Endorsement and it’s classification

by • 07/01/2013 • GeneralComments (0)488

Q.2 Define endorsement, what are the requirements of valid endorsement. also discuss the main classification of endorsement?

A cheque or a bill is endorsed when the transferor puts his signature on the back or along with a cheque and a bill as a part of negotiation. If the cheque is bearer it needs no endorsement. However in our country it is necessary.

 

REQUIREMENTS OF VALID ENDOR5EMENT

Following are the main requirements:

1. It must be on the back of the cheque or bill.

2. it may be in ink, print or with a stamp.

3. Partial endorsement is not valid legally it must be of the entire value of the cheque or bill

4. If the numbers of payee are more than one then all the payee will sign or that person who is authorized.

5. The endorsee can also add the proper signature if the endorse is not clear.

6. If the payee are more than two the endorsement should be in the same order which is paned down on the back of the bill.

 

CLASSIFICATION OF ENDORSEMENT

The different classes of endorsement are as under.

 

1. BLANK OR GENERAL ENDORSEMENT

When the endorsement of the instrument signs on the back of the instrument only his name with out writing the name of the endorsee, such endorsement is known as blank or general endorsement, but this type of endorsement is an order instrument becomes bearer and any holder of the instrument can get payment of the instrument.

 

2. SPECIAL OR FULL ENDORSEMENT

If the endorser of the instrument signs on the back of the instrument his name and also mentions the name of the endorsee, such endorsement is called special or full endorsement. Here the payment is made only to the specific person or his order.

 

3. RESTRICTIVE ENDORSEMENT

When the endorser of the instrument writes such words that the instrument cannot be further negotiated or endorsed by endorsee then it is called restrictive endorsement. For example the endorser endorses it as “Pay A only” or “Pay A and none”.

 

4. PARTIAL ENDORSEMENT

An endorsement, which purpose is to transfer to the endorsee only a part of the amount of the inst1ument then it, is called partial endorsement. This type of endorsement is not supported by law and is not a valid endorsement.

 

5. CONDITIONAL ENDORSEMENT

When the endorser of the instrument attaches any condition for transferring the property in the instrument to endorsee, the endorsement is said to be conditional endorsement.

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