Home » Eng Finance » E » Endorsement


A term used with particular reference to bills of exchange. When a bill is negotiated the person negotiating will write his name on the reverse of the bill. This transfers the property in the bill. A valid endorsement must be written on the bill itself or on an allonge. It must be of the entire bill and must be by all parties to whom the.bill is made out unless one has authority to act for the others. If the bill is payable to order and the payee’s name is wrongly spelt, the endorser may sign it in the incorrect way and add his correct name if he wishes. Where there are a number of endorsements on a bill, they are presumed to have been made in the order in which they appear. Unless the contrary is stated, a bill is presumed to have been negotiated before it is overdue. Any person endorsing a bill becomes liable on the bill to all subsequent endorsees or holders. He cannot deny the drawer’s signature or the signatures of persons previously endorsing the bill if asked to pay by a holder in due course.

Endorsements may be of various types: (1) a bill may be endorsed in blank, no endorsee being named; the bill then becomes payable to bearer, (2) there may be a special endorsement when the name be a special endorsement when the name becomes a bill payable to order, (3) there may be a restrictive endorsement, where the bill is endorsed ‘Pay A only’; the bill then ceases to be a negotiable instrument, (4) the endorsement may be limited, e.g. without recourse.

If an endorsement is forged, the position is more difficult. Generally speaking title cannot pass through a forgery and a holder of the bill can only claim from persons signing the bill subsequent to the forgery. Sometimes bills are endorsed conSometimes bills are endorsed conbill in X days’. The payer can please himself whether or not he observes the condition.

Reference: The Penguin Business Dictionary, 3rd edt.