and accept the bill, guaranteeing payment to the supplier and preventing a disruption in the supply chain.