DOCUMENTS SIGNED IN BLANK

DOIhttp://doi.org/10.1111/j.1468-2230.1982.tb02467.x
Publication Date01 Jan 1982
AuthorBob Allcock
DOCUMENTS
SIGNED
IN
BLANK
I.
INTRQDUCTION
A
RECURRING
question in commercial and property law is which
of
two innocent people is to suffer
for
the fraud of another. The purpose
of this article is to consider one particular type of fraud, namely
the incorrect completion of a document signed in blank. Four types
of documents seem particularly vulnerable to this practice-bills
of
exchange, share transfers, insurance proposal forms and hire
purchase proposal forms. The problem arises when an individual
signs a document in blank and that document comes into the
hands
of
another (the intermediary). Subsequently the inter-
mediary fraudulently, or perhaps mistakenly, fills in tha blanks in-
correctly and the document is passed on
to
a third party. The latter
may enter the picture in various ways. The document may be a
contractual offer which is addressed to him, or the intermediary
may have assigned an apparently valid contract between the signa-
tory and himself to the third party,
or
the third party may be the
holder of a bill
of
exchange which has been negotiated to him.
In
any event, the question that then arises is whether the signatory is
bound by the terms appearing in the document as against the third
party.
Looking at the situation in terms of offer and acceptance, and
ignoring for the time being the principles of agency and estoppel,
it is apparent that the offer made by the signatory is different from
that accepted either by the intermediary or the third party. On this
basis there is no concluded contract. A decision to this effect will
therefore relieve the signatory of any obligation under an alleged
hire purchase agreement or transfer of property,2 but will by the
same token deprive him of any rights under an insurance p01icy.~
However, this basic position may be affected by many other factors.
11.
THE
ROLE
OF
THE
INTERMEDIARY
Intermediary the agent
of
the third party
Where the intermediary is acting as agent for the third party both
in negotiating the agreement and in completing the document after
it is signed there will normally be a binding contract on the terms
orally agreed. In the case
of
an insurance contract, the third party
(the insurer) will not be able to rely on any misstatement in the
proposal form since it will have been inserted by their own agent.
Such a conclusion was reached in
Keeling
v.
Pearl Assurance
Co.
~~
1
As
in
Cumpbell Discounr
Co.
Ltd.
V.
Gull
(19611 1
Q.B.
431;
Mercantile Credit
a
As
in
France
v.
C3ark
(1884)
26
Ch.D.
251;
Outer Suburban
Pry.
Lid.
V.
Co. Lrd.
v.
Hmblin
119651
2
Q.B.
242.
Clarke
119331
S.A.S.R.
221.
As
in
The Phoenix Assurance
Co.
Lrd.
v.
Berechree
(1906) 3
C.L.R.
946.
18
Jan.
19821
DOCUMENTS
SIGNED
IN
BLANK
19
Lid4
and
Western Australian Insurance
Co.
Ltd.
v.
Dayton.‘
How-
ever, there are few cases in which the courts have concluded that
the intermediary was acting for the third party in completing the
document. Normally he will be taken to have acted either for
himself or
for
the signatory.
No
delivery to the intermediary
Subject to the application of estoppel by negligence, which will be
discussed later, where the document signed in blank is lost
or
stolen,
rather than delivered to the intermediary, the signatory will not be
liable upon the completed document. In
Baxendale
v.
Bennett
the
absence of delivery relieved the defendant
of
liability after he had
given his blank acceptance on a bill of exchange which was subse-
quently stolen and completed. The court distinguished the situation
where the signatory puts such a document into the hands
of
another
with the intention that it should be completed and used.
A
similar
approach has been adopted in relation to share certificates endorsed
in blank.’
Intermediary a
‘‘
mere custodian
Similarly, where a document signed in blank is left with an inter-
mediary as a “mere custodian,” with no authority to complete and
use it, the signatory will not be bound by the completed document.
The leading authority
for
this proposition is
Swirh
v.
Presser.'
The
defendant had there signed two blank promissory notes and left
them with an agent who was instructed to retain them until
authorised to complete and issue them. Acting without such
authority, the agent completed the notes and sold them to the plain-
tiff. The defendant was held not liable since the agent had
no
authority, rather than
a
limited authority, to complete the notes.
This principle also explains the decision in
Mercantile Credit
Co.
Ltd.
v.
Hamblin.
Mrs. Hamblin signed hire purchase proposal forms
in blank and left them with the dealer on the express understanding
that he was to make inquiries with finance companies
as
to the
terms they could offer and report back to her. The dealer ignored
these instructions and completed the forms which were
accepted
by the plaintiffs. Mrs. Hamblin was not bound by the agreement.
The rule under discussion has been applied
in
many cases,’O but
the distinction between no authority and
a
limited authority is some-
4
119231 129
L.T.
573.
5
(1924) 35 C.L.R.-355.
a
(1878)
3
Q.B.D. 525.
7
See
Chartered Trusr and Executor Co.
v.
Pagon
I19501 4 D.L.R. 761;
Aifken
v.
Gardiner
119561 4 D.L.R. (2d) 119.
.-
8
[1907] 2
K.B.
735.
9
[I9651 2 Q.B. 242.
10
In addition
to
the
cases
cited
in
the
text,
see
Ford
v.
Auger
(1874)
18
L.C.Jur.
296;
Ray
v.
Willson
(1911) 45
S.C.R.
401;
Kunst
v.
Abbott
(1923) 42 N.Z.L.R.
1072;
Coronet Investments Ply. Lfd.
V.
Hovelt
I19261
V.R.
208;
and
Commercial
Acceptance Corp. Ltd.
v.
Paris
(1964) 45 D.L.R. (2d) 493.

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