Verification of a signature on a bill of exchange and increasing its enforceability

Introduction: The Promissory Note as a Tool and a Risk in Czech Law

In modern commercial practice, a promissory note primarily serves as a security instrument. Its popularity stems mainly from the existence of simplified and expedited court proceedings. Based on a valid promissory note, a creditor can request the issuance of a bill of exchange payment order, which is a significantly more efficient process than standard trial proceedings. However, this advantage comes at the cost of extreme formal stringency, known as rigor cambialis.

The law governing bills of exchange places extraordinary emphasis on formalism and the literal interpretation of the document's text. Courts follow the principle that "what is not on the bill is not in the world," meaning that legal relationships are assessed almost exclusively based on what is explicitly stated on the promissory note itself.

This principle is a double-edged sword. On one hand, it allows for a quick and unambiguous assessment of claims; on the other hand, even a seemingly minor formal defect can lead to the absolute invalidity of the entire promissory note, resulting in the loss of all the creditor's rights arising from it. Past case law has dealt with instances of invalidity caused, for example, by the use of a foreign-language term for the currency or even by the inappropriate graphical arrangement of text within pre-printed boxes.

This report focuses on the most critical formal requirement of a promissory note – the signature of the drawer or other bill of exchange debtor. Challenging the authenticity of this signature is the most common and procedurally most effective defence for debtors in bill of exchange disputes.

The aim of this report is to provide a comprehensive analysis of the institution of official signature verification (legalisation) as a key preventive tool that dramatically strengthens the creditor's position and the overall enforceability of the promissory note. A substantial part of the text is then dedicated to a detailed and definitive refutation of the persistent myth that the person performing the verification (a notary, an official at a municipal office, or a Czech POINT office) becomes a guarantor on the bill of exchange by signing the verification clause and thus assumes the financial obligation under the bill.

The Signature as the Cornerstone of a Bill of Exchange Obligation

The signature is the alpha and omega of every obligation under a bill of exchange. According to Art. I, § 1 (for a bill of exchange) and § 75 (for a promissory note) of the Bills of Exchange and Cheques Act, the drawer's signature is one of the essential requirements of a promissory note. A document lacking this signature cannot be considered a valid promissory note, unless it is an intentionally incomplete blank promissory note, which is, however, also signed. By signing, the drawer identifies with the text of the document and establishes their unconditional order (in the case of a bill of exchange) or promise (in the case of a promissory note) to pay.

The law does not require the signature to be legible. It is sufficient if the identity of the signatory can be inferred from it. If a legal entity signs the promissory note, it must be clear from the signature and any additional information (e.g., a company stamp) that this is a legal act of that legal entity and not just a private act of the signing individual (e.g., an executive director).

Guarantee on a Bill of Exchange (Aval) and the Risk of a "Bare" Signature

In addition to direct debtors (the drawer of a promissory note, the acceptor of a bill of exchange) and indirect (recourse) debtors (the drawer of a bill of exchange, endorsers), the law on bills of exchange also recognises a specific security instrument – the guarantee on a bill of exchange, known as an aval. By signing the promissory note, the avalist guarantees payment of the sum of the bill and is bound in the same way as the person for whom they have given the guarantee (the so-called avalat). This obligation is usually expressed by the clause "as guarantor," "per aval," or similar, followed by the avalist's signature.

This is precisely where the root of the concerns associated with verifying signatures on promissory notes lies. In its strict formalism, the law on bills of exchange contains a provision that can be confusing for a layperson. According to Art. I, § 31(3) of the Bills of Exchange and Cheques Act, a mere signature on the face of the promissory note that does not belong to the drawer or the drawee has the effect of an aval for the drawer. This so-called "bare aval" means that to assume the full obligation under the bill, it is sufficient to place one's signature on the front of the document, without the need to add any other words expressing the will to guarantee.

This construct is the logical starting point for the myth about the liability of the verifying person. The thought process of an uninformed official or notary might be as follows:

1. The law on bills of exchange includes a rule about a "bare aval," where a mere signature on the face of the document automatically creates a financial obligation.

2. This rule is a manifestation of extreme formalism, where the law attributes legal consequences to the mere act of signing in a specific place, regardless of the actual intent.

3. In the course of their duties, the verifying person also places their signature and official stamp on the document, often on its face.

4. With a superficial knowledge of the law on bills of exchange and out of an excess of caution, a fear may arise that this official signature could also be misinterpreted by a court as a "bare aval," thereby creating a full bill of exchange obligation for the verifying person.

