Also known as: unqualified indorsements · unqualified endorsement · unqualified endorsements · blank indorsement
Written by attorneys · grounded in primary & secondary sources — see below
An indorsement of a negotiable instrument made by the holder without words limiting the indorser's liability on the instrument.
Uma Upadhyay delivers a promissory note payable to her order to Unity Capital in exchange for a loan. Unity Capital pays the agreed value but receives the note without any signature on the back. Unity Capital sues to compel Uma to sign the note so that it becomes a holder entitled to enforce the instrument against the maker.
Ulric Unger indorses a check to Upstream Petroleum solely to secure a debt owed to the company. The company later claims holder status to enforce the check against the drawer. The indorsement, though limited to a security interest, operates as a full unqualified indorsement for purposes of determining holder status.
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The transferee obtains a specifically enforceable right to the transferor's unqualified indorsement when the instrument is transferred for value. Negotiation does not occur until the indorsement is actually made on the instrument.
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Yes. For determining whether the transferee is a holder, an indorsement that transfers a security interest in the instrument is treated as an unqualified indorsement of the entire instrument.
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An unqualified indorsement leaves the indorser liable on the instrument if it is dishonored. A qualified indorsement, typically made with the words without recourse, limits or eliminates that liability.
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