Also known as: incomplete instrument · incomplete negotiable instrument
Written by attorneys · grounded in primary & secondary sources — see below
A signed writing whose contents at the time of signing show that it is incomplete but that the signer intended completion by the addition of words or numbers. The writing need not have been issued. The burden of establishing that words or numbers were added without the signer's authority rests on the person asserting the lack of authority.
Israel Irving signed a note form that left the amount blank, intending to fill it in later with the correct sum owed to his supplier. An employee later added a much larger amount without Irving's permission and attempted to negotiate the instrument to a third party. The added amount constitutes an unauthorized change to an incomplete instrument, so the instrument remains enforceable only according to its original incomplete terms.
Inertia Dynamics entrusted Imran Iyer with authority to prepare checks for issue in the company's name, including access to incomplete check forms. Iyer completed one such form by filling in a payee and amount without company approval and deposited the check into a personal account. Because Iyer held responsibility with respect to instruments, the company bears the loss when a bank in good faith pays the completed instrument.
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The person asserting the lack of authority bears the burden of establishing that the additions were made without the signer's authority.
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An unissued instrument or an unissued incomplete instrument that is completed is binding on the maker or drawer, subject to defenses such as nonissuance or failure of a condition.
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The drawer or indorser is obliged to pay according to the terms of the instrument when completed, to the extent stated in the rules governing incomplete instruments and alterations.
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