3 Ways on how to endorse a check or cheque in banking.
What is Endorsement: Endorsement is the signature of payee or endorsee usually at the back of the check or cheque. In practice, the signature is incomplete without the name and it is followed with the payee or endorsee’s address.
How to endorse a Check|Cheque
Let’s take a look look how one can endorse a check or cheque.
1. Endorsement in Blank – This is an endorsement in blank which specifies no endorsee, and a bill so endorsed becomes payable to the bearer(S.34 (1) BEA 1990).
When the Payee or endorsee of a check or cheque writes his name as written on front at the reverse of the cheque accompanied by a signature and as operating requires. Completed by address, it constitutes blank endorsement and such cheque or check is automatically payable to the bearer.
2. Special Endorsement – Another way to endorse a check. A special endorsement specifies the person to whom or to whose order the bill is to payable. (S. 34 (2) BEA 1990). When a bill has endorsed in blank, any holder may convert the blank endorsement into a special endorsement by writing above the endorse signature a directive to pay the bill to or the the order of himself or some other person (S. 34 (4) BEA 1990).
3. Restrictive endorsement – The last method to endorse a check/cheque. This prevent further endorsement of the bill. By S. 35 (1) BEA 1990. an endorsement is restrictive which prohibits the further negotiation of the bill.
A restrictive endorsement gives the endorsee the right to receive payment of the bill and and sue any party there to that his endorser could have sued. But it gives him no power to transfer his right as endorsee unless it expressly authorizes him to do so. Where a restrictive endorsement authorizes further transfer, all subsequent endorsees take the bill with with same rights and subjects to the same liabilities as the first endorsee under the restrictive endorsement( S. 35 (3) BEA 1990).
Validity of Endorsement
For an endorsement title be valid, S. 32 BEA 1990 states an endorsement in order to operate as a negotiation must comply with the following conditions;
1. It must be written on on the bill itself and br signed by the endorser and the simple signature of the endorser on the bill without any additional words is sufficient.
2. It must be an endorsement of the entire bill.
3. An endorsement written on an allonge or on a copy of a bill issued or negotiated in a country where copies are recognized is deemed to be written by the bill itself.
4. Where a bill is payable to order, the payee or endorsee is wrongly designated or hi name is misspelt, he may endorse the bill as therein describe, adding, if he think fit, his proper signature.
5. Where there are two or more endorsement of a bill, each endorsement is deemed to have been made in order in which it appears on the bill until the contrary is proved.
So this is how to endorse a check or cheque in its validity.