Allonge and bill of exchange

Article 484(1) of the Commerce Act provides that an aval, or bill guarantee, is given on the bill of exchange or on an allonge. Under Article 468(1) of the Commerce Act, an allonge is a sheet attached to the bill of exchange, that is, a part or continuation of the negotiable instrument itself.

According to the established case law, where there is no evidence or allegation that endorsements or guarantees have been entered on the security, the existence of an allonge as a sheet separate from the instrument has no statutory justification. Thus, even where no previous endorsements are recorded, the allonge is not regarded as a sheet separate from the provisional share certificate insofar as it is attached to that certificate by the signatures of both parties to the transfer. In each individual case, account must also be taken of the possibility of competing endorsements.

The legislature does not require the aval guarantor’s declaration of intent to appear exclusively on the face of the document. Article 484(2) of the Commerce Act establishes a presumption that a signature on the face of the bill of exchange constitutes a guarantee unless it is the signature of the drawee or the drawer. The purpose is to simplify the form of an aval by allowing a signature alone on the face of the instrument, without any accompanying declaration of intent. Accordingly, Article 484(2) should not be interpreted as prohibiting a guarantee given by using the expressions referred to in Article 484(1) together with a signature on the back of the security.

If you have questions about a bill of exchange, an allonge, a guarantee, an aval (guaranteeing an obligation under a negotiable instrument) or securities, it is best to consult an experienced lawyer practising in the law of obligations.