When Agents sign negotiable instruments

Question 1

The Principal’s liability

Answer 1

1. The principal is not bound if the agent did not have the authority to sign on the principal’s behalf
2. The principal may ratify the agent’s unauthorized signature if the principal adopts the signature and fails to deny the validity of it
3. The principal may be estopped from denying liability against a HDC if the principal negligently contributed to the agent’s unauthorized signature

Question 2

For an unauthorized signature

Answer 2

The agent will be liable

Question 3

For an authorized signature

Answer 3

1. The principal is liable when the agents signs the principal’s name only
2. An authorized agent who signs an instrument that clearly indicates that the agent is signing in his capacity as an agent will not be liable on the instrument

Question 4

Forged Makers signature

Answer 4

Forger will be liable, not the “maker”

Question 5

Forged Drawer’s signature

Answer 5

Forger will be liable, not the “drawer”

Question 6

Forged indorsers signature

Answer 6

Forger will be liable, not the “indorser”