by Bharath Simh

Reddy
Introduction

Endorsement means signature of the holder (An

individual who has lawfully received possession) made with object of
transferring the document.

The signature & message on the back of a cheque to either cash it,
deposit it or to handover the rights of the cheque to someone else.
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 party who has become the holder of the
instrument (sec.15).
Types of Endorsement

1. Blank or general endorsement

2. Endorsement in full or special endorsement
3. Restrictive endorsement
4. Partial Endorsement
5. Conditional endorsement
6. Facultative endorsement
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.
Endorsement in full or special endorsement
Restrictive endorsement
Partial Endorsement
Conditional Endorsement
 Sans recourse endorsement: (sec 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

 Liability dependent upon a contingency : An

endorser may endorse the instrument in such a way that his
liability depends upon the happening of a specified event
which may or may not happen.
Eg: Pay A or order on the arrival of the ship Nancy at Mumbai.
Facultative endorsement
Where an endorser does not want the endorsee or any
subsequent holder of the instrument to incur any
expenses, on his account on the instrument, the
endorsement is said to be ‘Sans frais’.
Where an endorser, after he has negotiated an
instrument again becomes its holder before
its maturity, the instrument is said to be
negotiated back to that holder.
Eg: A bill is drawn payable A by order. A
endorses it to B, B to C, C to D and D to E and
again to A.
 A fake endorsement is one in which signature of any of the party is fake
which makes the instrument invalid.
 All endorsement should be made in ink only.
 An endorsement in block letters is not necessary.
 It has been held that a type written endorsement is valid under the Act.
Even, endorsement in printed character can be accepted but can be
duplicated very easily.
 An rubber-stamp endorsement is as valid if accompanied by the hand
written signature of an authorized officer.
 Where an endorsement happens to be in a language which the banker is not
expected to know, then, the paying banker can refuse the payment for its
confirmation. But, he should give valid reasons for the same.