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Endorsement – Meaning And Types Of Endorsement

Types Of Endorsement – Hello friends, welcome to PdfFiles, today we are going to share Kinds of Endorsement but before that you have to read the meaning of Endorsement. Which is given below.

Endorsement – “When the holder of a negotiable instrument (cheque, bill of exchange or promissory note) who is entitled to get payment on the instrument, puts his signature on the back of it or on face thereof, or on a slip of paper annexed thereto, with the object of transferring his right to get the money, it is called endorsement. The person who so signs the instrument is called the endorser and the person in whose favour the instrument is endorsed is called the endorsee -Section 15

Types Of Endorsement

1. Blank or general endorsement

As per Section 13, if the person making the endorsement does not mention the name of the person in whose favour the instrument is being endorsed and merely signs his name, such an endorsement is known as a blank or general endorsement. A blank endorsement has the effect of converting the instrument into a bearer instrument, thereby making it negotiable merely by delivery. Section 18

For example, if A gives B a cheque of 1,000 payable to order, and B merely puts his signature on the back of the cheque and delivers it to C, such an endorsement is a blank endorsement.

2. Complete or special endorsement

When the person making the endorsement, before signing his name thereon, adds an order to the effect that the amount of the instrument shall be payable to a specific person or to his order, then such an endorsement is known as a complete or special endorsement. In case of a special endorsement, along with the signature of the endorser, the name of the person to whom or to whose order the instrument is payable should also be mentioned. ‘Pay Ram or Pay Ram or to his order’ are examples of special endorsement. -Section 16

3. Restrictive endorsement ( Types Of Endorsement )

When the endorser, while making the endorsement, uses certain words to the effect that the instrument shall no longer be endorsable in the future, such an endorsement is known as a restrictive endorsement.

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4. partial endorsement

When the endorser orders to pay only a part of the amount mentioned on the instrument, such endorsement is known as partial endorsement. Normally, such an endorsement is not considered proper.

Example: A is the holder of an instrument for Rupees 1,000. He endorses the instrument as Pay to B or his order the sum of Rupees 500. Then such an endorsement is a partial endorsement and hence is not a valid endorsement.

5. Conditional endorsement ( Types Of Endorsement )

When the endorser, while making the endorsement in clear words, limits his liability thereon or, instead of totally negating his liability, makes it conditional upon the happening of an uncertain event, or makes the right of the endorsee to receive the payment thereon conditional upon the happeing of an uncertain event thereby limiting his liability on the instrument, such an endorsement is known as a conditional endorsement.

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