What is an Indorsement?
Thu, 09/16/2010 - 08:39 — LIG Reporter
Instrument law in India involves considerable legal jargon and documents. Therefore, it is essential to know about instrument law pertaining to indorsements in India. Anything that is written, printed upon or on the back of a deed of writing is considered as an indorsement. Every day, we deal with indorsements for some purpose or the other. Examples of indorsements include a cheque, a bill of exchange and a promissory note, just to mention a few.
Instrument Law: Who May Indorse
As per section 15 of the Negotiable Instruments Act, a legislation that covers instrument law in India, every sole maker, drawer, payee or indorsee or several of them jointly may indorse. As per this section, the indorser shall be in lawful possession of the instrument so as to be able to indorse it. This further means that a stranger cannot indorse a negotiable instrument. For example, no third party can sign a cheque on your behalf as such a cheque is obtained by fraud and shall not be accepted by the bank unless it has your proper signature on the cheque.
Instrument Law: How to Verify Whether the Indorsement is Valid by Law
As per instrument law in India, an indorsement on the face of an instrument such as a cheque, a bill or a promissory note is considered valid as per the Negotiable Instrument Act. It requires to be signed by the indorser but a simple signature is enough. It is not required to follow a particular set of words or format to make it valid. There can be any number of indorsements on an instrument.
Instrument Law: Types of Indorsements
Different types of indorsements are recognized as per Indian instrument law. An endorsement that is blank is one that does not specify an indorsee. It is known as a general indorsement, whereas an indorsement that specifies the person to whom the instrument is payable, it is called a special indorsement.
An indorsement is considered to be complete only when it is actually delivered as the intention of passing it to the payee is clearly established.
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