Sections 27-29 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 27, 28 and 29 deal with people who sign for someone else. Section 27 lets a person capable of being bound act through a duly authorised agent, but limits what a general authority covers. Section 28 makes an agent who signs without indicating that he signs as agent personally liable. Section 29 does the same for a legal representative of a deceased person unless he expressly limits his liability. This article reads them as per the consolidated text consulted. If you sign instruments for a firm or an estate, a legal dispute resolution review of your signing practice can prevent personal exposure.
A person who can bind himself may do so through a duly authorized agent acting in his name (s.27). A general authority to transact business and receive and discharge debts does not include the power to accept or indorse bills, and an authority to draw bills does not of itself import an authority to indorse. An agent who signs without indicating that he signs as agent, or that he does not intend personal responsibility, is personally liable (s.28). A legal representative who signs is personally liable unless he expressly limits liability to the assets received (s.29).
Section 27: agency
The text says: every person capable of binding himself or of being bound, as mentioned in section 26, may so bind himself or be bound by a duly authorized agent acting in his name. It then adds two limits: a general authority to transact business and to receive and discharge debts does not confer upon an agent the power of accepting or indorsing bills of exchange so as to bind his principal; and an authority to draw bills of exchange does not of itself import an authority to indorse.
The rule
The first sentence links back to section 26 (see our article on section 26). Anyone who may bind himself or be bound under that section may do so through a "duly authorized agent acting in his name". Three conditions are in the words: the agent is duly authorised, the agent acts, and he acts in the principal's name.
For the general law of agency, see our article on section 182 of the Indian Contract Act, 1872, which defines agent and principal, and section 188 of the Indian Contract Act, 1872 on the extent of an agent's authority.
The two limits
| Authority the agent has | What it does not, of itself, give |
|---|---|
| A general authority to transact business and to receive and discharge debts | The power of accepting or indorsing bills of exchange so as to bind the principal |
| An authority to draw bills of exchange | An authority to indorse |
The first limit concerns bills of exchange. A manager with a general business power to run the business and collect debts cannot, on that basis alone, accept or indorse a bill so as to bind the owner. The second limit says that drawing and indorsing are different powers: permission to draw does not carry permission to indorse.
The text speaks of bills of exchange in both limits. It does not mention cheques or notes in these limits, and this article does not extend them. A principal who wants an agent to accept or indorse should give that authority expressly, and a person dealing with the agent should ask to see it.
Example with invented names: Himanshu owns a shop and gives his manager, Ila, a general authority to run the shop and receive and discharge debts. Ila indorses a bill of exchange payable to Himanshu to pay a supplier. On the text, her general authority does not itself confer the power of indorsing bills so as to bind Himanshu. Whether she had some other authority is a question of fact.
Section 28: agent signing
The text says: an agent who signs his name to a promissory note, bill of exchange or cheque without indicating thereon that he signs as agent, or that he does not intend thereby to incur personal responsibility, is liable personally on the instrument, except to those who induced him to sign upon the belief that the principal only would be held liable.
Break it down.
| Element | Text |
|---|---|
| Who | An agent who signs his name |
| What | A promissory note, bill of exchange or cheque |
| Without | Indicating on the instrument that he signs as agent, or that he does not intend to incur personal responsibility |
| Result | He is liable personally on the instrument |
| Exception | Except to those who induced him to sign upon the belief that the principal only would be held liable |
What "indicating thereon" means in practice
The indication must be "thereon", on the instrument itself. A private understanding is not enough on the words of the section. Typical indications are words next to the signature stating the capacity in which the signer acts. The text consulted does not prescribe any form of words, and none is given here.
The exception
The agent is not personally liable "to those who induced him to sign upon the belief that the principal only would be held liable". So if a person persuaded the agent to sign because that person believed that only the principal would be liable, that person cannot hold the agent personally liable. The exception protects the agent against those who induced the signing on that belief; it does not protect him against others.
Example
Jatin is the purchase manager of Kamal Enterprises. He signs a cheque in his own name only, with no words showing he signs as an agent. Under section 28, he is liable personally on the cheque. If he had written "for Kamal Enterprises" and the designation next to the signature, the section's condition would have been met and the personal liability under section 28 would not arise. The same section covers a note or bill.
Section 29: legal representative signing
The text says: a legal representative of a deceased person who signs his name to a promissory note, bill of exchange or cheque is liable personally thereon unless he expressly limits his liability to the extent of the assets received by him as such.
| Element | Text |
|---|---|
| Who | A legal representative of a deceased person |
| What | Signs his name to a note, bill or cheque |
| Result | Liable personally |
| Escape | Unless he expressly limits his liability to the extent of the assets received by him as such |
The word "expressly" matters. The limit to the assets received must be stated, not implied. The text does not say where it is to be stated, but the pattern of section 28, "thereon", suggests that the sensible place is on the instrument itself. That is a prudent reading and not the text's own words.
Example: Lata is the legal representative of her late father and signs a promissory note in that role to settle his business debt. If she signs without more, she is personally liable under section 29. If she adds an express limit, such as stating that she signs only to the extent of the assets received by her as legal representative, the exception applies.
Comparing sections 28 and 29
| Point | Section 28 (agent) | Section 29 (legal representative) |
|---|---|---|
| Default | Personally liable | Personally liable |
| How to avoid | Indicate on the instrument that he signs as agent, or does not intend personal responsibility | Expressly limit liability to the assets received as legal representative |
| Specific exception | Those who induced him to sign believing the principal only would be liable | None stated |
In both cases the safe course is to say clearly, in writing, on the instrument, in what capacity and with what limit you sign.
Need help with signing authority?
If you sign cheques or notes on behalf of a firm, or are an executor or legal representative asked to sign, a short review of the wording and your authority can avoid personal liability. Speak to us about legal dispute resolution.
Key takeaways
- A person who can bind himself may do so through a duly authorised agent acting in his name.
- A general authority to transact business and to receive and discharge debts does not confer the power of accepting or indorsing bills so as to bind the principal.
- An authority to draw bills does not of itself import an authority to indorse.
- An agent who signs without indicating thereon that he signs as agent, or that he does not intend personal responsibility, is personally liable, except to those who induced him to sign on the belief that only the principal would be held liable.
- A legal representative who signs is personally liable unless he expressly limits his liability to the extent of the assets received.
Read next
- Section 26: capacity to make instruments, minor and corporation
- Sections 30-31: liability of drawer and of the drawee bank of a cheque
- Sections 32-34: liability of maker and acceptor, and who can accept a bill
- Section 141: liability of directors for company cheque bounce
Disclaimer: Based on a consolidated text of the Negotiable Instruments Act, 1881 stating the position as of 26 December 2015 and on the Negotiable Instruments (Amendment) Act, 2018, as consulted on 2 October 2026. Later amendments and current criminal procedure law should be checked. This article is general information, not legal advice; check the official text before acting.