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 Regarding 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
1.Blank or general endorsement
2.Endorsement in full or special endorsement
3.Conditional endorsement
4.Restrictive endorsement
5.Endorsement ‘Sans Recourse’
6.Facultative endorsement
7.Forged endorsement
8.Partial Endorsement

10. Blank or General 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.

11. Endorsement in Full or Special
Endorsement

12. Conditional Endorsement

13. Restrictive Endorsement

14. Endorsement ‘Sans Recourse’
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

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