Section 70(b) provides that the ‘interpretation’ of the contracts of the drawer, indorser and
acceptor is determined by the lex loci contractus. Regrettably the meaning of
‘interpretation’ is unclear. Does it include the essential validity of the negotiation of the
instrument? It is uncertain what is included in this category. For instance, the question
whether a signatory of the bill need indicate that he signs in a representative capacity to
avoid personal liability was treated in the Bedit Properties case, as a matter of form, when just such a question would naturally be
considered one of ‘interpretation’. The English decisions on this question have not contributed to clarity. Each of the three
relevant cases have dealt with the essential validity of the transfer of an instrument. In the
first two cases, the statute was hardly referred to, but in Koechlin et Cie v Kestenbaum
Brothers the English equivalent of s 70(b) was considered. In this case, the essential
validity of a transfer of an instrument pursuant to an indorsement made by the payee’s duly
authorized agent, but in which the agent did not indicate that he signed in that capacity, was
in issue. The bill in question was drawn in France, accepted in London, and the disputed
indorsement was affixed when the bill was returned to Paris. Under French law the
indorsement was valid, but it was not valid under English law. summarise this