(6) Signature of the drawer.53

An instrument deficient in any formal respect is not valid as a bill or note.54

57

It is obvious from the above provisions that the Uniform Law contains stricter formal requirements than does the Anglo-American law. In England and in the United States the validity of a bill or note is not affected by the fact that it is not dated,55 or does not specify the place where it is drawn,56 or does not specify the place where it is payable. The name of the drawee and payee need not be given, it being sufficient that these parties are indicated in the instrument with reasonable certainty.58 Again, a bill or note may be payable at a determinable future time." Such an instrument is void under the Uniform Law, except in the case of bills payable at sight or a certain time after sight.60

59

9. Additional Provisions or Clauses.

There are no provisions in the Uniform Law corresponding to section 5 of the Uniform Negotiable Instruments Act, nor is there any general rule from which one can ascertain the effect upon the validity of the instrument of additional stipulations. In view of the fact that the different continental countries have taken various attitudes with reference to such clauses,1 different results will, no doubt, be reached under the Uniform Law.

10. Delivery.

According to the Negotiable Instruments Law:62

"Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. . . . But where the instrument is in the hands of a

53 Art. 1 (8).

54 Art. 2, par. 1. Does this also hold true in the case where the name of the payee is omitted? There is no express provision on the point in the Uniform Law. The Central Committee at the Conference of 1910 decided that they should be considered as bills of exchange in blank. Proceedings, 1910, 203; Actes, 1910, 329-330.

55 N. I. L. sec. 6 (1); B. E. A. sec. 3 (4).

56 N. I. L. sec. 6 (3); B. E. A. sec. 3 (4) (c).

57 N. I. L. sec. 6 (3); B. E. A. sec. 3 (4) (c).

58 N. I. L. sees. 1 (5), 8, last par.; B. E. A. secs. 6 (1), 7 (1).

59 N. I. L. secs. 1 (3), 4; B. E. A. secs. 3 (1), 11.

60 Arts. 1 (4), 32. Another qualification is found in art. 6 of the Convention, which reserves to the contracting states the right, within their own territory, to allow bills payable at a fair, and to fix the date of their maturity.

61 Lyon-Caen & Renault, 86 et seq.; Staub, art. 4, notes 55 et seq.; 1 Grünhut, 468.

62 Sec. 16.

holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed."

63

The only express provision on the subject in the Uniform Law is found in article 28, according to which an acceptor may cancel his acceptance before delivery of the bill, except where he cancelled it after having informed the holder or any other signer in writing that he has accepted. All other contracts on the instrument will likewise probably be deemed revocable until delivery. From article 15 of the Uniform Law it is clear that the want of delivery cannot be set up against the person who acquired title to the instrument in good faith and in the exercise of due care by an uninterrupted series of indorsements.

11. Interpretation.

64

There is an express provision in the Uniform Laws that where the amount is written several times, either in words or in figures, the sum payable shall in case of discrepancy be the smaller sum. The Bills of Exchange Act and the Negotiable Instruments Law are silent on the subject."

Article 8 of the Uniform Law makes any one personally liable who, without due authorization, adds to his signature on a bill of exchange words indicating that he signs in a representative capacity. This agrees with the law as laid down in the Negotiable Instruments Law,67 which followed the German law in this regard.68 Article 95 of the German Bills of Exchange Law imposes upon the agent the same liability as would have rested upon the principal had the agent been authorized to bind him. He is under no liability, therefore, if the

63 The B. E. A. provides likewise that an acceptance written on the bill is irrevocable after the drawee has given notice to or according to the directions of the person entitled to the bill that he has accepted. B. E. A. sec. 21 (1). 64 For the antecedent law see 1 Meyer, 41-44.

65 Art. 6, par. 2.

66 In Chalmers, 29, it is said that this is the practice followed by bankers in England with respect to checks.

67 Sec. 20.

68 Sec. 20 reads: "Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized.'' By necessary implication, the agent is liable on the instrument if he was not duly authorized. In most jurisdictions in this country before the Negotiable Instruments Law was enacted, such agent was not liable on the instrument, but only for breach of warranty of authority. See Bunker, sec. 22, n.; Daniel, sec. 306. Mr. Crawford's first draft of the Negotiable Instruments Law embodied the old rule, but the commissioners changed it deliberately in favor of the German rule. Crawford, sec. 39, n.; McKeehan, 41 Am. Law. Reg. (N. S.) 462-465.

69

alleged principal would have had no capacity to bind himself, or if the statute of limitations would have barred an action against him. The Bills of Exchange Act re-enacts the common law. The agent signing in a representative capacity without authority is liable not on the bill or note, but only in an action for breach of warranty of authority, or in an action for deceit. Most of the continental countries also limit the holder's rights under these circumstances to an action for damages.70

II. CONSIDERATION.

There are no rules relating to the subject of consideration in the Uniform Law. The notions of "holder for value" or "holder in due course" are equally unknown to the Uniform Law. The explanation is to be found in the fact that the law of bills of exchange had a continental origin and was developed upon the basis of the Roman law; it was incorporated into the English common law, and was thus compelled to adjust itself to the common-law doctrine of consideration."1 An application of all rules governing the question of consideration in the law of contracts would have defeated the very purposes for which negotiable bills and notes had been created. It therefore became necessary to indulge in presumptions and fictions and to make exceptions to the ordinary rules and to those dealing with the burden of proof.72 On the continent, where the law of bills and notes continued to develop as a separate legal institution upon its original basis, bills and notes became a circulating medium free from the personal relationship existing between the parties, without having to

69 Sec. 26 (1).

70 1 Meyer, 68.

