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Unit- 4 Negotiable Instruments

Introduction & Meaning
The word negotiable means “transferable from one person to another in return for
consideration” and an instrument means “A written document by which a right is created
in favour of some person”. Thus, a negotiable instrument is a document which entitles a
person to a sum of money and which is transferable from one person to another.
Definition:
According to Section 13 of the Negotiable Instrument Act, 1881, Negotiable Instrument
means a promissory note, bill of exchange or cheque payable either to order or to bearer. A
negotiable instrument may be made payable to two or more payees jointly, or it may be made
payable in the alternative to one of two, or one or some of several payees”
A negotiable instrument is a device of transferring a debt from one person to another.
Negotiable Instrument should be of as such nature that it should be in the form of writing,
signed by the maker or drawer, an unconditional promise or order to pay, a fixed amount of
money to be stated, freely transferrable from one person to another person, be payable to order
or to bearer, lastly be payable on demand or at a definite time.
The Negotiable Instruments Act was enacted, in India, in 1881. Prior to its enactment,
the provision of the English Negotiable Instrument Act was applicable in India, and the
present Act is also based on the English Act with certain modifications.

Features of Negotiable Instruments

1. Easily Transferable: A negotiable instrument is easily and freely transferable. There are no
formalities or much paperwork involved in such a transfer. The ownership of an instrument
can transfer simply by delivery or by a valid endorsement.
2. Must be in Writing: All negotiable instruments must be in writing. This includes
handwritten notes, printed, typed, etc.
3. Time of Payment must be Certain: If the order is to pay when convenient then such an
order is not a negotiable instrument. Here the time period has to be certain even if it is not a
specific date
4. Payee also must be certain: The person to whom the payment is to be made must be a
specific person or persons. Also, there can be more than one payee for a negotiable instrument.
And “person” includes artificial persons as well, like body corporate, trade unions, chairman,
secretary etc.
5. Holder’s title free from all defects: The holder in due course (one who acquires the
instrument in good faith and for consideration) gets it free from all defects.
6. Recovery: One can sue upon the instrument in his own name.
7. Presumption as to Holder: Every holder of negotiable instrument is presumed to be holder
in due course.
8. Presumption as to considerations: Every negotiable instrument is presumed to have been
made, drawn, accepted, negotiated or transferred for consideration.

Types of Negotiable Instrument

1. Promissory Note: Section 4 of Negotiable Instruments Act 1881 states a “Promissory note”
as an instrument in writing (not being a bank-note or a currency-note) containing an
unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to
the order of, a certain person, or to the bearer of the instrument.
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Promissory notes are one of the legal documents or an instrument by which rights are
conferred and party promises to pay a certain or a fixed amount of money to another person at
a demand of the payee. A promissory note is unconditional as to other Instruments and is signed
by the maker.

Primary parties of Promissory notes:

Maker: Person who makes the Promissory note and promises to pay a certain amount.
Payee: A person to whom the payment is to make.
In case of transfer of promissory notes by payee, parties involved are,
Endorser: The person who endorse the note in favour of another person.
Endorsee: The person in whose favour the note is negotiated by the endorsement.

