Endorsement – a Negotiable Instrument

Endorsement – a Negotiable Instrument

An endorsement is an act of authorizing another person to receive payment of a negotiable instrument. It is the action of endorsing someone or something. It is made by writing one’s name on the back of the instrument. This may be done by the payee or every subsequent holder of the instrument. It is the process of signing the back of a paper, thereby imparting the rights that the signer had in the paper to another person. They are forms of approval. For example, by signing the back of a check, the payee is approving the cashing of that check.

A paper containing a blank endorsement is one that has the signature of the payee but no specific endorsee is designated. It is a statement or action which shows that you support or approve of something or someone. A restrictive endorsement is conditional and attempts to prevent the subsequent transfer of the document. A bank endorsement is a guarantee by a bank confirming that it will uphold a check or other negotiable instrument, such as a banker’s acceptance, from one of its customers. Common bank endorsements include banker’s acceptances and letters of credit.

Four principal kinds of endorsements exist special, blank, restrictive, and qualified.

  • The endorsement in blank is the writing of only the endorser´s name on the negotiable instrument without designating another person to whom the endorsement is made.
  • Collection endorsement is one that restricts payment of the endorsed instrument to purposes of deposit or collection.
  • A conditional endorsement is one that limits the time at which the instrument can be paid or further transferred or that requires the occurrence of an event before the instrument is payable.
  • A restrictive endorsement is one that directs a specific payment of the instrument, such as for deposit or collection only.

An endorsement is defined as the act of giving your approval or recommendation to something, usually in a public manner. However, an endorsement that tries to prohibit the further transfer of an instrument will not succeed. A public declaration of support for a person, product, or service is also an endorsement. For example, a WNBA player endorsing shoes in a commercial.