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Important kinds of endorsements are given below:

1. 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.

2. Endorsement in full or special endorsement:

If the endorser, in addition to his signature, also adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person the endorsement is said to be in full [Sec. 16(1)].

If, for example, A, the holder of a bill of exchange, wants to make an endorsement in full to B, he would write thus: "Pay to B or order, SdA4." After such an endorsement it is only the endorsee, i.e., B, who is entitled to receive the payment of the instrument and to further negotiate the instrument by his endorsement.

A blank endorsement can easily be converted into an endorsement in full, According to Section 49, the holder of a negotiable instrument endorsed in blank may, without signing his own name, by writing above the endorser's signature a direction to pay to any other person as endorsee, convert the endorsement in blank into an endorsement in full; and since such holder does not sign himself on the instrument he does not thereby incur the responsibility of an endorser.

3. Partial Endorsement:

Section 56 provides that a negotiable instrument cannot be endorsed for a part of the amount appearing to be due on the instrument. In other words, a partial endorsement which transfers the rights to receive only a part payment of the amount due on the instrument is invalid.

Such an endorsement has been declared invalid because it would subject the prior parties to plurality of actions (one action by holder for part value and another action by endorsee for part value) "and will thus cause inconvenience to them.

Moreover, it would also interfere with the free circulation of negotiable instruments. It may be noted that an endorsement which purports to transfer the instrument to two or more endorses separately, and not jointly is also treated as partial endorsement and hence would be invalid.

Thus, where A holds a bill for Rs 2,000 and endorses it in favour of B for Rs 1,000 and in favour of C for the remaining Rs 1,000, the endorsement is partial and invalid.

Section 56, however, further provides that where an instrument has been paid in part, a note to that effect ma; be endorsed on the instrument and it may then be negotiated for the balance.

Thus, if in the above illustration the acceptor has already paid Rs 1,000 to A, the holder of the bill, A can then make an endorsement saying "Pay B or order" Rs 1,000 being the unpaid residue of the bill." Such an endorsement would be valid.

4. Restrictive endorsement:

Stating the effect of endorsement, Section 50 provides that "the endorsement of negotiable instrument followed by delivery transfers to the endorsee the property herein with the right of further negotiation." However, Section 50 permits restrictive endorsement.

An endorsement which, by express words, prohibits the endorsee from further negotiating the instrument or restricts the endorsee to deal with his instrument as directed by the endorser is called 'restrictive' endorsement.

The endorsee under a restrictive endorsement gets all the rights of an endorser except the right of further negotiation. In other words, such an endorsement entitles the endorsee to receive the payment on due date and sue the parties for it but he cannot further negotiate the instrument.


(a) B, the holder of the bill, makes an endorsement on the bill saying "Pay C only." It is a restrictive endorsement as C cannot negotiate the bill further.2

(b) B, the holder of the bill, makes an indorsement on the bill, saying "Pay C for my use or "Pay C or order for the account of B." In either case there is a restrictive endorsement as the right of further negotiation by C has been excluded thereby.

The person liable on the hill must pay by drawing a cheque in the name of the holder (or the endorser) B. If he makes the payment to C on C's own account, he will still be liable to B, the endorser; Hence C cannot endorse the bill further in his own name.

5. Conditional endorsement:

If the endorser of a negotiable instrument, by express words in the endorsement, makes his liability, dependent on the happening of a specified event, although such event may never happen, such endorsement is called a 'conditional' endorsement (Sec. 52).

The law permits a conditional endorsement and therefore it does not in any way affect the negotiability of the instrument. Thus, endorsements can validly be made in the following terms:

(i) "Pay B or order on his marriage;"

(ii) "Pay B on the arrival of Pearless ship at Bombay."

In the case of a conditional endorsement the liability of the endorser would arise only upon the happening of the event specified. But the endorsee can sue other prior parties, e.g., the maker, acceptor, etc., if the instrument is not duly met at maturity, even though the specified event did not happen.

6. Sans recourse endorsement (Sec. 52):

When the endorser expressly excludes his own liability on the negotiable instrument to the endorsee or any subsequent holder in case of dishonour of the instrument, the endorsement is known as 'sans recourse' endorsement.

Such an endorsement is generally made by adding the words 'sans recourse' or 'without recourse.' Thus, "Pay X or order sans recourse" or "Pay X without recourse to me" or "Pay X or order at his own risk" is examples of this type of endorsement.

7. Facultative endorsement:

When the endorser expressly gives up some of his rights under the negotiable instrument, the endorsement is called a 'facultative' endorsement. Thus, "Pay X or order, notice of dishonour waived" is a facultative endorsement.

As a result of such an endorsement the endorsee is relieved of his duty to give notice of dishonour to the endorser and the latter remains liable to the endorsee for the non-payment of the instrument, even though no notice of dishonour has been given to him.

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Q: What are the types of endorsements that can be made on a bill of exchange?
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What endorsements does Tiger Woods possess now in 2013?

