ENDORSEMENT

Presented by, P.Padma Prasadhe

What is an Endorsement ?
The word endorsement is derived from the Latin word lndorsum which means the back. According to the Negotiable Instruments Act, 1881, the writing of a persons name either on the back or the face of instrument followed by ones signature for the purpose of negotiation is called endorsement. A negotiable instrument payable to order can be negotiated by endorsement and delivery In fact two things are necessary for endorsement. (1) It must be written and signed by the transferor called as endorser. (2) There must be a person to whom endorsement is to be made called endorsee.

Who may endorse?

The payee of an instrument is the rightful person to make the first endorsement. Thereafter the instrument may be endorsed by any person who has become the holder of the instrument. The maker or the drawer cannot endorse the instrument but if any of them has become the holder thereof he may endorse the instrument.

Essentials of a valid endorsement

1. It must be on the instrument. The endorsement may be on the back or face of the instrument and if no space is left on the instrument, it may be made on a separate paper attached to it called allonge . 2. It must be made by the maker or holder of the instrument. A stranger cannot endorse it. 3. It may be made either by the endorser merely signing his name on the instrument (it is a blank endorsement) or by any words showing an intention to endorse or transfer the instrument to a specified person (it is an endorsement in full).

Types of Endorsement
Blank Endorsements :
A blank endorsement is just a signature on a check or other form of negotiable instrument. Blank endorsements are commonly used all throughout both business world and everyday.

Full endorsement :
It contains not only the signature of the endorser but specifies the endorsee or to his order also.

Restrictive endorsement :
Here the endorser uses such words in endorsement which restricts further negotiation and transfer of bills.

Conditional endorsement:
It contains an order to pay only when a condition expressly laid down by the endorser is met with.

Sans Recourse endorsement :

In this type of endorsement, the endorser refuses to accept any liability on the instrument to any subsequent party in case of dishonor of the instrument.

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