Question

In: Economics

1. What is the legal significance of an Endorsement? Explain in detail. 2. What is a...

1. What is the legal significance of an Endorsement? Explain in detail.

2. What is a Special Endorsement? Explain in detail and provide an example.

3. What is a Blank Endorsement? Explain in detail and provide an example.

4. What is a Restrictive Endorsement? Explain in detail and provide an example.

Solutions

Expert Solution

Answer 1

In law the significance of endorsement is that When the payer or owner of the negotiable instrument signs at the back of the negotiable instrument with his or her name so that he can pay to another person , is called endorsement. When the owner signs atthe back of negotiable instrument it gets legally belong the person to whom onwer wants to pay. In short the onwer gives guarantee to the other person on account of money to be lend by the bank to him

Answer 2 when the payer or owner of the negotiable instrument specifically writes the name of the person to whom he want to pay at the back of the negotiable instrument with his signature is called special endorsement.

example -   suppose Andrew wants to make payment to Kallis through endorsement. Then Andrew will write "pay to the order of Kallis" at the back of the negotiable instrument with his signatures. And then he will endorses to him

In special endorsement , The owner have to write "Pay to the order of " name" at the back of the negotiable instrument.

Answer 3  When the owner of the negotiable instrument do not mention anything about the payee then such endorsement is called Blank endorsement. In this the person holding the negotiable instrument becomes the owner for the endorsement and can claim his title for the possession of the instrument.

Example -  The best example you can know for blank edorsement is that when you issue a cheque or any other negotiable instrument and is made payble in cash and the owner have signed it already at the back of the cheque then it is the case of blank endorsement.

Answer 4-  Restrictive endorsement is the one which restricts the negotiablity of the instrument i.e it cannot be further endorsed or negotiated. In Restrictive endorsement the the phrase such as "for deposit only" ," account payee"  Is used to restrict the further endorsement along with the signature of the payee at thr back of the negotiable instrument.

Example -   Andrew wants to make payment to kallis . Andrew issued a cheque and on the face of the cheque he worte "account payee". Now when the kallis gets the cheque he cannot further endorse the cheque to any other person. Now the cheque is restricted as the words Account payee is mentioned on the cheque. Only kallis can claim this amount when he will present this cheque at the counter of the bank.

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