Harold H. Heidingsfelder signed a credit agreement as vice president of J.O.H. C

Question

Harold H. Heidingsfelder signed a credit agreement as vice president of J.O.H. Construction Co. for a line of credit with Pelican Plubming Co. The credit agreement contained the folloing language; In consideration of an open account privilage, I hereby understand and agree to the above terms. Should it become necessary to palce this account for collection I shall personally obligate myself and my corporation, if any, to pay the entire aount due including service charges (as outlined above terms) thirty-three and one-third (33.5%) attorney's fees, and all costs of collection, including court costs. Signed (Harold H. Heidingsfelder) Company J.O.H. Construction Co., Inc. When J.O.H. Construction failed to make payment, Pelican, claming it was a holder ofa negotiable instrument, sued Heidingsfelder to hold him personally liable for this failure in indicate a resresentative capacity on the credit agreement. He claims that a credit application is not a negotiable instrument and that he could not be held personally liable. Is he right?

Please first restate the question, second state the issue or problem, third legal concepts or principles that apply here, and lastly answer the question.

Explanation / Answer

The question here is that whether Harold H. heidingsfelder is personally liable for the credit and other charges payment and whether the instrument which Harold signed and was hold by Pelican was negotiable instrument.

The problem here is that if Harold happens to be personally liable then he will have to make all the payment from his own pocket even if his company is not in position to pay. Hence his liability heer will become unlimited towrads Pelican. Secondly if the instrument happens to negoatiable instrument then the parties have rights under Article 3 otherwise it would be treated under Contract Law.

For an instrument to benegotiable instrument it is required that - it is evidenced by a record, signed by maker/drawer, contain a promise or order, unconditional character, pay certain sum of money, at given date or after a date, to bearer or order.

Here the credit application did not have all the requirements fulfilled mentioned just above. It contains no unconditional promise as it is stated "Should it become necessary to place this account for collection", no certaiin sum of moeny, no definit time or demand and also not payable to order or bearer. Hence this will not be traeted as negotiatibel instrument and teh case will be ruled under contract act.

Secondly, the signed of Harold was there in the agreement but as representative. He would have become perosnally obligated if the instrument neither named the person represented nor showed the representive signed in a representive capacity. Here Harodl signed in a representive capacity thus he works as an agent, as a representive to the company an dhence cannot be held personally liable.

Thus, Harold is right.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.