Essential elements of a promissory note

1. Writing: The instrument must be in writing. Writing includes print & typewriting and may
also be in pen or ink.
2. Promise to pay: The instrument must contain an express promise to pay. The following
instrument signed by A is not a promissory note:
Ex: I am bound to pay the sum of Rs. 500 which I received from you.
3. Definite and Unconditional: The promise to pay must be definite and unconditional. If it
is conditional or uncertain, the instrument is invalid.
Ex: I promise to pay B Rs. 500 when he delivers the goods.
4. Signed by the maker: The instrument must be signed by the maker otherwise it is
incomplete & of no effect.
5. Certain parties: The instrument must point out with certainty as to who the maker is & who
the payee is. Where the maker & the payee can’t be identified with certainty with the
instrument itself, the instrument even if contain an unconditional promise to pay is not a
promissory note.
6. Certain sum of money: The sum payable must be certain and must not be capable of
contingent addition or subtraction.
Ex.: I promise to pay B Rs. 1000 and all other sums due to him.
7. Promise to pay money only: The payment to be made under the instrument must be in the
legal tender money of India. If the instrument contains a promise to pay something in addition
to money, it cannot be a promissory note.
Ex: I promise to pay B 20 shares & 10 bonds of XY limited.
It may be payable on demand or after a definite period of time.
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2. Bills of Exchange:
It is Negotiable Instrument in form of a written promissory document for a person to
pay a certain amount of money to the required payee. Three Parties are here in the Bills of
Exchange as they are drawer, drawee and payee. It includes an unconditional order which is
signed by maker for directing a person to pay.
The Negotiable Instrument Act 1881 states Bill of Exchange as “an instrument in
writing containing an unconditional order, signed by the maker, directing a certain person to
pay a certain sum of only to, or to the order of, a certain person or to the bearer of the
instrument”.
Parties to a bill
a) Drawer: The person who gives the order to pay or who makes the bill is called the drawer.
b) Drawee: The person who is directed to pay is called the drawee. When the drawee accepts
the bill, he is called the acceptor.
c) Payee: The person to whom the payment is to be made is called the payee.

The drawer or the payee who is in the possession of the bill is called the holder. The
holder must present the bill to the drawee for its acceptance. When the holder endorses the bill,
note or cheque, he is called the endorser. The person to whom the bill, note or cheque is
endorsed is called the endorsee.

Essential elements of bill of exchange

a) It must be in writing.
b) It must contain an order to pay.
c) The order must be unconditional.
d) It requires three parties i.e., the drawer, the drawee & payee.
e) The parties must be certain.
f) It must be signed by the drawer.
g) The sum payable must be certain.
h) It must contain an order to pay money only.
i) The formalities like number, date, place, consideration etc are usually found in an instrument
although they are not essential in law but a bill must be affixed with the necessary stamp.
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3. Cheques:
Cheque: Cheque is a negotiable instrument, it orders the bank to pay the certain amount
of money to the account of the drawer. Cheque basically crossed in its back to end its
negotiability and it is always accepted into the account of the payee.
A “cheque” is a bill of exchange drawn on a specified banker and not expressed to be
payable otherwise than on demand and it includes the electronic image of a truncated cheque
and a cheque in the electronic form.
A cheque is a bill of exchange drawn upon a specified banker and payable on demand
and it includes the electronic image of a cheque or a cheque in the electronic form. A cheque
in the electronic form means, “Cheque which contains the exact mirror image of a proper
cheque and is generated, written & signed in a secure system ensuring the minimum safety
standard with the use of digital signature”
A cheque is the species of a bill of exchange but it has the following two additional
qualifications:
a) It is always drawn on specified banker.
b) It is always payable on demand.

All cheques are bill of exchange but all bill of exchange are not cheque. A cheque must have
all the essential elements of a bill of exchange but it doesn’t require acceptance as it is intended
for immediate payment.
Essential Ingredients
1. Cheque to be drawn by a person,
2. To banker,
3. For payment of any amount of money to another person,
4. To discharge in part any debt or other liability,
5. Cheque returned by the bank unpaid,
6. Amount of the money in the bank a/c is insufficient to dishonour the cheque,
7. Or that it exceeds the amount arranged to be paid from that account by an agreement made
with that bank.
Exceptions:
1. The cheque has been presented to the bank within a period of three months from the date on
which it is drawn or within the period of its validity, whichever is earlier.
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2. The payee or the holder in due course of the cheque, as the case may be, makes a demand
for the payment of the said amount of money by giving a notice; in writing, to the drawer of
the cheque, [within thirty days] of the receipt of information by him from the bank regarding
the return of the cheque as unpaid.
3. The drawer of such cheque fails to make the payment of the said amount of money to the
payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of
the receipt of the said notice.

