What Is an Allonge?
An allonge is a sheet of paper that is attached to a negotiable instrument, such as a bill of exchange. Its purpose is to provide space for additional endorsements when there is no longer sufficient space on the original instrument. The word “allonge” derives from the French word allonger, which means “to lengthen."
- Allonges are physical sheets of paper used to provide additional space on a contract.
- They are commonly associated with negotiable instruments such as bills of exchange.
- Today, allonges are relatively rare as contracts are increasingly drafted and amended electronically.
How Allonges Work
Allonges are commonly used on bills of exchange, which are a type of negotiable instrument in which one party agrees to pay a specified sum of money to another party, either immediately or on a future date. BIlls of exchange generally do not involve any interest payments, making them essentially post-dated checks.
An important role that allonges play includes the housing of the signature for a contract’s guarantors. In the context of bills of exchange, the person who guarantees the payment of the bill is known as a “given of an aval.” The term aval refers to the guarantee given that the amount stipulated on the bill or allonge will be paid. To ensure enforceability, an aval must specify the specific account for which it is given. If no such specification is given, then it will be deemed as pertaining to the drawer.
Allonges vs. Bills of Exchange
Bills of exchange are primarily used in international trade, with each involving the following three parties. The first party is known as the “drawee," which is the party responsible for paying the sum of money specified. The second party is the “drawer”, who is an intermediary between the drawee and the payee. Lastly, the “payee” is the party who ultimately receives the funds paid by the drawee. In the event that there are only two parties involved, then the drawer and payee would be the same party.
Importantly, bills of exchange are transferable through endorsements. In practice, this means that the original endorsements applied to a bill of exchange may need to be updated several times in the event that the bill is transferred repeatedly. To facilitate this, bills of exchange will often come with an allonge attached to the bill, effectively acting as a placeholder for potential future amendments to the contract. In order for the allonge to have legal enforceability, any new endorser must inscribe and sign their endorsement onto the allonge.
Example of an Allonge
Today, allonges are mainly used in Europe among countries that operate on a tradition of civil law, such as France. They are relatively rare in the U.K. due to differences in the treatment of endorsements under the English legal tradition.
In practice, however, allonges have become rare throughout the world as contracts of all kinds are increasingly drafted and amended electronically, thereby allowing new pages to be added as needed without the prior physical constraints.