Negotiation or Endorsement of Cheques.

Negotiation or Endorsement of Cheques:

Endorsement of cheque means giving signature for transferring. It is an idea of many people that, The word endorsement came from the Latin word 'Indorsum'. Here 'In' means  above and 'dorsum' means backside. Thus, to give sign on or back side of bearer or ordered cheque for transferred is called Negotiation or endorsement of Cheques.

"Endorsement is signing, for the purposes of negotiation or face of negotiable instrument or on a slip of paper annexed there to with the intention to make it so". ( Sec. 15 of negotiable instrument act 1881)

"Endorsement of Cheques is a signature on the back of a cheque making it payable to person who signed it". (Oxford Dictionary of finance and banking)

"An Endorsement is the signature of the drawer or holder of negotiable instrument for the purpose of negotiation". (Shekhar and shekhar)

Types / Classification of Endorsement

The different types / Classification of endorsement are given beneath :

1. Ordinary or blank endorsement: 

On the off chance that the endorser signs his name just and does not indicate the name of the endorsee, the underwriting is said to be blank endorsement. Sec. 16(1). The impact of a blank endorsement is to change over the request instrument into bearer instrument (Sec. 54), which may be exchanged just by conveyance.

2. Special or Full Endorsement :

In the event that the endorser, notwithstanding his mark, likewise adds a bearing to pay the sum specified in the instrument to, or to the request of, a predetermined individual the underwriting is said to be in full [Sec. 16(1)].

On the off chance that, for instance, A, the holder of a bill of trade, needs to make an endorsement in full to B, he would compose along these lines: "Pay to B then again arrange, SdA4." After such an endorsement it is just the endorsee, i.e., B, why should entitled get the instalment of the instrument & to further arrange the instrument by his support.

A clear endorsement can without much of a stretch be changed over into an endorsement in full, As per Section 49, the holder of a debatable instrument embraced in clear might, without marking his own particular name, by composing over the endorser's signature a heading to pay to some other individual as endorsee, change over the endorsement in clear into an underwriting in full; and since such holder does not sign himself on the instrument he doesn't subsequently acquire the obligation of an endorser.

3. Partial Endorsement: 

Section 56 express that negotiable

instrument can't be embraced for a part of the sum seeming, by all accounts, to be expected on the partial instrument. As such, an partial endorsement which exchanges the rights to get just a part instalment of the sum due on the instrument is invalid. Such an endorsement has been proclaimed invalid in light of the fact that it would subject the earlier gatherings to majority of activities (one activity by holder for part esteem and another activity by endorsee for part esteem) "and will in this way reason disservice to them.

Additionally, it would likewise meddle with the free flow of negotiable instruments. It might be noticed that a support which indicates to exchange the instrument to two or more supports independently, and not together is additionally regarded as incomplete 

support and consequently would be invalid. In this way, where A holds a bill for $ 2,000 and supports it for B for $1,000 & for C for the remaining $ 1,000, the support is halfway and invalid. Sec. 56, in any case, further gives that where an instrument has been paid partially, a note to that impact mama; be supported on the instrument & it might then be arranged for the parity. Consequently, if in the above outline the acceptor has officially paid $ 1,000 to A, the holder of the charge, A can then make an support saying "Pay B or request" $ 1,000 being the unpaid build-up of the bill." Such a support would be legal.

4. Restrictive Endorsement: 

Expressing the impact of support, Section 50 gives that "the support of negotiable instrument took after by conveyance exchanges to the endorsee the property thus with the privilege of further arrangement." However, Section 50 permits restrictive endorsement. A support which, by express words, forbids the endorsee from further arranging the instrument or limits the endorsee to manage his instrument as coordinated by the endorser is called restrictive endorsement. The endorsee under a restrictive endorsement gets all the privileges of an endorser with the exception of the privilege of further arrangement. At the end of the day, such an support qualifies the endorsee for getting the instalment on due date and sue the gatherings for it yet he can't further arrange the instrument

.

Illustration :

(a) B, the holder of the bill, makes an support on the bill saying "Pay C just." It is a restrictive endorsement as C can't arrange the bill further.2

(b) B, the holder of the bill, makes an endorsement on the bill, saying "Pay C for my utilization or "Pay C or request for the record of B." In either case there is a restrictive endorsement  as the privilege of further transaction by C has been barred consequently. The individual subject on the slope must pay by attracting a check the name of the holder (or the endorser) B. On the off chance that he makes the instalment to C all alone record, he will still be subject to B, the endorser; Hence C can't embrace the bill further in his own name.

5. Conditional Endorsement : 

On the off chance that the endorser of a Conditional Endorsement, by express words in the endorsement, makes his obligation, subject to the event of a predefined occasion, despite the fact that such occasion might never happen, such Endorsement  is known as a Conditional Endorsement (Sec. 52).

The law allows a Conditional Endorsement furthermore, subsequently it doesn't in any capacity influence the debatability of the instrument. Therefore, supports can truly be made in the taking after terms:

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

(ii) "Pay B on the landing of Pear less boat at any specified place."

On account of a Conditional Endorsement the obligation of the endorser would emerge just upon the incident of the occasion indicated. Be that as it may the endorsee can sue other earlier gatherings, e.g, the creator, acceptor, and so forth., if the instrument is not rightfully met at development, despite the fact that the predefined occasion did not happen.

6. Sans recourse endorsement(Sec.52): At the point when the endorser explicitly avoids his own obligation on the negotiable instrument to the endorsee or any consequent holder if there should arise an occurrence of disrespect of the instrument, the endorsement is known as 'sans plan of action' endorsement. Such an endorsement is for the most part made by including the words 'sans response' or 'without response.' Thus, "Pay X or request sans response" or "Pay X without plan of action to me" or "Pay X or request at his own particular danger" is cases of this kind of endorsement.

7. Facultative endorsement: 

At the point when the endorser explicitly surrenders some of his rights under the  instrument, the support is known as a "facultative" support. Therefore, "Pay X or request, notification of disrespect waived" is a facultative support. As an aftereffect of such an underwriting the endorsee is alleviated of his obligation to give notification of disrespect to the endorser and the last stays subject to the endorsee for the non-instalment of the instrument, despite the fact that no notification of disrespect has been given to him.