Types of Cheque
1. Bearer Cheque
The words “or bearer” printed on the cheque, & it is not cancelled, then the cheque is called a
bearer cheque.
• A bearer cheque is made payable to the bearer i.e. it is payable to the person who presents it
to the bank for encashment.
• In simple words a cheque which is payable to any person who presents it for payment at the
bank counter is called ‘Bearer cheque’

2. Order Cheque
• The word "or order" is written on the face of the cheque, the cheque is called an order cheque.
• Such a cheque is payable to the person specified therein as the payee, or to any one else to
whom it is endorsed (transferred).

3. Open Cheque
• When a cheque is not crossed, it is known as an “Open Cheque” or an “Uncrossed Cheque”.
• These cheques may be cashed at any bank and the payment of these cheques can be obtained
at the counter of the bank or transferred to the bank account of the bearer.
• An open cheque may be a bearer cheque or an order cheque.

4. Crossed Cheque
• Crossed cheque means drawing two parallel lines on the left corner of the cheque with or
without additional words like “Account Payee Only” or “Not Negotiable”.
• A crossed cheque cannot be en-cashed at the cash counter of a bank but it can only be credited
to the payee’s account.

This is a safer way of transferring money then an Uncrossed or open cheque.

5. Anti-Dated Cheque
• Cheque in which the drawer mentions the date earlier than the date on which it is presented
to the bank, it is called as “anti-dated cheque”.
• Such a cheque is valid up to six months from the date of the cheque drawn.

6. Post-Dated Cheque
• Cheque on which drawer mentions a date which is yet to come (future date) to the date on
which it is presented, is called post- dated cheque.
• For example – If a cheque presented on 10th Jan 2021 bears a date of 25th Jan 2021, it is a
post-dated cheque. The bank will make payment only on or after 25th Jan 2021.
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7. Stale Cheque:
• If a cheque is presented for payment after three months from the date of the cheque, it is
called stale cheque. After expiry of that period, no payment will be made by banks against that
cheque.
• A stale cheque is not honoured by the bank.

8. Mutilated Cheque
• When a cheque is torn into two or more pieces and presented for payment, such a cheque is
called a mutilated cheque.
The bank will not make payment against such a cheque without getting confirmation of the
drawer.

Crossing of Cheque:
Crossing of a cheque means "Drawing Two Parallel Lines" across the face of the cheque. Thus,
crossing is necessary in order to have safety. Crossed cheques must be presented through the
bank only because they are not paid at the counter. Crossing is a popular device for protecting
the drawer and payee of a cheque.
Object of Crossing Cheques:
Crossing is intended to ensure the safety of a cheque. The safety of a cheque is ensured by
crossing in the following two ways:
1. First, crossing makes it difficult for a wrong person (i.e., one who is not entitled to receive
payment of the cheque) to get the payment of a crossed cheque. A wrong person finds it
difficult to get the payment of a crossed cheque for the following reason. As a crossing is a
direction to the paying banker (i.e., the banker on whom the cheque is drawn) to pay the amount
of the crossed cheque to another banker, and not to the holder at the counter, the paving banker
will not pay the amount of the crossed cheque at the counter. Therefore, the Wrong person who
holds a crossed cheque has to get the amount through another banker. Another banker (i.e., the
collecting banker) will collect the amount of a crossed cheque only for a customer. Therefore,
the wrong person (who may not be the customer of the collecting banker) finds it difficult to
receive the payment of the crossed cheque. Thus, crossing ensures the safety of a cheque.
2. Secondly, crossing facilitates the tracing of the person who has received the payment of the
cheque. This traceability ensures the safety of the cheques.

Who Can Cross a Cheque?

(a) The drawer of a cheque can cross it generally or specially and add the words "Not
Negotiable" or "Account Payee".
(b) If the drawer issues an open or uncrossed cheque, the holder can cross it generally or
specially. If the cheque is crossed generally by the drawer, the holder can cross it specially. If
the cheque is crossed generally or specially by the drawer without the words "Not Negotiable"
or "Account Payee", the holder can add these words.
(c) If an uncrossed cheque or a cheque crossed generally is sent to a banker for collection, that
banker can cross it especially to himself. Further, if a cheque is crossed specially, the banker
to whom it is crossed can again cross it especially to another banker (i.e., his agent) for
collection
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Types of Crossing: There are two types of crossing. Viz.,

