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The Endorsement consists of the signature of the holder made on the back of the
negotiable instrument with the object of transferring the instrument. If there is no space
on the instrument, the Endorsement may be made on a slip of paper attached to it. This
attachment is known as Allonge.
When the maker or holder of a negotiable instrument signs the same for the purpose of
negotiation, or for the same purpose a stamped paper intended to be completed as
negotiable instrument, he is said to endorse the same, and is called the endorser.
Different types of endorsements
(a) Blank (or general): It contains only the bare signature of the endorser and no endorsee
is specified A bill so endorsed becomes payable to bearer.
(b) Special (or in full): In addition to the signature of the
the person to whom or to whose order the instrument is payable is specified.
endorser
(c) Restrictive: Such an endorsement has the effect of restricting further negotiation and
transfer. E.g. Pay to A only
(d) Conditional: Such an endorsement combines an order to pay with condition.
E.g. Pay to A on safe receipt of goods.
(e) Sans Recourse: By adding these words after the endorsement, the endorser declines
to accept any liability on the instrument of any subsequent party.
(f) Sans Frais: These words when added at the end of the endorsement indicate that no
expenses should be incurred on account of the bill.
(g) Facultative: When it is desired to waive certain right, the appropriate words are added
to indicate the fact, e.g., notice of dishonour dispensed with.
Liability for endorsement
Every endorser of a negotiable instrument is liable to every subsequent party to it
provided due notice of dishonour is given to or received by him. There are few exceptions
under section 52:
(1) Any endorser can exclude personal liability by endorsing sans recourse
(2) If the holder of a negotiable instrument, without the consent of the endorser destroys
the instrument or in any way prejudices the holder.
(3) The rule is not applicable also in the case of circuity of action
(4) The endorser may restrict his liability by endorsement by
making his liability depend upon the happening of a specified uncertain event,
making the right of the endorsee to receive the amount mentioned in the instrument
depend upon a specified uncertain event.
When an instrument is endorsed by a minor, the minor himself is not liable and the holder can
receive payment from any other party thereto.
Effect of endorsement:
(a) The endorsement of an instrument, followed by delivery, transfers to the endorsee
the property in the instrument with right of further negotiation.
(b) The endorsement may also contain express terms making it restrictive so as