The invention of the bill was the first successful attempt to replace money in payments, using debt transfer instead. So, in fact, the monetary system appeared. A significant milestone in its development was the period of the endorsement at the stage of industrial revolutions. Thanks to him, liquidity debt obligations increased, and the procedure for obtaining a loan simplified. Only then was cashless payment invented paper money, as well as a variety of financial instruments.
Characteristic
An endorsement is an endorsement affixed on a document (check, security, bill of exchange, etc.), which confirms the transfer of part or all of the rights to it to another person. Usually placed on the back or in addition - allonge.
Transfer of a bill may be prohibited - just write “Pay not to order”. The ban on endorsement is not able to prevent, but the endorser will not answer to future owners - only to his own endorser.
An endorsement of a bill of exchange is a one-way action that engenders an abstract obligation. The integrity of such an acquisition does not differ from that of its issuance.
An endorser is a person who transfers a bill of exchange to a new holder, an endorser, through an endorsement.
Varieties
Economic activity formed a brief endorsement formula and two varieties of endorsements: registered and blank, transferring the document into ownership, and entrusting - the equivalent of a power of attorney to receive payment.
The endorsement includes the name of the new owner.
The blank inscription contains only the signature of the endorser. The transfer of securities as movable property is regulated by property law. Holders not recorded on the document are not subject to bill legislation. They are responsible on a common basis. A blank bill is similar to bearer paper, but if the holder inscribes someone else's name, it can be turned into a registered one.
Transfer Label Functions
An endorsement transfers a bill to the property of the creditor, like the first acquirer, on the basis of:
- sequence continuity;
- fair purchase.
Crossing out an endorsement leads to a row break, and the holder becomes the person who completes the unbroken row, starting with the first bill holder. The certification of signatures is not the responsibility of the endorser. There is a presumption of good faith: the acquisition is considered legitimate until proven otherwise.
The next role of the endorsement is to provide a guarantee. The holder of the bill is responsible for all persons who transmitted the document, regardless of the others, and their presence indicates that the document is reliable.
Good faith
A recipient of a bill of exchange for continuous endorsement is a conscientious holder whose rights, subject to the legitimacy of receiving the document, are independent of the relations and mutual settlements of the endorser and previous owners, as well as the latter. It is impossible to object to payment to such an owner if the refusal is based on personal relations between the said persons. Therefore, a conscientious endorser has the advantage.
In the case of evidence of the retirement of the bill from the possession of the previous holder against his desire (abduction, receipt of fraud, violence and the like), provided that the holder knew about it, he is deprived of his rights under the document as unscrupulous. Prove the illegality of the acquisition should be the person who refers to this fact.
Disclaimer
The endorser is responsible for the payment, but may be freed from it by inclusion in the endorsement promissory note reservations "Pay the order (name) without a turn on us." The presence of such an inscription may raise doubts among the recipients. Purchasing a bill of exchange on a blank endorsement is a more reliable option.
In addition, the endorsement may stipulate intermediaries, change the date of presentation and exclude protest.
Bill and civil law
- An endorsement is a unilateral act transferring a security, and a cession is a two-sided assignment of rights that result from an obligation.
- Upon transfer of the document, the claim is acquired on the basis of a bill of exchange, in case of assignment - as assignor.
- The creditor is only liable for the existence of the right, and not for its exercise, which is the subject of a separate agreement. The existence of a requirement in the inscription means less than in the case of a counterfeit bill, and for the possibility of its implementation the endorser is liable if a non-negotiable reservation is not made.
- Assignors joint and several liability do not carry.
- The right of the inscription passes in full, the assignment may be partial.
- During cession, the notification of the debtor is mandatory, in case of transfer of a bill of exchange this is not necessary.
Endorsement is the best defense
Protection of a bill of exchange against counterfeiting is ensured by joint and several liability, including the person who transmitted it, since the presence of fake inscriptions or nonexistent endorsers does not eliminate it. These securities never had a large number of degrees of protection, therefore they dispensed with the special order of the document and the law. The purchaser of the bill must exercise the same caution as at the time of signing the contract, because it may be extreme. Awareness of this is the best defense. For a blank bill, protection is important because it is equivalent to a banknote.
