DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : P. Samba Murthy

Designation : Head of Department
Branch : D.C.C.P.
Institute : S.R.R.S. Govt. Polytechnic, Sircilla,
Karimnagar District
Year/Semester : V Semester
Subject : Banking – I
Subject Code : CCP- 504(B)
Topic : Negotiable Instrument Act
Duration : 50 Minutes
Sub-Topic : Different kinds of endorsements
Teaching Aids : PPT
CCP-504(B).68 1
Objectives

On completion of this period, you would be able to

 Further understand the different types/kinds
of endorsements.

CCP-504(B).68 2
Known to unknown

1. What is endorsement in blank?

2. Explain endorsement in full or special
endorsement.
3. What is meant by conversion of endorsement in
blank into endorsement in full ?
4. Explain restrictive endorsement.

CCP-504(B).68 3
Recap

 So far, we have discussed on the topic of

different types/kinds of endorsements partially.
 Now, let us discuss on the same issue in the
present session.

CCP-504(B).68 4
Partial endorsement:

 According to sec. 56 no writing on a negotiable

instrument is valid for the purpose of negotiation if
such writing purports (claim) to transfer only a part
of the amount appearing to be due on the
instrument.

CCP-504(B).68 5
Partial endorsement:

 But where such amount has been partly paid, a note

to that effect may be endorsed on the instrument
which may then be negotiated for the balance.
 In a nutshell, a negotiable instrument cannot be
endorsed for a part of its value.
 A partial endorsement is invalid.

CCP-504(B).68 6
Partial endorsement:

 This is because a partial endorsement will

cause inconvenience to prior parties, subject
them to plurality of action and interfere with the
free circulation of these instruments.
 Law does not allow apportionment of personal
contract.

CCP-504(B).68 7
Partial endorsement:

 However, there is an exception to this general

rule that where an instrument has been paid in
part, the fact of the part payment may be
endorsed on the instrument and it may then be
negotiated for the reside.

CCP-504(B).68 8
Conditional Endorsement:

 Conditional endorsement limits or negatives the

liability of the endorser.
 It differs from restrictive Endorsement which
restricts the negotiability of the instrument but
does not in any way limit or negate the liability of
the endorser.

CCP-504(B).68 9
Conditional Endorsement:
 A conditional endorsement may be in any of the
following forms:-
 ‘Sans Recourse endorsement’:
 According to sec.52, an endorser of a
negotiable instrument excludes his own
liability or the right of the endorsee to receive
the amount due thereon based on the
happening of a specified event.

CCP-504(B).68 10
‘Sans Recourse endorsement’:

 It is another matter that such an event may not take

place at all.
 Where an endorser so excludes his liability and he
himself becomes the holder after words of the
instrument, all intermediary endorser are liable to him.
 Where an endorser of a negotiable instrument, by
express words in the endorsement, excludes his own
liability there on, it is called ‘Endorsement Sans
Recourse’ .

CCP-504(B).68 11
‘Sans Recourse endorsement’:

 Example : X endorses a negotiable instrument

duly signing his name at the back of the
instrument adding the words ‘without recourse’.
On this endorsement, X as an endorser incurs no
liability.

CCP-504(B).68 12
Facultative endorsement:

 Normally, the endorsee must inform through a

notice about dishonour of the instrument to the
endorser.
 But if the endorser waives such notice, it is called
facultative endorsement.
 The endorser continues to be liable for the
endorsee for the payment yet to be made on the
instrument.
 Eg. Pay A or order, notice of dishonour waived

CCP-504(B).68 13
Facultative endorsement:

 In brief, if the endorser, by express words

increases his liability or gives up some of his
rights under the negotiable instrument, the
endorsement is termed as facultative

CCP-504(B).68 14
Sans Frais (without expense)
endorsement:

 The endorser indicates, by adding the words ‘sans

frais’ at the end of the endorsement, the expenses
should not be incurred on his account on the
instrument.
 Such an endorsement is called ‘sans frais’
endorsement.

CCP-504(B).68 15
Liability dependent upon a contingency:

 The endorser may make the endorsement in such

a way that his liability depends upon happening of
a specified event which may never happen
 In case the event becomes impossible to happen,
the liability of the endorsee will be at an end

CCP-504(B).68 16
Summary

 In partial endorsement negotiable instrument is

invalid if it is endorsed partially.
 Whereas in conditional endorsement, it limits or
negatives the liability of the endorser.

CCP-504(B).68 17
Quiz

Fill in the Blanks:

1. An order instrument can be made payable to the bearer by
making _________endorsement.
(general)
2. The endorser will not be liable to the holder on a
dishonoured negotiable instrument if he makes
__________________ endorsement.
(sans-recourse)
3. The title of a negotiable instrument can be transferred by
___________
(endorsement) CCP-504(B).68 18
Frequently asked questions

1. Describe the different kinds of endorsements.

2. A partial endorsement does not operate as a
negotiation of the instrument. Comment.
3. What is a blank endorsement?
4. Define full endorsement.

CCP-504(B).68 19