Requirements for Negotiability: Signature
The issue of signature is very important in the law of negotiable instrument, because it has varying implication for each party starting from issuance of the instrument to each successive stages of the negotiation.
First of all signature by the maker or drawer makes the instrument valid and binding creating duties on the person who initiates it and immediately creating rights upon delivery to the holder.
Secondly, it has to be emphasized that the key to liability on a negotiable instrument is a signature. Every party who signs a negotiable instrument is either primarily or secondly liable for payment of that instrument when it comes due.
Having said so, let’s examine as to who should and how a negotiable instrument should be signed so as to be called a valid instrument. Generally for an instrument to be negotiable, it must be signed by;
• The maker if it is a promissory note (Art 823(g)
• The drawer if it is a Bill of exchange or a cheque(Arts 735(h) and 827(e) respectively.)
If a person signs an instrument as the agent for the maker or drawer, the maker or drawer has effectively signed the instrument, provided the agent has the appropriate authority.
In general terms Art 734(1) of the code requires Declarations made by commercial instrument to bear the signature of the person making it (i.e. the maker or the Drawer) since a negotiable instrument create a duty on the person signing on it, it is self evident that he should have legal capacity to perform juridical acts.
Determining what constitutes a signature, in some cases may become difficult. The word signature includes ‘any symbol exempted or adopted by a party with present intention to authenticate a writing.’ Art 734(1) after imposing a general requirement of signature with out defining “signature” typically acknowledges that signature may be made by a hand written mark or by mechanical process such as stamp. However a thumb mark by a physical person unable to sign, should be verified by an authentic declaration to bind that person. [(Art 734(3)]. Although this rule seems applicable to a physical person unable to sign, it has to be similarly applicable to any physical person even literate and able to sign, as far as he chooses a thumb mark as his signature.
The rules in Art 734 are limited to the manner of making signature, they do not indicate as to what a mark, word or symbol could be validly called a signature. Hence as far as it unequivocally manifests the intention of the maker or drawer, a very brand interpretation should be given as to what mark, symbol or may be properly called as signature. According to the American uniform commercial code any name, including a trade or assumed name, word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing is regarded as a signature. Thus, initials, an x mark, a trade name or assumed name is sufficient.
The Location of the signature on the document is unimportant, though the usual place is the lower right hand curer. Although, there is no clear indication as to the right location of the signature in the commercial code any mark or symbol on the body of the instrument should be regarded as a valid signature. The intention of the person putting his signature on the instrument and avoiding any uncertainty should be taken as key factor in determining the validity of any signature.