Posted in Finance, Accounting and Economics Terms, Total Reads: 269
Definition: Blank Endorsement
Signature of the person to whom a particular instrument, mostly cheque, is referred to at the back of instrument with nothing else written bellow or above it is called blank endorsement. Blank endorsement gives the bearer of instrument the right to own it.
When a payer pays the payee through an instrument, say cheque, he refers the instrument to the payee, so only payee can use the instrument as he is the owner. If the payee wants to pass on the ownership to someone else but not to a particular person he would just sign at the back of the instrument. Now the original payee can give the instrument to anyone and the bearer will be considered as the owner of instrument.
Let us say X had to pay a sum of 1000 units to Y. In order to pay Y, X draws a cheque in favour of Y. After receiving the cheque Y realises that he does not need the money now buy he has to pay a sum of 1000 to Z. So, using blank endorsement Y will just sign at the back of cheque and will give the cheque to Z. Hence, making him the owner of instrument.