Endorsement:
A legal term that refer to signing of
a document which allows for the legal transfer of a negotiable instrument from
one party to another party in various circumstances.
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| ENDORSEMENT |
Types of Endorsement
Various circumstances can be as
follows
a.
If a
bill is drawn by a trader is retained by him its due date and is honored by the
acceptor on the due date. In this case the parties involved with the bill are
drawer and acceptor.
For instance, on 1st Jan 2018 Mahendra sold goods to John
for Rs 5000/- and received a two months bill for the amount. The bill was duly paid
on maturity by John.
b.
If a
bill drawn by a trader is discounted by him with the bank before its due date
and the bill is honored to the acceptor on the due date. In this case the
parties involved are drawer, banker and acceptor.
For Instance, on 1st March Ram draw a three months bill
on Rahim for Rs 8000/- discounted the bill with his banker at 8% per year. The
bill was duly honored on due date.
c.
If a
bill drawn by a trader is endorsed by him to any of his creditors and the bill
is honored by acceptor on due date. In this case the parties involved are
drawer, endorsee and acceptor.
For instance, Raju sells goods worth Rs 2000/- to Browne on 1st
October 2018 and draws a bill on him for the amount for two months on the same
day. The bill is endorsed to his creditor. The bill is paid on maturity.
d.
If a
bill drawn by a trader is sent by him to his bank for collection and is honored
by the acceptor on the due date. In this case the parties involved are drawer,
bank and acceptor.
On 1st Feb 2018 Ram draws a two month bill on Rajan for
Rs 1000/- and sent it to Bank for collection the bill is duly met. The
collection charges charged by bank is Rs 2/-.
Returning a Bill under Rebate:
In some situations the acceptor of the
bill has enough money so that he can meet his acceptance before the due date
itself. In such cases he may approach the holder of the bill and offer to meet
his acceptance before due date provided some discount or rebate is allowed to him.
The holder of the bill may agree to the proposal made by acceptor and accept
the cash for the net value. Such a process is called rebate under bill.
The various circumstances that may
arise in rebate under bill are
a.
If
the bill retired under a rebate he in the hands of drawer himself.
For Instance, on 1st November 2018 Raghunath draws a
bill on Rajaram for Rs 500/- for three months. Before a month of due date
Rajaram retired his bill for which he was given a rebate of Rs 10/-.
b.
If the
bill retired under a rebate is in the hands of endorsee.
For Instance, On 1st Jan 2018, Mr. A draws a bill on Mr.
B for Rs 3000/- for three months being accepted the bill and returned it to Mr.
A on the same date. The bill was endorsee from Mr. A to Mr. C On 1st
March 2018 Mr. B retired the bill in the
hand of Mr. C at a rebate of Rs 200/-.
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