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Simple English definitions for legal terms
Qualified indorsement (endorsement)
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A quick definition of Qualified indorsement (endorsement):
A qualified indorsement is when someone signs a piece of paper that can be traded for money, but they add a special phrase like "without recourse" to limit their responsibility if the paper is not worth anything. This makes it harder for someone to steal the paper and get money for it, but it doesn't stop other people from trading it.
A more thorough explanation:
A qualified indorsement (or endorsement) is a way to transfer ownership of a negotiable instrument, like a check or promissory note, with certain restrictions. It is an endorsement that includes an additional phrase, such as "without recourse," which limits the liability of the signer (indorser) if the instrument is dishonored.
For example, if John writes a check to Jane for $100, and Jane wants to transfer the check to Bob, she can use a qualified indorsement by signing the back of the check and adding "without recourse" after her signature. This means that if the check bounces or is not honored by the bank, Bob cannot hold Jane responsible for the loss.
While a qualified indorsement can make it harder for someone to steal or misuse a negotiable instrument, it does not prevent further transfer or negotiation of the instrument.
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