Question

Discuss various types of endorsement.

Explain and illustrate the following:

1. Conditional endorsement.
2. Restrictive endorsement.
3. Sans Recourse endorsement.

Explain with illustrations the different types of endorsement.

What are the different types of endorsement?

Explain any five kinds of endorsements.

Answer 1

1. Blank or General Endorsement: When the endorser simply puts down his signature on the cheque without writing the name of the endorsee, it is called a blank or general endorsement. The effect of such an endorsement is that the cheque becomes payable to the bearer. The property in the cheque can now be transferred by mere delivery, and no endorsement is required.
2. Full or Special Endorsement: When the endorser specifies the name of the endorsee and signs the cheque, it is called a full or special endorsement, e.g., 'Pay to A Sd/- X'. The effect of such an endorsement is that the endorsee must endorse it again if he wants to transfer the property in the cheque to somebody else. A blank endorsement can be converted into a special endorsement by simply adding the name of the payee.
3. Restrictive Endorsement: When the endorser restricts the further negotiation of a cheque, it is called a restrictive endorsement. In such an endorsement, the endorsee gets all the rights of the endorser except the right to negotiate. The following are examples of restrictive endorsement:
   1. Pay to Kishan Lal only.
   2. Pay to Kishan Lal for my use.
   3. Pay to Kishan Lal for the account of Ram Lal.
4. Partial Endorsement: When the endorsement is made for a part of the amount of the cheque, it is called a partial endorsement. For example, a cheque for ₹ 1000 may be endorsed only for ₹ 500. Such an endorsement is not legally valid. But when ₹ 500 has already been paid to the endorsee, a cheque for ₹ 1000 may be endorsed for the balance of ₹ 500.
5. Sans Recourse or Sans Faris Endorsement: Sans recourse literally means 'without recourse to me'. When the endorser excludes his liability on the cheque in express words, it is called a sans recourse endorsement. For example, 'Pay Kishan Lal Sd/-Ram Lal (sans recourse)'. In case the cheque is subsequently dishonoured, Mr. Ram Lal (the endorser) cannot be held liable to pay the amount to Mr. Kishan Lal.
6. Conditional or Qualified Endorsement: When the endorser makes his liability on the cheque dependent on the happening of a specified event, the endorsement is called a conditional or qualified endorsement. For example, 'Pay Kishan Lal or order on his marriage' is a conditional endorsement.
7. Facultative Endorsement: When the endorser waives his right to receive the notice of dishonour, the endorsement is called a facultative endorsement. For example, 'Pay to Kishan Lal, a notice of dishonour waived Sd/-Ram Lal'. In such an endorsement, the endorser remains liable even though the endorsee sends no notice to dishonour to him.