Kuwait Court of Cassation principle number 335

Summary: - An agent’s concluding a transaction in the principal’s name within the limits of his agency. Its implication: that transaction is attributed to the latter. His acting outside that agency or without any authorization at all. Its effect: the effects of that transaction are not attributed to the agent unless he ratifies it. - The drawer of a cheque is the person who creates it. He is regarded as its original debtor. Its implication: the cheque must bear the drawer’s signature, by his handwritten signature, seal, or fingerprint. Appointing an agent, manager, or representative for the drawer to sign the cheque. Its requirement: the Bank must be notified of the agency. The reason therefor: banks usually obtain a specimen signature of the customer, his agent, or his representative and retain these specimens to compare them with the signature of any of them on cheques received bearing any of their signatures, to verify their issuance by any of them. One of them abusing his authority, such as by drawing cheques from the principal’s cheque book in payment of a debt not owed by the account holder and affixing his signature thereto. Its effect: his liability towards the holder. Its condition. - The appellant beneficiary’s acknowledgment, in respect of the cheques drawn on the account of Burj Kuwait Decoration Establishment owned by the respondent, that the latter did not sign them, and his denial that he authorized their signatory to issue them. The contested judgment’s dismissing the action to require the respondent to pay the value of those cheques on the mere assertion that the cheque did not bear the latter’s signature, without examining whether the signatory of the cheques in dispute had representative authority and whether they were issued within the limits of that authority. Inadequate reasoning that led it to contravene and misapply the law. Rule: The import of Articles 715, 61, 57 of the Civil Code, as established in the jurisprudence of this Court, is that if an agent concludes a transaction in the principal’s name within the limits of his agency, everything arising from that transaction is attributed to the latter. If, however, he concludes it outside the limits of that agency or without any authorization at all, its effects are not attributed to the principal unless he ratifies that transaction. It is established that the drawer of a cheque is the person who creates it and is thus regarded as its original debtor. The cheque must therefore bear the drawer’s signature, by his handwritten signature, seal, or fingerprint. If the drawer has an agent, manager, or representative, the Bank must be notified of him, since banks usually obtain a specimen signature of the customer, his agent, or his representative and retain these specimens to compare them with the signature of any of them on cheques received bearing any of their signatures. They can thereby verify that these cheques were issued by any of them. If the representative, manager, or agent abuses his authority by drawing cheques from the principal’s cheque book in payment of a debt not owed by the account holder and affixing his signature thereto, he is liable towards the holder unless he proves the holder’s bad faith. That being so, the appellant—the beneficiary—acknowledged that the respondent was not the person who signed the cheques forming the basis of the action, and the latter denied authorizing the person who signed it to issue it. However, the contested judgment based its ruling setting aside the first-instance judgment and dismissing the action to require the respondent to pay the value of the cheques drawn on the account of Burj Kuwait Decoration Establishment, owned by the respondent, on the mere assertion that the cheque did not bear the respondent’s signature, without taking care to examine whether the signatory of the cheques in dispute had representative authority and whether or not they were issued within the limits of that authority. It is therefore defective for inadequate reasoning, which led it to contravene and misapply the law, rendering it defective and requiring its cassation.