Capacity to incur liability under instrument Section 26: Every person competent to contract has capacity to incur liability by making ‘drawing’ accepting, endorsing , delivering and negotiating an instrument.
A party having such capacity may himself put his signature or authorize some other person to do so. A minor cannot make himself liable as drawer, acceptor or endorser, but where the instrument is drawn or endorsed by him, the holder can receive payment from any other party thereto. Authority to sign (Section 27 & 28): Every person, capable of incurring liability, may bind himself or be bound by a duly authorized agent acting in the name.
A general authority to transact business given to an agent does not empower him to accept or endorse bill of exchange so as to bind the principal. An agent may have authority to draw bills of exchange, but endorse them. An authority to draw does not, necessarily, imply an authority to endorse. An agent who signs his name on an instrument without indicating that he signs as agent, is personally liable, but this rule does not apply where any one induces him to sign upon the belief that principal only would be held liable.