71 Huffcut (p. 235) says:

"The doctrine that a bill or note requires any consideration is of comparatively recent origin. It was unknown in the time of Blackstone (2 Comm. 446), and early American cases are to be found in which it appears to be denied or doubted (Bowers v. Hurd, 10 Mass. 427; Livingston v. Hastie, 2 Cai. (N. Y.) 246). But the modern cases now uniformly hold that a bill or note executed and delivered as a gift is unenforceable for want of consideration.''

72 Attention may be called to the following: An antecedent debt constitutes value. N. I. L. sec. 25; B. E. A. sec. 27 (1) (b). An accommodation party is liable to a holder for value. N. I. L. sec. 29; B. E. A. sec. 28. Every negotiable instrument is deemed prima facie to have been issued for valuable consideration N. I. L. sec. 24; and every person whose signature appears thereon to have become a party thereto for value. N. I. L. sec. 24; B. E. A. sec. 30 (1). Where value has at any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who become such prior to that time. N. I. L. sec. 26; B. E. A. sec. 27 (2). Absence or failure of consideration is not a defence against any person who is a holder in due course (N. I. L. sec. 28); who may not have given any consideration himself. N. I. L. sec. 58; B. E. A. sec. 29 (3).

encounter such difficulties as were created in England by the doctrine of consideration. While liability upon a bill or note in AngloAmerican law rests today fundamentally upon the same footing as ordinary contracts, there is often a basic distinction between the two classes in continental countries. The theory has become prevalent in Germany that a unilateral promise to pay a certain sum may in itself constitute a contract deriving its validity not from the transaction giving rise thereto, but exclusively from its form.73 The rights of the holder, whether he be an immediate or a remote party, result in a clear and logical manner from this conception. It would seem

that this point of view also underlies the Uniform Law. It should be observed, however, that whatever may be the disagreement in the fundamental notions underlying the continental and Anglo-American systems of bills and notes in regard to the matter under discussion, both systems attain substantially the same result." The main difference lies in the method by which the result is reached. Under the continental system it is done in a direct and simple manner; under the Anglo-American system, in a roundabout way by means of fictions and exceptions to the ordinary rules governing the subject of consideration.

III. COVER.

In certain continental countries belonging to the French group, the connection of a bill of exchange with the underlying business transaction is seen in the rules relating to cover.75 According to the law of these countries, the drawer or his agent must provide cover, which exists when at maturity the drawee owes to the drawer, or to the party for whose account the bill of exchange is drawn, an amount equal to the sum stipulated in the instrument. In case the drawer has not complied with his obligation, he will be liable even though the instrument was not duly presented and protested. If he has furnished cover, he is not liable upon the dishonor of the bill. The acceptance of a bill of exchange raises the presumption that the drawee has received cover. Where a bill is drawn for accommodation, the want of cover has no effect upon the legal existence of the instrument. A

73 The theory was first propounded with great force by Otto Bähr, Die Anerkennung als Verpflichtungsgrund (Cassel, 1855).

74 This is not true, of course, in all cases. A note executed by A and delivered by him to C as a gift would probably be enforceable under the Uniform Law; but according to English and American law it would not be enforceable for want of consideration.

751 Meyer, 149-161.

holder in bad faith, however, cannot recover on an accommodation bill.

Under French law the drawing and indorsement of a bill operates as an assignment of the funds in the hands of the drawee. Every holder has an action against a drawee who has received cover, and in the event of the bankruptcy of the drawer, the holder will be entitled to the funds in the drawee's hands.76

The rules just stated are plainly opposed to the German system, where the bill of exchange stands on its own merits, independent of the relations that may exist between the drawer and the drawee. They are also contrary to the law of England and to that of the United States." At the Hague Conference the French delegates insisted that the interested parties in France were satisfied with the French system and asked that it be not sacrificed in the interest of the unification of the law. No agreement could be reached with regard to this matter. The Convention expressly provides that all questions relating to cover shall be outside the scope of the Uniform Law and Convention.79

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IV. NEGOTIATION.

1. In General.

The laws of the continental countries on the subject of indorsements differ widely from each other and from the Anglo-American law. In some, a formal system prevails. France, for example, allows only special indorsements and requires that they be made to order, dated, and recite the value received.80 An indorsement in blank does not pass title to the instrument, but operates only as a power of attorney to collect the amount of the bill.81 The Uniform Law, on the other hand, agrees in most respects with the provisions of the Anglo

76 Arts. 115-117, French Commercial Code; Williamson, 26-48; 4 Lyon-Caen & Renault, 159-175; Thaller, 714-729.

77 N. I. L. sec. 127; B. E. A. sec. 53 (1). The Bills of Exchange Act makes an exception in favor of Scotland. It provides:

"In Scotland, where the drawee of a bill has in his hands funds available for the payment thereof, the bill operates as an assignment of the sum for which it is drawn in favor of the holder, from the time the bill is presented to the drawee." B. E. A. sec. 53 (2).

78 Proceedings, 1910, 92; Actes, 1910, 40.

79 Art. 14 of the Convention. The same impossibility of reaching an agreement upon this point had been disclosed at the Congress of Antwerp in 1885 and at the Congress of Brussels in 1888.

80 Art. 137, French Commercial Code.

81 Art. 138, French Commercial Code. Since the law of June 14, 1865, an indorsement in blank has been recognized in France as regards checks. 4 LyonCaen & Renault, 142.