Endorsement of Notes

If a note is payable "to bearer," endorsement is not necessary since the note is transferred by simple delivery to the other person. Paper money is such a note. If the note is payable to a named person, that person must "order" the maker to pay to the transferee by an endorsement. The endorsement may be:

♦ In Blank - Endorsement with a signature alone makes the note payable to any bearer of the note.

♦ Special - Holder endorses "pay to the order of (name of new payee)" and signs the note; the note is now payable only to the new payee.

♦ Restrictive - Holder restricts further negotiability by writing "for deposit only" and signs the note.

♦ Qualified - Adding the words "without recourse" before signing a note means the endorser will not be liable for the amount of the note if the maker refuses to pay.

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