(1) General Crossing
(2) Special Crossing.
1. General Crossing:
The Indian Negotiable Instruments Act, 1881, defines a general crossing as "Where a cheque
bears across its face, an addition of the words "and company" or an abbreviation thereof
between two parallel transverse lines, or of two parallel transverse lines simply, either with or
without the words "not negotiable", that addition shall be deemed a crossing and the cheque
shall be deemed to be crossed generally". So, general crossing means drawing across the
face of a cheque two parallel transverse lines with or without the words "And Company"
or "Not Negotiable" or "Account Payee" between the parallel transverse lines.
Essential Features of General Crossing:
1. There must be two parallel transverse lines.
2. The two parallel transverse lines must be on the face of the cheque, and not on the back
3. In actual practice, the lines are drawn on the left-hand top corner of the cheque.
4. The words "And Company" or its abbreviation "And Co." or "& Co." do not form a
necessary part of general crossing. So, they may or may not be written. These words are
written, when the name of the payee's banker (i.e., the collecting banker) is not known. These
words mean some banking firm or banking company.
5. The words "Under Rupees. Only" do not form an essential part of general crossing. They
are written to prevent the fraudulent alteration of the amount of the cheque.
6. Words, such as "Not Negotiable" or "Account Payee" also do not form an essential part of
general crossing. So, they may or may not be written. However, the addition of these words to
general crossing increases the safety of the cheque.
7. The paying banker is required to pay the amount of a generally crossed cheque to another
banker, but not to the holder at the counter.
8. General crossing makes a cheque safe by making it difficult for a wrong person to obtain its
payment.

Examples of General Crossing-The following are the examples of general crossing,

2. Special Crossing:
The Indian Negotiable Instruments Act, 1881 defines a special crossing as where a cheque
bears across its face an addition of the name of a banker with or without the words "not
negotiable", that addition shall be deemed a crossing and the cheque shall be deemed to be
crossed specially and to be crossed to that banker. Therefore special crossing means writing
across the face of a cheque the name of some banker with or without lines or words such
as "Not negotiable at 'Account Payee".
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Essential Features of Special Crossing

1. A special crossing requires the name of the collecting banker tie, the banker to whose the
payment should be made on the face of the cheque
2. The two parallel transverse lines are not essential for a special crossing So, they may or may
not be drawn. But. usually, these lines are drawn in a special crossing also.
3. Words such a "Not Negotiable or "Account Payee also do not form a necessary part of a
special crossing. So, they may or may not be written. However, the addition of these words to
a special crossing increases the safety of a cheque.
4. The paying banker is required to pay the amount of a specially crossed cheque only to the
banker named in the crossing (or bis agent for collection), but not to the holder at the counter
or to any other banker.
5. Special crossing makes a cheque more safe than general crossing by making it very difficult
for a wrong person to obtain the payment of specially crossed cheque.

Examples of Special Crossing

The following are the examples of special crossing

Differences between a general Crossing and Special Crossing: The main differences
between general crossing and a special crossing are:
1. Two parallel transverse lines are essential for a general crossing But such lines are not
essential for a special crossing.
2. The words 'And Company may or may not be written in a general crossing. But these words
are not written in a special crossing
3. In the case of a general crossing, the name of the collecting banker in not Written on the
face of the cheque. But in the case of a special crossing, the name of the collecting banker must
be written on the face of the cheque.
4. The amount of a generally crossed cheque can be paid by the paying banker to any banker
But the amount of a specially crossed cheque should be paid by the paying banker only to the
banker named in the crossing or his agent for collection.
5. Special crossing makes a cheque more safe than general crossing.
6. Conversion of a generally crossed cheque into a specially crossed cheque does not amount
to material alteration. So, it does not require the drawer's confirmation for payment On the
other hand, conversion of a specially crossed cheque into a generally crossed cheque amounts
to material alteration So, it should not be paid without the drawer's confirmation.
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Material alteration
Material alteration means to make alter or change some material parts of the instrument and
try to make it a valid created with the purpose of the nature of that instrument.
Due to the effects of Material Alteration, the said instrument becomes a void. But one thing
we should know that a material alteration is different from filling up a blank cheque by the
payee or holder of the cheque.
But it is also noted that every change to make in a cheque it not mean a material alteration.
Only such type of changes that create negatively effect from another side it may be called
material alteration.
As per the provision under section 87 of the negotiable instrument act 1881, it’s clearly defined
that any material alteration of a negotiable instrument renders the same void which makes such
alteration without consent of first parties.
Examples of Material Alteration: No Act in India has specified as to what are material
alterations However, as per the banking custom, the following are considered material
alteration;
Alteration of the date of the cheque
Alteration of the sum payable.
Alteration of the place of payment
Alteration of the name of the payee.
Changing an order cheque into a bearer cheque by substituting the word ‘order’ by the word
"bearer".
Cancellation of the crossing on a cheque
Changing a specially crossed cheque into a generally crossed cheque.
Striking off the words "Not Negotiable" or "Account Payee from a general crossing or a
special crossing.