This fear is therefore not entirely irrational but stems from the incorrect application of a correct legal principle (the bare aval) to a completely different legal situation (an act of public authority – legalisation). To refute it, it is first necessary to understand why challenging a signature is such a significant threat to a creditor, and then to demonstrate why the institution of the aval cannot, by its nature, apply to the act of legalisation.

Dispute over the Authenticity of a Signature: The Achilles' Heel of Enforceability

Although a promissory note is designed as a powerful tool for creditors, its effectiveness can be dramatically weakened by one simple procedural act of the debtor.

The Objection of a Non-Authentic Signature as a Key Defence for the Debtor

In court practice, the objection that the signature on a promissory note is not the authentic signature of the defendant debtor is by far the most frequently used and procedurally most effective defence against a bill of exchange payment order.

Once the debtor, in timely and properly reasoned objections, denies the authenticity of their signature, the court is obliged to schedule a hearing during which evidence will be taken regarding this disputed fact. This immediately thwarts the main advantage of the promissory note – the speed and simplicity of the proceedings.

The Burden of Proof – Who Must Prove What?

The crucial question in such a dispute is which party bears the burden of proof. According to the established case law of the Supreme Court of the Czech Republic, formulated for instance in the landmark judgment Ref. No. 29 Cdo 3478/2007 and confirmed in many other decisions, the burden of proof regarding the authenticity of the signature on a promissory note always rests with the creditor (the plaintiff).

This conclusion is also consistent with the general provision in Section 565 of Act No. 89/2012 Sb., the Civil Code, which states that "it is for anyone who relies on a private document to prove its authenticity and correctness." Although in the practice of some lower courts one may still encounter the erroneous view that the burden of proof lies with the defendant who denies the authenticity, this position is in stark contradiction to the case law of the highest judicial instances.

Procedural Consequences and Costs

This results in serious procedural complications for the creditor. They must actively propose evidence to prove the authenticity of the signature, which in practice primarily means requesting an expert opinion from the field of handwriting analysis (graphology). This process is associated with several pitfalls:

• Need for the original: The expert unconditionally requires the original promissory note for their examination; a photocopy is insufficient.

• Comparative material: The expert needs a sufficient amount of comparative material, i.e., undisputed signatures of the debtor from other documents, which can be requested, for example, from the tax office, a bank, or the social security administration.

• Writing test: The expert may also require the debtor to appear in person and perform a so-called writing test in their presence.

• Cost and time: The entire process of expert examination is very time-consuming and expensive. The costs of the expert opinion are usually borne by the creditor in the form of an advance payment, and their potential reimbursement depends on the final success in the case.

• Uncertain outcome: Even an expert opinion may not yield a conclusive result. In some cases, the expert may state that the authenticity of the signature can neither be confirmed nor refuted with the required degree of certainty, which further complicates the position of the creditor who bears the burden of proof.

This situation leads to an effective paralysis of the strategic purpose of the promissory note. A creditor who accepted a promissory note with the prospect of a quick and inexpensive satisfaction of their claim is, by a single, easy, and cheap act of the debtor, drawn into a lengthy, costly, and procedurally uncertain court dispute. The entire burden of proof lies on them. It is precisely this asymmetry and the creditor's vulnerability regarding the authenticity of the signature that is the main reason why it is absolutely crucial for them to prevent this situation. The solution is offered by the institution of official signature verification.

Official Signature Verification (Legalisation): Legal Nature and Effects

Legalisation, or the official verification of the authenticity of a signature, is an institution of public law, the purpose of which is to provide legal certainty that a specific person has indeed signed a given document.

Legal Framework

The process of legalisation is comprehensively regulated in Act No. 21/2006 Sb., on Verification (hereinafter the "Verification Act"). The authority to perform legalisation is held not only by notaries but also by regional authorities, municipal authorities of municipalities with extended powers, selected municipal authorities, district authorities, and, based on special authorisation, also the Czech Chamber of Commerce and the holder of a postal licence, i.e., the Czech POINT public administration contact points.

Subject and Limits of Verification – What is (not) confirmed?

Understanding the precise scope of legalisation is key to refuting the myths about the liability of the verifying person. The Verification Act in § 10 strictly defines what is the subject of verification. Legalisation verifies exclusively and only one of the following facts:

a) that the applicant signed the document in their own hand before the verifying person, or

b) that the applicant acknowledged a signature already on the document as their own

c) that the applicant acknowledged their electronic signature on a document in electronic form as their own.

Equally important is what the law explicitly excludes from verification. Section 10(2) of the Verification Act unequivocally states that legalisation does not confirm the correctness or truthfulness of the data stated in the document, nor their compliance with legal regulations. And most importantly, the law adds: "The authority is not responsible for the content of the document." This provision is a fundamental pillar that excludes any substantive liability of the verifying authority for obligations arising from the content of the document on which the signature is being verified.

