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Inchoate Instrument

bill, person, authority and holder

INCHOATE INSTRUMENT. An incom plete document, as, for example, a stamped bill form, signed by a person and handed to another person to till up and make into a complete bill.

By Section 20 of the Bills of Exchange Act, 1883 : " (1) Where a simple signature on a blank stamped paper is delivered by the signer in order that it may be converted into a bill, it operates as a primd facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer, or the acceptor, or an indorser and, in like manner, when a bill is wanting in any material particular, the person in possession of it has a prim,i facie authority to fill up the omission in any way he thinks fit.

" (2) In order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its com pletion, it must be filled up within a reasonable time, and strictly in accordance with the authority given. Reasonable time for this purpose is a question of fact.

Provided that if any such instru ment after completion is negotiated to a holder in due course it shall he valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given." It is important to note that an incomplete bill must he filled up strictly in accordance with the authority given. If a person signs

a stamped form as an acceptor and hands it to another person to fill up in a certain specified manner and sign it as drawer, and the drawer exceeds his authority, the acceptor will not be liable thereon to the drawer, but if the bill is negotiated to a holder in clue course, he will be liable to such a holder. By accepting a bill in blank an acceptor may thus find himself in the awkward position of having to pay a very much larger sum than he intended to pay when he placed his name on the paper.

The Court of Appeal said in France v. Clark (1884, 26 Ch. D. 257) : " The person who has signed a negotiable instrument in blank or with blank spaces is, on account of the negotiable character of that instrument, estopped by the law merchant from dis- ! puting any alteration made in the document after it has left his hands by tilling up blanks (or otherwise in a way not ex facie fraudu lent) as against a bond fide holder for value without notice, but it has been repeatedly explained that this estoppel is in favour only of such a bond fide holder, and a man who, after taking it in blank, has himself filled up the blanks in his own favour without the consent or knowledge of the person to be bound, has never been treated in English Courts as entitled to the benefit of that doctrine." (See BILL OF EXCHANGE.)