Endorsement of Cheque: When a cheque is transferred by payee to someone else, it has to be endorsed by the payee by putting a signature at the back of the cheque. This act of signing is known as endorsement.
1. Full or Special Endorsement: When the endorser specifies the name of the endorsee and signs the cheque, it is called full or special endorsement, e.g., ‘Pay to A Sd/- X’. The effect of such an endorsement is that the endorsee must endorse it again if he wants to transfer the property in the cheque to somebody else. A blank endorsement can be converted into a special endorsement by simply adding the name of the payee.
2. Partial Endorsement: When the endorsement is made for a part of the amount of the cheque, it is called partial endorsement. For example, a cheque for Rs. 1,000 may be endorsed only for Rs. 500. Such an endorsement is not legally valid. But when Rs. 500 have already been paid to the endorsee, a cheque for Rs. 1,000 may be endorsed for the balance of Rs. 500.
3. Facultative Endorsement: When the endorser waives his right of receiving the notice of dishonour, the endorsement is called facultative endorsement. For example, ‘Pay to Kishan Lai, notice of dishonour waived Sd/- Ram Lai’. In such an endorsement, the endorser remains liable even through the endorsee sens no notice of dishonour to him.