Procedural Requirements

Legalisation is marked on the document in the form of a so-called verification clause. This must contain the requisites prescribed by law, such as the serial number from the verification register, information about the applicant, a statement on how identity was verified, the date, the signature of the verifying person, and the impression of the official stamp.

The Verification Act also specifies cases where legalisation cannot be performed. These include, for example, verifying a signature on a document that contains no text, or on a completely blank form. This is also relevant for promissory notes, especially blank promissory notes, which, however, must contain at least the word "promissory note" and the drawer's signature to be valid.

Verified Signature on a Promissory Note: Strengthening Legal Certainty and Enforceability

The combination of the private law instrument of the promissory note with the public law act of legalisation has far-reaching and exceptionally positive consequences for the creditor.

Transformation of the Evidentiary Situation

While the promissory note itself is a private document, the verification clause attached to it is a public document. According to § 134 of the Code of Civil Procedure, documents issued by courts of the Czech Republic or other state authorities within the scope of their powers, as well as documents declared public by special regulations, confirm that it is an order or declaration of the authority that issued the document, and unless the contrary is proven, also the truth of what is certified or confirmed therein.

This completely changes the procedural standing of the parties in a dispute over the authenticity of a signature. An officially verified signature establishes a rebuttable legal presumption that the person whose identity was verified actually signed the document or acknowledged the signature as their own. The consequence is a de facto shift of the burden of proof from the creditor to the debtor.

The debtor can no longer simply and without further ado deny the authenticity of their signature in their objections. It is now they who must actively allege and prove that the public document (the verification clause) is false. They would therefore have to prove, for example, that they were not at the given office on the day of verification, that their identity document was misused, or that the verifying person made a mistake, which is an incomparably more difficult position in terms of evidence.

Practical Impact on Bill of Exchange Proceedings

Verifying the signature on a promissory note is therefore a crucial strategic tool to preventively limit and practically eliminate the debtor's most common defence. A creditor who secures a promissory note with the debtor's officially verified signature dramatically increases the probability that the issued bill of exchange payment order will not be successfully challenged by an objection of a non-authentic signature and will become final and binding without the need to order lengthy and costly hearings involving expert evidence.

This is a sophisticated legal strategy that uses public law tools to strengthen a position in a private law relationship. The creditor faces a private law problem – the high risk and costs associated with proving the authenticity of a signature on a private document. The solution is found in an institution of public law – legalisation.

By "wrapping" the key element of their private document (the signature) in a public document (the verification clause), they import the advantages associated with a public document into their private law relationship, primarily the presumption of correctness and the shift of the burden of proof. Signature verification is thus not a mere formal act, but a pre-emptive solution to the greatest procedural weakness of a promissory note.

The Myth of the Verifying Person's Liability: A Definitive Refutation

Despite clear legal regulations and practical advantages, concerns among verifying persons (notaries, officials) about legalising a signature on a promissory note still arise in practice. These concerns stem from the myth that by signing the verification clause, they could become guarantors on the bill of exchange. However, this myth is legally completely unfounded and can be refuted by several key arguments.

Arguments Against the Creation of a Bill of Exchange Obligation

1. Different Purpose and Legal Nature: The signature of the verifying person is part of the verification clause, which is an act of public authority performed under the Verification Act. Its sole purpose is to certify the fact that a specific person signed the document or acknowledged the signature as their own. 

It is not an expression of private will aimed at assuming any obligation. In contrast, the signature of an avalist is a purely private law act under the Bills of Exchange and Cheques Act, the express purpose of which is to guarantee the payment of the promissory note. These are two completely different legal institutions with different purposes, forms, and legal consequences.

1. Different Form and Content: The verification clause has a form and content strictly prescribed by law. It always includes a serial number, date, the signature of the verifying person, and, above all, the impression of an official stamp. This formal and content-related definition clearly and unmistakably distinguishes it from a simple, uncommented signature on the face of the promissory note, which is the only thing that can, under the conditions set by law, establish a so-called "bare aval."

2. Explicit Statutory Exclusion of Liability: As already mentioned, § 10(2) of the Verification Act directly and unequivocally states that the verifying authority is not responsible for the content of the document. This provision is a direct legal obstacle to the creation of any obligation (including a bill of exchange obligation) for the verifying person that would arise from the content of the verified document.

Analysis of Case Law and Legal Doctrine

There is not a single judgment from Czech courts that has ever inferred a bill of exchange obligation for a notary, official, or other verifying person by virtue of performing legalisation. On the contrary, legal literature and established legal practice are in unanimous agreement that such a fear is entirely unfounded and is a persistent myth.

