Blank Endorsement Definition
A Blank Endorsement occurs when a negotiable instrument such as a check carries the signature of the endorser but does not indicate the payee of the instrument. When a financial instrument carries an endorsement by the party who creates it but fails to specify in whose favor the financial instrument was created, a blank endorsement is in place.
Given that no payee is named in a blank endorsement, the bearer or holder of the negotiable instrument is entitled to the benefits or payment of the instrument. This means the holder can assert claims for the redemption of the instrument.
A Little More on What is a Blank Endorsement
Blank Endorsement can apply to different types of negotiable instruments, checks being the most common. When a check is duly endorsed by the creator but does not state the party in whose favor the check was drafted, the check has a blank endorsement. Usually, a check is payable in cash, when a check has a blank endorsement, the payee of the check is not indicated which means this financial instrument is only payable to the bearer. Blank endorsements carry more risks than other forms of endorsements.
Blank Endorsement and Other Forms of Check Endorsement
There are three major types of endorsement, these are;
- Blank Endorsement: This is a type of endorsement that carries the signature of the person who created the negotiable instrument but does not indicate the payee.
- Restrictive Endorsement: Restrictive endorsement occurs when a check note is written for deposit only. In this case, the creator puts his name and signs underneath the first line that carries “for deposit only.” The account into which the cash will be deposited is also specified.
- Special Endorsement: Payers or creators of negotiable instruments use the special endorsement when the instrument is for a particular person. In the case of a check, the recipient of the check is specified, the payer will write the name of the recipient and sign underneath.
Reference for “Blank Endorsement”
Academics research on “Blank Endorsement”
Banks and Banking: Trusts: Special Deposits: Agreement between Depositor and Bank, Sipes, R. E. (1939). Banks and Banking: Trusts: Special Deposits: Agreement between Depositor and Bank. Michigan Law Review, 37(3), 470-473.
Titles to Used Automobiles in Missouri Section 301.210 RSMo 1959-Complete Endorsement, Blank Endorsement, and No Endorsement As Effecting Validity of …, Taylor, W. E. (1963). Titles to Used Automobiles in Missouri Section 301.210 RSMo 1959-Complete Endorsement, Blank Endorsement, and No Endorsement As Effecting Validity of Transaction. Mo. L. REv., 28, 121.
Some Principles of the Negotiable Instruments Legislation of Mexico, Graf, J. B. (1955). Some Principles of the Negotiable Instruments Legislation of Mexico. Tex. L. Rev., 34, 426.
[PDF] How to Use Your Bank., Newman, E. J., & Bates, C. H. (1958). How to Use Your Bank. Leaflet/Texas Agricultural Extension Service; no. 389.
Banking Briefs, Banich, T. G. (2015). Banking Briefs. Banking LJ, 132, 563.