Effects of material alteration in cheque:*

• A drawer to voluntarily re-validate a negotiable instrument, including a cheque.
A cheque which has become invalid because of the expiry of the stipulated period could be
made valid by alteration of dates. There is no provision in the Negotiable Instruments Act or
in any other law which stipulates that a drawer of a negotiable instrument cannot re-validate
it. It is always open to a drawer to voluntarily re-validate a negotiable instrument, including a
cheque.
• When the document itself is void, it cannot be held any legally recoverable debt on
the basis of that document.
This principle of law is essential to the integrity and sanctity of contracts. By alteration, the
identity of the instrument is destroyed. So, the effect of making a material alteration on a
negotiable instrument without the consent of the party bound under it is exactly the same as
that cancelling the instrument.
• The date of the cheque was altered to make it post-dated cheque is amounts to
material alteration.
The date of cheque was altered to make it post-dated cheque handwriting in alteration of
cheque did not match handwriting of drawer nor was it signed by her after said alteration held
material alteration of date by drawer not proved, such instrument not worthy of reliance.
• Blank signed cheque leaf held; It cannot be said to be ‘cheque’ within the meaning
of S. 6 of Act.
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• Date inserted later in instrument it amounts to material alteration.

Where a look at the pro-note itself made it apparent that the date which was in a different ink,
that is other than the ink that had been used for body of instrument, was a subsequent
introduction into the document, the subsequent insertion would amount to “material
alteration”. Further held that “Material alteration”, takes in not only a case where the certain
thing which is already written has been altered or erased but also a new insertion.

Alteration which are Not Material Alterations

There are certain alteration which cannot be regarded as material alterations. Examples of such
alterations are;
Changing a bearer cheque into an order cheque by substituting the word "bearer by the word
"order".
Changing an open or uncrossed cheque into a crossed cheque.
Changing a generally crossed cheque into a specially crossed cheque.
Adding the words "Not Negotiable" or "Account Payee’ to a general crossing or to a special
crossing.
Completing an inchoate (i.e, an incomplete) cheque by filling up the blanks

As the above alterations are not material alterations, they do not require the drawer's
confirmation So, cheques which contain such alterations can be paid by the paying banker
safety without insisting on drawee's confirmation.
Protection against Fraudulent Alteration:
As fraudulent alterations land the bankers and the customers in trouble, they should guard
themselves against such fraudulent alterations.
Generally the following precautions are taken by bankers to guard themselves against
fraudulent alterations
1. The cheque forms supplied by the bankers to their customers are prepared out of good quality
security paper which is sensitive to chemicals and will disclose fraudulent alterations, however
cleverly made with the help of chemicals
2. Most of the bankers use ultraviolet lamps for detecting fraudulent alterations made with the
help of chemicals. Ultraviolet lamps ate special lamps fitted with special bulbs to emit
ultraviolet rays. For the detection fraudulent alterations, cheques, especially cheques for large
amounts, are placed under these lamps. If a cheque contains any alterations made with the help
of chemicals, the cheque will indicate fluorescent shadow of lines in those areas of the cheque
where chemicals have been used. Thus, ultraviolet lamp help the detection of fraudulent
alterations.

