Endorsement

Meaning of Endorsement ,
Rules regarding Endorsement
Types of Endorsement.

1. Endorsement: Meaning, Types and Rules Prepared by- Dr Ramandeep Assistant Professor Deptt. of Commerce GCW, Sirsa (Haryana)

2. Endorsement: Meaning When a negotiable instrument is signed by one person to another in such a manner that the right to receive the payment on the basis of the negotiable instrument is transferred to the other person, it is known as endorsement.

3. Definition of Endorsement When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed there to, he is said to endorse the same, and called the “endorser”.

4. Parties of Endorsement Endorser Endorsee Who signs the instrument In whose favor endorsement is made

5. Endorser of Negotiable Instrument The following persons can endorse a Negotiable Instrument – Holder Payee Endorsee

6. Essentials of a Valid Endorsement On the Backside of the instrument Written in Ink Signed by Endorser Endorsement of Entire Instrument Two or more payees No issue of Honorable Words Post of Qualification Name of Endorser In case of Married women Illiterate person Delivery of instrument

7. Legal Provisions R egarding Endorsement Effect on Endorsement Endorser Time Endorsement for a part of the payment Endorsement in order Endorsement by legal representative

8. Rules Regarding Endorsement Signature of the Endorser Spelling “ Kudeep Mehta” “ Kudip Mehta” No addition or omission of initial of the name Prefixes or suffixes to be excluded Endorsement by firms Endorsement by Companies Endorsement by Public authorities

9. Types of Endorsement Blank or general endorsement Endorsement in full or special endorsement Conditional endorsement Restrictive endorsement Endorsement ‘Sans Recourse’ Facultative endorsement Forged endorsement Partial Endorsement

10. Blank or General E ndorsement If the endorser signs his name only and does not specify the name of the endorsee, the endorsement is said to be in blank Sec. 16(1). The effect of a blank endorsement is to convert the order instrument into bearer instrument (Sec. 54), which may be transferred merely by delivery. This type of endorsement is payable to the bearer.

11. Endorsement in Full or S pecial E ndorsement

12. Conditional E ndorsement

13. Restrictive Endorsement

14. Endorsement ‘Sans Recourse’ S ec 52- When the endorser expressly excludes his own liability on the negotiable instrument to the endorsee or any subsequent holder in case of dishonor of the instrument, the endorsement is known as ‘sans recourse’ endorsement. Eg : Pay A or order Sans recourse

15. Facultative Endorsement

16. Forged Endorsement A fake endorsement is one in which signature of any of the party is fake which makes the instrument invalid

17. Partial Endorsement A partial endorsement is one which means to transfer the document only for a part of its value ordinarily a partial endorsement is not valid. When any amount has already been paid, a note to that effect may be endorsed on the instrument which can then be negotiated for the balance of the said amount.

18. Thank You