Compilation
A bill can be transferred when there is a transfer inscription on its back - an endorsement with the signature of the holder. This allows you to attribute it to order securities. The first inscription is located on the top left and does not need to be certified by a notary. The endorsement is not conditional on anything, and if any conditions exist, they are considered unwritten.
Registered, bearer and blank - types of endorsement, which are made by the holder on the back of the bill or its continuation. The first entry is placed at the top left, and each subsequent entry should be numbered in order.
An endorsement is an inscription containing the name of the recipient and the signature of the person who transfers the bill. A new holder may be a person who already owes it.
Blank endorsement is the signature of an endorser without the name of an endorser.
The name of the original holder of the bill must correspond to the name of the person who made the transfer first. Similarly, the names of the next endorser and endorser must match.
Consider several options for filling out a document.
1. Nominal endorsement, sample:
No._ Pay the order (holder name). Location and date. Signature of the transmitting person.
2. Filling of an endorsement to bearer, sample:
No._ Pay the order of the bearer of this bill. Location and date. Signature of the endorser.
3. The blank endorsement has the form:
No. ______________________________. Location and date. Signature of the transmitting person.
The first and each subsequent endorsement is dated no earlier than the date of the previous transaction.
In the blank endorsement, it is necessary to leave a place for entering the name of the endorser.
Acceptable Reservations
The endorsement may include such reservations:
- “Pay (name), but not his order.” This reservation is permitted in the nameplate. May be violated by the following endorsement. The endorser who placed such a reservation is no longer included in the circle of persons jointly and severally liable.
- "Without a turn on us." This reservation can be crossed out with assurance by the person who affixed it. Allows the endorser to withdraw from the number of obligated persons.
- “Without protest.” The fact of the protest does not affect the liability of the endorser.
- "(Name) as a pledge." A reservation prohibits the further movement of the document with the endorsement.
If the date of presentation is approaching in legislatively predetermined cases, reservations may be as follows: “before (date)”, “for acceptance no later than (date)”, “for acceptance (date)”.
Instructing
The holder of the security may entrust the receipt of payment to another person. An endorsement bill of exchange is an inscription that draws up such an order, but does not make the indicated person the owner of the document. By this, the authorized person gains the authority to commit acts related to the receipt of payment without a power of attorney. Such an inscription may be exclusively registered. The order can be transferred to other persons. Its legitimacy is the same as with the endorsement. It does not stop even if the surety is liquidated or its legal capacity is limited.
- The inscription when transferring the document to the bank is as follows: "For collection (name), signature."
- When transferring to another person: “I trust to receive payment (name), signature”.
By this, an authorized person may perform operations on receipt of payment without issuing a power of attorney. An exclusively instructive inscription is possible.
If the place is over
Allonge is an addition to a bill of exchange in the form of a sheet of paper. It joins if there is no free space on the document for the endorsement. It is necessary to provide a solid connection to the continuation of the security.
Allonge is similar to a bill, because it has a front and a back side. The front end is as follows:
Allonge
To a promissory note (number) on (amount) issued (date) at (place) (name) order (name) on (name) by payment (date). Joined (name).
The front part appeared as a result of the fight against fakes, because the addition without the front part was cut off, and a blank sheet was used to draw up a false bill, which was put into circulation with these signatures.
Allonge is attached to the bottom or left of the document with the upper or right edge of the back of the add-on. The place of attachment must be certified by the seal of the person performing the operation, with the capture of allonge and promissory notes.
The reverse side is used to continue endorsements. The first endorsement at the same time begins on the back of the bill “Pay the order (name)”, ending on the allonge: “(Name), signature”.
Accession of each subsequent allonge is made according to the same rules.
Intermediaries
On the back of the document, separately or with endorsement, intermediaries may be appointed to make a payment or acceptance:
- "Intermediary in payment (name), signature."
A guarantee is also given on the front or back of the document - aval:
- "Aval for (name) (amount), signature."
