Misc.

Rules on Indorsement

Indorsement of an instrument payable to

bearer (Sec.40, NIL)
o May still be negotiation by delivery;
but the one making the indorsement is
liable as indorser
Where the instrument is payable to the
order of two or more persons who are not
partners (Sec. 41, NIL)
o All must indorse unless the one
indorsing has authority to indorse for
the other(s)
Instrument is drawn or indorsed to a
person as cashier/fiscal officer (Sec. 42,
NIL)
o Presumption instrument is payable to
bank/corporation;
negotiated
by
bank/corporation through its officer
(w/ authority)
Where name of payee or indorsee is
misspelled (Sec. 43, NIL)
o Such payee or indorsee can indorse
instrument using the wrong spelling as
therein described and adding his
correct signature, if there need be
Indorsement in representative capacity
(Sec. 44, NIL)
o Indorse in representative capacity;
adopt such terms as to negative

personal liability (i.e. for and behalf

of); disclose principal
Presumption as to time of indorsement
(Sec. 45, NIL)
o Every negotiation is considered prima
facie to have been effected before
instrument has become overdue
Place of indorsement (Sec. 46, NIL)
o Presumed to be prima facie to have
been made at the place where the
instrument is dated
Striking out of indorsement (Sec. 48, NIL)
o Holder could at any time remove
indrosement so long as indrosement
not necessary for holders title
o Effect: discharges liability of the
person
whose
indrosement
was
stricken out, as well as liability of
subsequent indorsers
Transfer of an order instrument without
indorsement [when such indrosement is
necessary] (Sec. 49, NIL)
o Transferee acquires title to the
instrument but not as holder (transfer
could partake assignment; acquires no
better right)
o Transferee has the right to have the
indorsement by the transferor [this
additional right available only when
the instrument is really negotiable and
payable to order on its face]