Endorsement and Indorsement in Negotiable Instruments

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the legal life of a negotiable instrument dependent on?

The assignment of the instrument

The delivery of the instrument to the first holder

The negotiation of the instrument

The issuance of the instrument by the maker or drawer (correct)

How is negotiation of a negotiable instrument achieved?

By assignment to a payee

By issuing it to the first holder

Through indorsement followed by delivery to the indorsee (correct)

Through making it payable to bearer

What does the term 'bearer' refer to in relation to negotiable instruments?

The person who assigns the instrument

The person in possession of an instrument payable to bearer (correct)

The person who negotiates the instrument

The person who issues the instrument

Where must an indorsement be made on a negotiable instrument?

On a separate paper attached to the instrument or on the instrument itself Signup and view all the answers

What does an indorsement without additional words signify?

It is a sufficient indorsement Signup and view all the answers

What is necessary for a person to be considered a bearer of an instrument?

The person must be in possession of an instrument that is payable to bearer Signup and view all the answers

What is the primary purpose of endorsement?

To legally transfer ownership of a negotiable instrument to another party Signup and view all the answers

Which of the following is NOT a form of endorsement?

Unlimited endorsement Signup and view all the answers

What is required for an endorsement to be valid and transfer title?

The endorsement must be accompanied by delivery of the instrument Signup and view all the answers

For an instrument payable to order, to whom is it payable?

To the payee or any person authorized by the payee to collect Signup and view all the answers

What is the literal meaning of the word 'endorsement'?

To write on the back Signup and view all the answers

Where can an endorsement be written on a negotiable instrument?

On the instrument itself, either the back or the face Signup and view all the answers

What is the meaning of endorsement?

The act of signing one's name on the back of a negotiable instrument to transfer ownership or rights. Signup and view all the answers

What is the purpose of an endorsement on a negotiable instrument?

To transfer ownership or rights to another party. Signup and view all the answers

What is the difference between an endorser and an endorsee?

An endorser is the person who signs the instrument, and an endorsee is the person to whom the instrument is transferred. Signup and view all the answers

Which type of endorsement is required for an instrument payable to order?

Special endorsement Signup and view all the answers

Where should an endorsement be placed on a negotiable instrument?

On the back of the instrument Signup and view all the answers

What is required for an instrument payable to bearer to be negotiated?

Delivery of the instrument to the transferee Signup and view all the answers

Study Notes

Negotiable Instruments

Methods of Transfer

Three basic methods: Issue, Negotiation, and Assignment
Issue: First delivery of the instrument, complete in form, to a person who takes it as holder
Negotiation: Transfer of a negotiable instrument to make the transferee the holder
Assignment: Transfer of title to an instrument, with the assignee taking only such title or rights as the assignor has

Negotiation

Made by means of indorsement followed by delivery of the instrument to the indorsee
Instrument payable to bearer is negotiated by delivery
Instrument payable to order is negotiated by indorsement of the holder and completed by delivery

Key Terms

Endorser: Person making the endorsement
Endorsee: Person to whom the instrument is being endorsed
Assignor: One who grants an assignment
Assignee: Receives the assignment of rights
Bearer: Person in possession of a bill or note payable to bearer
Holder: Person legally entitled to possess the instrument and receive payment on due date or on demand
Transferor: Party who transfers or conveys ownership or rights to another party
Transferee: Stands in the transferor's shoes and takes the instrument subject to all claims and defenses

Endorsement

Act of signing, usually on the back of a negotiable instrument, to legally transfer its ownership to another party
Writing of the name of the payee on the instrument with the intent to transfer title to the same
Payee becomes an indorser, and the person receiving the indorsed instrument is the indorsee
Indorsement alone without delivery conveys no title and creates no holder

Forms of Indorsement

Special (Sec. 34)
Blank (Sec. 35)
Restrictive (Sec. 36)
Qualified (Sec. 38)
Conditional (Sec. 39)

Place of Indorsement

On the instrument itself
May be written on the face of the instrument

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Explore the concepts of endorsement and indorsement in negotiable instruments, understanding how ownership is transferred through signing and writing on the instrument. Learn about the roles of payee, indorser, and indorsee in the process.