Professional Documents
Culture Documents
Chapter 20
Chapter 20
negotiable instrument. An endorser is one who puts his signature (endorsement) on the back of order instrument, or on a slip of paper annexed thereto (called allonge). The person in whose favour it is endorsed is the endorsee.
(ii) It must pertain to full amount of instrument. (iii) Title to instrument must be transferred in favour of two or more persons (endorsees) only jointly, and not separately. (iv) All joint payees or endorsees must endorse it jointly, unless one of the persons has authority of the remaining payees or the endorsees to endorse it on their behalf. Partners of a firm are presumed to have such authority of the remaining partners.
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Payee r endor ee i required to i n (endor e) i name and desi nation, in t e same manner as is mentioned in instrument. But such ersons may also rite their correct desi nation or name, under their earlier si natures (endorsements), as er the instrument.
(vi) In the cases of t o or more endorsements made on the instrument, these are resumed to e made in the order that these may appear thereon, unless proved to the contrary.
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Endorsement in Full Where, on an order negotiable instrument, the endorser writes the name of the endorsee (a specific person) above his signature, it is known as an endorsement in full. In such cases, the title to the cheque can be transferred by an endorsement and delivery.
(iii) Restrictive Endorsement It is one, which restricts (prohibits) any further endorsement of a negotiable instrument.
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(iv) Conditional Endorsement In the case, where the endorser makes his own liability on the instrument conditional on the happening of a particular incident or event, such endorsement is called a conditional endorsement. Similarly, a conditional endorsement also makes the rights of the endorsee on the instrument conditional on the happening of a particular incident or event. Further, such specified event may be a certainty, like the death of a particular person, as also an uncertainty, like if Ram marries Sita. (v) Endorsement Sans (without) Recourse (to me) It is one, where the endorser endorses the negotiable instrument by expressing, in words, in his endorsement, to the effect that he excludes his own liability thereon. In such cases, the endorser cannot be held liable if the instrument is dishonoured
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(vi) Facultative Endorsement It is one, where the endorser endorses the negotiable instrument by expressing, in words, to the effect that he (endorser) waives his legal right to receive the notice of dishonour of the instrument. (vii) Partial Endorsement A partial endorsement is one where the endorser endorses the negotiable instrument only for a part of the amount, as against for its full amount, as required by law. Such endorsements are, accordingly, not held valid in the eye of law.
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A restrictive endorsement has the following effects: (a)To restrict or prohibit any further endorsement and negotiation thereafter; (b)To constitute the endorsee, and the agent of the endorser, to endorse the document; or (c)To constitute the endorsee as an agent to receive its contents for some other person, specified therein.
The title to an instrument may be transferred by way of negotiation as also by way of assignment. In the case where a negotiable instrument is transferred by way of negotiation, its transferee, if he happens to be a holder in due course, gets a better title than that of his transferor or the endorser. ut, in the case where an instrument is transferred by way of assignment, its assignee gets only those rights that the assigner himself had possessed, at the time of the assignment of the instrument. Thus, the transfer of title by way of negotiation has certain inherent advantages over the transfer made by way of an assignment.
(i) The transfer of title to an instrument by way of negotiation does not require any endorsement in the case of bearer instruments. ut, an assignment invariably requires a written document to this effect, executed by the assigner (transferor) concerned, whether it pertains to an order instrument or even a bearer instrument. (ii) In the case of negotiation of an instrument, a holder in due course gets a better title than its transferor himself had, at the time of such negotiation. ut, the assignee, even if he happens to be a holder for value and in good faith (i.e. a holder in due course), gets only those rights that the assigner himself had, at the time of the assignment of the instrument.
iii) In the case of the transfer of title to an instrument by way of negotiation, consideration is invariably presumed to be there. ut, in the case, where an instrument is transferred by way of assignment, the transferee is require to prove that there was consideration involved in the transfer. (iv) In the case of negotiation of an instrument no information or notice is required to be given to the debtor. ut, an assignment in itself does not bind the debtor, unless a notice of such assignment is given to him, and he has given his consent thereto, expressly or impliedly.