Endorsing of cheque means writing on back of the cheque. It is process of transferring of ownership of cheque in name of another person whose name is written on back of cheque by the transferor. The person who transfer the ownership of cheque is Endorser whereas, the person on whose name the ownership is transferred is called Endorsee. Let understand, endorsing of cheque with help of a example.
Suppose, Mr X owes 5000 money to Mr Y. So, Mr X draw a cheque worth 5000 and gave to Mr Y to pay off his debt. Now if Mr Y also owed some money to Mr Z, then he can transfer the cheque received from Mr X to Mr Z. Thus in this way the ownership of cheque is transferred to another party.
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Endorsing of cheque are of many types:
- General Endorsement: When the endorser of cheque does only his signature on back of the cheque and hand over the cheque to the party to whom he owes money then this is called General Endorsement. It is also called Blank Endorsement. In this type of Endorsement, the cheque amount is payable to any person who present it on cash counter.
- Special Endorsement: In this the endorser writes the name of endorsee on back of cheque and then draw his signature. Later the endorsee can re-endorsod the cheque in name of another person.
- Restrictive Endorsement: If the endorser of cheque write word “only” after the name of endorsee then it restricts further endorsement of cheque by endorsee.
- Partial Endorsement: If the endorser wants to pay part of the cheque amount to endorse then partial Endorsement of cheque can be done. This is basically done in case of making advance payment to a party when the cheque is drawn of full amount but bank pays only part amount of cheque.
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