Days of Grace

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Days of Grace

An extension of the time originally scheduled for the performance of an act, such as payment for a debt, granted merely as a gratuitous favor by the person to whom the performance is owed.

In old English practice, days of grace allowed a person an extra three days beyond the date specified in a writ summoning him or her before a court in which to make an appearance without being subject to punishment for failure to appear. This allowance of time was granted in consideration of the far distances that had to be traveled to court.

The laws and customs that regulate the commercial affairs of merchants have recognized days of grace as a means of facilitating various transactions. Three days of grace were originally allowed to give a maker or acceptor of a note, bill, or draft, in which the person is ordered to make payment according to its terms, a longer time to pay than specified by the date in the document. This practice was begun merely as a favor to those who regularly engaged in business with each other, but it soon became a custom between merchants. Eventually, the courts recognized this right, often as a result of statute; in some cases, it has become a right that must be demanded.

The phrase days of grace is sometimes used interchangeably with grace period, a term used in insurance law to denote an extension of time within which to pay a premium due on a policy, but the terms do not have identical meanings.

DAYS OF GRACE. Certain days after the time limited by the bill or note, which the acceptor or drawer has a right to demand for payment of the bill or note; these days were so called because they were formerly gratuitously allowed, but now, by the custom of merchants, sanctioned by decisions of courts of justice, they are demandable of right. 6 Watts & Serg. 179. The number of these in the United States is generally three. Chitty on Bills, h.t. But where the established usage of the where the instrument is payable, or of the bank at which it is payable, or deposited for collection, be to make the demand on the fourth or other day, the parties to the note will be bound by such usage. 5 How. U. S. Rep. 317; 1 Smith, Lead. Cas. 417. When the last day of grace happens on the 4th of July; 2 Caines Cas. in Err. 195; or on Sunday; 2 Caines' R. 343; 7 Wend. 460; the demand must be made on the day previous. 13 John. 470; 7 Wend. 460; 12 Mass. 89; 6 Pick. 80; 2 Caines, 343: 2 McCord, 436. But see 2 Conn. 69. See 20 Wend. 205; 1 Metc. R. 43; 2 Cain. Cas. 195; 7 How. Miss. R. 129; 4 J. J. Marsh. 332.
     2. In Louisiana, the days of grace are no obstacle to a set off, the bill being due, for this purpose before the expiration of those days. Louis. Code, art. 2206.
     3. In France all days of grace, of favor, of usage, or of local custom, for the payment of bills of exchange, are abolished. Code de Com. art. 185. See 8 Verm. 833; 2 Port. 286; 1 Conn. 329; 1 Pick. 401; 2 Pick. 125; 3 Pick. 414; 1 N. & M. 83.

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