Although a direct Supreme Court judgment on this issue is lacking, legal practice makes do with an analogous interpretation of other relevant decisions. An example is the Supreme Court judgment Ref. No. 29 Cdo 722/2010, which addressed the validity of a promissory note whose text was written into pre-printed boxes. The lower courts had originally concluded that the boxes disrupted the continuity of the text and the promissory note was therefore invalid.

The Supreme Court rejected this formalistic excess and stated that if the mutual connection and logical sequence of the text are apparent from the document, graphical elements do not affect the validity of the promissory note. However, this decision also admits that "if any data on the promissory note is in a box, it may mean its exclusion from the text of the document only if it must be clear to everyone from the graphical layout of the document that the box has precisely this meaning and not another." 

Exclusion from the text of the document can undoubtedly be attributed, for example, to a box in which the verification clause is embodied. The verification clause – which is textually, graphically, formally, and legally a completely different and separate unit – must be considered as something that stands outside the text of the promissory note and cannot be part of it. 

This judgment thus provides a strong indirect argument that courts should distinguish between the text of the bill of exchange obligation itself and other elements on the document, and it is therefore excluded that a signature on a verification clause could be mistaken for a signature establishing an aval.

Liability of the Notary/Authority for Damage

It is necessary to distinguish between the non-existent liability under a bill of exchange and the possible liability for damage caused during the performance of verification activities. This liability is strict (does not require fault), but its prerequisite is always an error, i.e., an incorrect official procedure. 

Such an error would be, for example, verifying an identity based on a clearly forged or invalid document. Conversely, the mere verification of a signature on a document whose content is legally problematic or invalid (such as an invalid promissory note) is not an incorrect official procedure, as the verifying person is not liable for the content of the document by law.

Practical Steps to Minimise Concerns

To completely dispel any, even subjective, concerns on the part of verifying persons, it can be recommended that the verification clause be placed on the document in such a way that its separation from the text of the promissory note itself is also visually completely obvious. The ideal placement is on the reverse (back) side of the promissory note or on a sheet firmly attached to it. However, even when placed on the face, it should be clearly below the text of the promissory note.

Conclusion and Recommendations for Practice

The analysis has shown that in Czech law, the promissory note is a powerful yet risky instrument, whose effectiveness is intrinsically linked to compliance with strict formal rules. The greatest procedural risk for the creditor is the possibility of the debtor challenging the authenticity of their signature. This step effectively paralyses the advantages of swift bill of exchange proceedings and shifts the entire, often costly, burden of proof onto the creditor.

It has been demonstrated that official signature verification (legalisation) is a highly effective and strategic tool that practically eliminates this key risk. By making the verification clause a public document, there is a de facto reversal of the burden of proof regarding the authenticity of the signature, which dramatically strengthens the creditor's legal certainty and the enforceability of their claim.

Final Position on the Myth of Liability

The fear of a bill of exchange obligation arising for the verifying person is a legally unfounded myth. It is based on a flawed and superficial analogy with the institution of the "bare aval." However, the signature on a verification clause is an act of public authority with a clearly defined purpose, form, and content, which stands completely outside the private law text of the promissory note and, by its nature, cannot establish a bill of exchange obligation. Furthermore, the legal regulation explicitly excludes the liability of the verifying person for the content of the document.

Final Recommendations

Based on the analysis conducted, the following recommendations for practice can be formulated:

• For creditors: It is strongly recommended that for all significant bill of exchange transactions, they insist, without exception, on the official verification of the debtor's signature (whether it be the drawer, acceptor, or avalist). This is a minimal investment of a few euros, which, however, brings maximum strengthening of legal certainty and preventively removes the biggest obstacle to the quick and effective enforceability of the promissory note.

• For debtors: The debtor should be aware that by signing a promissory note with a verification clause, they are practically waiving the possibility of defending themselves in a future dispute with the objection of a non-authentic signature. They should therefore take this act with the utmost seriousness.

• For verifying persons (notaries, authorities, Czech POINT): There is no valid legal reason to refuse to perform the legalisation of a signature on a promissory note out of fear of creating one's own bill of exchange obligation. Such a procedure is contrary to the purpose and meaning of the Verification Act. To remove even the last subjective doubts, it is advisable to ensure a clear visual separation of the verification clause from the text of the promissory note itself, ideally by placing it on the reverse side of the document.

Don't wait for a problem to arise. Whether you need to prepare a formally watertight promissory note or defend against a claim from a promissory note that you consider unjustified, turn to us. Contact us today and arrange a consultation where we will find the best solution together.