Juan Francisco Brosas

4BSA
Law on Negotiable Instruments

Indorsement
- The writing of the name of the payee on the instrument with the intent either to transfer the
title to the same, or to strengthen the security of the holder by assuming a contingent liability
for its future payment or both.

Payable to order- the payee must be named or otherwise indicated wherein with reasonable certainty
Payable to bearer- when the instrument fails to qualify as an order instrument is nonetheless if its
payable to bearer

Classification of Indorsement as to the methods of negotiation:

1. Special indorsement one where the name of the payee is specified.
2. Blank indorsement one which specifies no particular indorsee.
SPECIAL INDORSEMENT

UNQUALIFIED
INDORSEMENTS

BLANK INDORSEMENT

Forms:
Forms:
a. One that specifies the person to whom the a. Consists only of the signature of the payee
instrument is to be paid.
or indorser.
b. One that specifies the person whose order b. No specified person to whom the
the instrument is to be payable.
instrument is to be paid or whose order
the instrument is to be payable.
Interpretation:
Interpretation:
Payable to bearer; or to order
Payable to bearer; or to order
Negotiation:
Negotiation:
Indorsement and delivery
Indorsement and delivery
Negotiation if:
The instrument is originally payable to Conversion:
order, the indorsement of the
Blank indorsment to special
indorsee is necessary.
indorsement.
The instrument is originally payable to
Payable to order converts to payable
bearer, may nevertheless negotiated
to bearer. (vice versa)
by mere delivery but the special
indorser is liable to holders as make
Why a blank indorsement does converts order
title through his indorsment.
instrument to a bearer instrument?
- Because a blank indorsement specifies
Why a special indorsement does not convert a
no particular payee, the nature of
bearer instrument to an order instrument?
being an order instrument is being
- Because a bearer instrument always
disregarded due to a blank
remains a bearer instrument
indorsement .
negotiable by mere delivery whether
the last indorsement is a blank or a
special indorsement.