Conditions of Endorsements

The section 15 of the Negotiable Instruments Act 1881 defines endorsing as “signing on the face or an instrument for the purpose of negotiating a negotiable instrument (such as Cheque).”

Endorsing is signing in the instrument either on face or on back, for the purpose of negotiation of a NI. The person who signs is called endorser. The person in whose favor the instrument has been transferred is called Endorsee.

  • The holder of the instrument endorses the instrument.
  • If he signs only and does not mention anything else it is called Blank Endorsement.
  • If he endorses and adds a direction to pay the amount to a specified person it is called Endorsement in full.
  • If he signs and adds direction for restriction on further negotiability, then it is called Restrictive Endorsement.
  • Partial endorsement is NOT valid. This means that if Suresh issues you a check of ` 10000 and endorses on the backside of the check that “Pay Ramesh ` 5000″ it is NOT a Valid endorsement. Again if Suresh issues you a check of ` 10000 and endorses with a direction that ” Pay Ramesh when he passes his examination”, this is again NOT a valid endorsement. Both these conditions are called partial endorsements.
  • A minor is NOT a valid endorser.

Tags: , ,