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CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

Rohit signs and delivers to Sunil a properly stamped paper bearing an incomplete promissory note. Sunil fills in an amount that is within the amount covered by the stamp. What is the legal position of Sunil's act?

Sunil acts within prima facie authority. A person who signs and delivers a stamped paper that is blank or has an incomplete instrument authorises the holder to complete it for any amount up to the amount covered by the stamp.

  1. AIt is forgery, because the amount was not written by the signatory
  2. BIt is valid only if Rohit later ratifies it in writing
  3. CIt is valid only if Sunil is a holder in due course
  4. DRohit has given Sunil prima facie authority to complete the instrument for any amount up to the stamp coverCorrect

Explanation

Where a person signs and delivers a stamped paper that is blank or carries an incomplete instrument, he gives the holder prima facie authority to complete it for any amount not exceeding the stamp cover. No ratification is needed, and holder-in-due-course status matters only for recovery beyond the intended amount.

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