In the past Tiger Woods made over $900 million from his endorsements which included AT & T and Nike but he does not currently have any endorsements.

What are the similarities of a check and a bill of exchange?

A bill of exchange can be used by any person to give money and is usually accepted before the payment can be made. A cheque can be used by a certain bank for anyone and therefore does not have to be accepted.

Difference Between Bills Of Exchange And A check?

The following are the main differences between a cheque and a bill of excyange.A cheque is always drawn on a banker, whereas a bill of exchange can be drawn on any person including a banker.A cheque is always payable on demand, whereas a bill of exchange is either payable on demand or after a fixed period.Payment of a cheque can be countermanded, whereas the payment of a bill of exchange cannot be counter mended.A cheque can be made payable to a bearer, but a bill of exchange can be made payable only to order.A cheque is a means of payment. But a bill of exchange is usually used for financing a trade.In a cheque, the drawer of the cheque is primarily responsible, but in a bill of exchange, the drawee or acceptor is primarily responsible for payment.When a cheque is dishonoured, noting and protesting is not necessary/required. But when a bill of exchange is dishonoured, noting and protesting is necessary.When a cheque is dishonoured, the holder of the cheque need not give notice of dishonour to the drawer to make him liable on the cheque. But on the other hand, when a bill of exchange is dishonoured, notice of dishonour is to be given to all parties, including the drawer to make them liable on the instrument.A cheque can be crossed, but a bill of exchange needs no crossing.M. J. SUBRAMANYAM, BANGALORE

What do you understand by dishonour of bill of exchange?

DISHONOUR OF THE BILL OF EXCHANGEWhen the Bill of exchange is not accepted by the drawee, or payment is not made against the bill by the drawee, the bill is is said to be dishonoured. A Bill is dishonoured in the following two conditions:1-DISHONOUR BY NON-ACCEPTANCEIf the Drawee refuses to accept the bill, it is known as Dishonour of the bill of exchange by non-acceptance.2-DISHONOUR BY NON-PAYMENTIf the drawee doesn't pay a certain amount of money when the bill is shown on maturity, the bill gets dishonoured due to Non-payment.

What is Difference between cheque and promissory note?

The following are the main differences between a Bill of Exchange and a Promissory Note:A Bill of Exchange is an unconditional order to pay money, whereas a promissory note is an unconditional undertaking or promise to pay money to a certain person.In a Bill of Exchange, there are three parties, viz., the drawer, the drawee and the payee. In a Promissory Note, there are only two parties, viz., the Maker and the Payee.In case of usance (Time) bill, acceptance of the bill is necessary, whereas in a promissory note no such acceptance is required.While foreign bill of exchange is drawn in sets of three, foreign promissory note requires no such sets.In case a foreign bill of exchange is is dishonoured, protesting is compulsory. But when a foreign promissory note is dishonoured, no protesting is required.In case a bill of exchange is dishonoured, a notice of dishonour is required to be given by the holder to the maker of the bill (= drawer). However, in case a promissory note is dishonoured, no notice of dishonour is required to be given by the holder of the maker of the promissory instrument.The liability of the drawer (= maker) of a bill of exchange is secondary, whereas, the liability of the maker of a promissory note is primary.A bill of exchange is drawn for financing trade, whereas, the liability of the maker of is a promissory note is primary.When a bill of exchange is made payable to the bearer, it is not considered as illegal. But a Promissory Note, which does not contain the payee's name, but states that it is payable to bearer, it becomes illegal.In a bill of exchange, the drawee can put conditions subject he will accept the bill. but in a promissory note a maker cannot put any conditions on it.M.J. SUBRAMANYAM, BANGALORE

Explain characteristics of bill of exchange?

Bill of exchange A bill of exchange or "draft" is a written order by the drawer to the drawee to pay money to the payee. A common type of bill of exchange is the cheque, defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange. They are not used as often today. A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at fixed or determinable future time a sum certain in money to order or to bearer. It is essentially an order made by one person to another to pay money to a third person. A bill of exchange requires in its inception three parties-the drawer, the drawee, and the payee. The person who draws the bill is called the drawer. He gives the order to pay money to third party. The party upon whom the bill is drawn is called the drawee. He is the person to whom the bill is addressed and who is ordered to pay. He becomes an acceptor when he indicates his willingness to pay the bill.The party in whose favor the bill is drawn or is payable is called the payee. The parties need not all be distinct persons. Thus, the drawer may draw on himself payable to his own order. A bill of exchange may be endorsed by the payee in favour of a third party, who may in turn endorse it to a fourth, and so on indefinitely. The "holder in due course" may claim the amount of the bill against the drawee and all previous endorsers, regardless of any counterclaims that may have disabled the previous payee or endorser from doing so. This is what is meant by saying that a bill is negotiable. In some cases a bill is marked "not negotiable". In that case it can still be transferred to a third party, but the third party can have no better right than the transferor

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