What are different types of endorsements?

There are different types of endorsements:

(a) Blank ( or general): No endorsee is specified in an endorsement in blank it contains only the bare signature of the endorser. A bill so endorsed becomes payable to bearer.


Specimen

Krishna Lal Sharkar

(b) Special ( or in full) : In such an endorsement, in addition to the signature of the endorser the person to whom or to whose order the instrument is payable is specified.

Specimen

Pay to Harihara. Kishan Lal Prashad

(c) Restrictive: Such an endorsement has the effect of restricting further negotiation and transfer.

Specimen (1) [Pay to A only ]
M.Lal P.Kumar

(d) Conditional : Such an endorsement combines an order to pay with condition.

Specimen: Pay to A on safe receipt of goods.

V. Chopra

(e) Sanse Recourse: By adding these words after the endorsement, the endorser declines to accept and liability on the instrument of any subsequent party.

(f) Sans Frais: These words when added at the end of the endorsement, indicate that no expenses should be incurred on account of the bill.

(g) Facultative: When it is desired to waive certain right, the appropriate words are added to indicate the fact, e.g., “notice of dishonor dispensed with”.

Every endorser of a negotiable instrument is liable, under Section 35, to every subsequent party to it provided due notice of dishonor is given to or received by him e.g., if a bill is drawn by A upon B and is payable to C or order, and C endorses the bill to D, who in turn endorses it to E, then, in case B, dishonors the bill, the holder, i.e., E has the right of action against all the parties i.e., D.C. and A. Similarly, D has right against C and A. To this rule that every prior party of a bill is liable to every subsequent party, there are a few exceptions which are enumerated below:

(1) Any endorser can exclude personal liability by endorsing “sans recourse” i.e. without recourse.

(2) If the holder of a negotiable instrument, without the consent of the endorser destroys the instrument or in any way prejudices the holder (Section 40 ).

(3) The rule is not applicable also in the case of “circuitry of action” e.g., a bill is drawn by A upon B payable to C or order, who endorses it to D who endorses it to E, who endorses it to F, who endorses it to G and who again. Endorses it back to D. In that case, it will be observed that a circle is complete between the first and second holdings of D; and the parties in between ( i.e., E,F and G) are absolved from liability to D because D is, as against them, both a subsequent party and a prior party. If, however, D’s first endorsement was “sans recourse”, the intermediate parties, i.e., E,F and G would not be absolved from liability to him.