Types of endorsement

Types of Endorsements:

There are different types of endorsements which may be as follows:

I. The endorsement in blank or general endorsement:

A black or general endorsement is one of the types of endorsement in which the endorser simply put signature on the instrument without specifying the name of the endorsee (Sec 94).

The effect of such an endorsement is that the instrument becomes payable to bearer even though originally it was order instrument.

The instrument with blank endorsement does not need a further endorsement for its negotiation and it is then by mere delivery.

For instance, if a cheque is payable to pretty Bansal or order and Preety Bansal endorses the cheque by affixing her signature, it is a blank or general endorsement

2. The endorsement in Full or Special endorsement :

An endorsement is said to be a special endorsement when the endorser intends to pay the amount to a certain person or to his order. This is done by mentioning the name of the endorsee in the instrument.

This types of endorsement are termed as an endorsement in full (Sec 16). Thus, endorsement in full contains the name of the endorsee along with the signature of the endorser.

For instance, ‘Pay to Sudip Deka or order’ s/d Ramesh Das is an endorsement in full. Here Ramesh Das is the endorser and he has mentioned the name of the endorsee — Sudip Deka.

An endorsement in blank may be converted into a full or special endorsement by the holder of the instrument.

In case the holder desires to convert general endorsement into special endorsement he has to simply add an order making the instrument payable to a specific transferee.

3. Conditional endorsement:

Where the endorser of a negotiable instrument specifies a condition on the endorsement, it is called a conditional endorsement.

In this case, the endorser by express words makes his liability or the fight of the endorsee to receive the amount of the instrument depends on the happening of a specified event which may or may not happen (Sec 52).

For “Pay to Ptanjal Bora on his marriage” s/d Dilip Das is an instance, conditional endorsement.

The effects of conditional endorsement are as follows:

 I) The liability of the endorser on the instrument becomes conditional on the happening of a particular event.

II) The right of the endorsee on the instrument becomes conditional on the happening of a particular event.

4. Facultative endorsement:

The facultative endorsement is an endorsement where the endorser by express words increases his liability or gives up some of his rights under the negotiable instrument.

For instance, the endorser may waive the duty of the endorsee to give notice of dishonour in case of dishonour of the instrument, by expressly writing on the instrument “Notice of dishonour waived.

The endorser remains liable to the endorsee for the non-payment of the instrument. Example, “Pay to Dipak Barman or order — Nodce of dishonour waived”. s/d Gunamani Sarma is a facultative endorsement.

7. Partial endorsement:

It is an endorsement where the instrument is endorsed for only a part of the instrument. For instance, when a cheque of Rs 10,000 is endorsed for Rs 5000 it is a partial endorsement.

Such an endorsement is legally invalid. It is because partial endorsement of an instrument may cause inconveniences to prior parties and result in a plurality of action.

However, where an instrument is already partly paid, it may be negotiated for the balance of the amount.

For example, “Pay to Mrinal Sarma or order Rs 1000 being the unpaid residue of the bill” s/ d Mukut Medhi.

In such a case note to the fact that the instrument has already been partly paid must be given on the instrument.

8. Forged Endorsement: When a negotiable instrument is endorsed with the forged signature of the endorser, the endorsement is called a forged endorsement.

In such a case, the endorsee does not acquire any title to the instrument even if he is the bonafide purchaser. It is because such an endorsement is a nullity and has no existence in the eyes of law.

Must Read: WHAT IS CHEQUE

Leave a Comment