Question

Which of the following is NOT the essential requirement for the endorsement as per Negotiable Instruments Act, 1881?

• A. It should be made by the holder or the maker
• B. It should be on the instrument
• C. Signatures should be in ink and not by pencil or rubber stamp
• D. It should contain unconditional order.

Answer 1

Answer: (D)

The term endorsement under Section 15 of the Negotiable Instruments Act, 1881 means when the maker or the holder of a negotiable instrument signs the same otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, he is said to endorse the same and is called the endorser and the person to whom the instrument is endorsed is called the endorsee. There are basically six essentials of endorsement under the act:

• 1.It must be on the instrument. The endorsement may be on the back or the face of the instrument and if no space is left on the instrument, it may be made on a separate paper attached to it called along.
• 2.It must be an endorsement of the entire bill. A partial endorsement that is which purports to transfer to the endorse a part only of the amount payable does not operate as a valid endorsement.
• 3.It must be made by the maker or holder of the instrument. A stranger cannot endorse it.
• 4.It may be made either by the endorser merely signing his name on the instrument or by any words showing an intention to endorse or transfer the instrument to a specified person.
• 5.t must be signed by the endorser. It is not necessary to write the full name initial may be sufficient. Thumb- impression should be attested.
• 6.It must be completed by delivery of the instrument. The delivery must be made by the endorser himself or by somebody on his behalf with the intention of passing property therein.