Phi Corporation defended on the basis that it did not sign the instrument and that its name does not appear on the instrument. For what amount, if any, are Acton and Phi Corporation liable?
$900.00 Smalltown, Illinois
Maker, November 15, 2017
The undersigned promises to pay to the order of John Doe Nine Hundred Dollars with interest from date of note. Payment to be made in five monthly installments of One Hundred Eighty Dollars, plus accrued interest beginning on December 1, 2017. In the event of default in the payment of any installment or interest on installment date, the holder of this instrument may declare the entire obligation due and owing and proceed forthwith to collect the balance due on this instrument.
(Signed) Acton, agent
On December 18, 2017, no payment having been made on the note, Doe indorsed and delivered the instrument to Todd to secure a preexisting debt in the amount of $800. On January 18, 2018, Todd brought an action against Acton and Phi Corporation, Acton’s principal, to collect the full amount of the instrument with interest. Acton defended on the basis that he signed the instrument in a representative capacity and that Doe had failed to deliver the consideration for which the instrument had been issued. Phi Corporation defended on the basis that it did not sign the instrument and that its name does not appear on the instrument. For what amount, if any, are Acton and Phi Corporation liable?
Individual A wrote the instrument and signed it without indicating whether the parties to the contract had any intentions of making Individual A liable under the contract. As a result, Individual A will be held liable for the payment against the instrument. However,Individual A can get away with the liability by arguing that Individual T was aware of the non-payment of the instrument on the due date, and Individual T should not have accepted the instrument.
The name of Corporation P, the principal, was not mentioned in the instrument, thereby making it free from any liability that arises from the instrument. For this reason, Individual T cannot recover the amount from Corporation P.
Individual T can hold Individual A liable for the payment as Individual A acted as an agent in the contract and failed to mention the name of the principal, making Individual A liable for the instrument.
Individual T cannot claim that Corporation P is liable for the payment as the name of the corporation was not mentioned anywhere in the instrument.