The customers on their part take the following precautions

While writing the cheques, they ensure that no blank spaces are left before and after the
amounts stated in words and figures.
They also add the words "under rupees only" in the crossing.
The use of perforating machine by the customers, while writing the particulars on the
cheque, will make material alterations difficult.
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Endorsement:
Endorsement and delivery is a mode of negotiating a negotiable instrument like cheque. A
negotiable instrument like cheque payable to order (i.e., payable to specified person or his
order) can be negotiated only by endorsement and delivery. So, it is necessary to have some
idea about endorsement.

Meaning of Endorsement: The term “Endorsement” or “indorsement” is derived from the

Latin term “in dorsum” which means “on the back”. So, “endorsement means signing one’s
name on the back of a negotiable instrument, say, a cheque, with a view to transferring the
interest, right, property or title in the instrument to another person”.

The Negotiable Instruments Act, 1881, Sec 15, defines endorsement as “When the
maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for
the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto,
or so signs for the same purpose a stamped paper intended to be completed as a negotiable
instrument, he is said to indorse the same, and is called the “endorser”.
Parties:
1) Endorser: The person who endorses the instrument (i.e., the person who signs his name on
the back of the instrument for the purpose of transferring its property to another) is called the
“endorser”.
2) Endorsee: The person to whom the instrument is endorsed is called the “endorsee”

Who Can Endorse An Instrument?

As per Sec 51 of The Negotiable Instruments Act, a negotiable instrument can be endorsed
by any one of the following persons:
a) The payee of the instrument.
b) The holder of a negotiable instrument.
c) The endorsee of the instrument.

Effects of Endorsement:
When a negotiable instrument is endorsed and delivered by the endorser to the endorsee, he
(endorser) creates certain legal consequences. They are:
1. He transfers his right, interest, property or title in the instrument to the endorsee.
2. He certifies the genuineness of the instrument.
3. He also certifies that all prior endorsement are genuine.
4. He guarantees to the endorsee that he had good title to the instrument.
5. Endorsement conveys to the endorsee the right of further negotiation.
6. He undertakes to compensate every subsequent holder of the instrument in case of dishonor
or non-payment of the instrument which is presented strictly in accordance with its tenor.(It
should be noted that the endorser’s liability to the subsequent endorsees is that of a surety. But
to the immediate endorsee, he is also liable as a principal debtor).

Essentials of Valid Endorsement:

1. It is better that endorsement is made in Ink.
2. It must be on the instrument.
3. It must be made by the maker or holder of the instrument.
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4. It must be signed by the endorser.

5. It must be completed by delivery of the instrument.
6. It should be in the form of ordinary signature of the payee or the endorsee.
7. Title of honor should be omitted.
8. It must be an endorsement of the entire bill.
9. In case of illiterate, a thumb impression should be fixed.
10. If the number of payee are more than one then all the payees will sign or that person who
is authorized.

Kinds of Endorsements:**
1. Blank or general endorsement
2. Endorsement in full or special endorsement
3. Restrictive Endorsement
4. Conditional Endorsement
5. Sans Recourse Endorsement
6. Facultative Endorsement
7. Sans Frais Endorsement

1. Blank or General Endorsement:

A blank endorsement is an endorsement in which the endorser merely signs his name on the
back of the instrument without mentioning the name of the person to whom the instrument is
endorsed.
2. Endorsement in full or special endorsement:
If the endorser, in addition to his signature, also adds a direction to pay the amount mentioned
in the instrument to, or to the order of, a specified person the endorsement is said to be in full.
When a cheque is endorsed in full, it can be negotiated further only by the endorsee named in
the endorsement.
3. Restrictive endorsement:
The endorsee under a restrictive endorsement gets all the rights of an endorser except the right
of further negotiation. In other words, such an endorsement entitles the endorsee to receive the
payment on due date and sue the parties for it but he cannot further negotiate the instrument.
4. Conditional endorsement:
A conditional endorsement is an endorsement in which the endorser makes his liability on the
instrument or the right of the endorsee to receive the payment of the instrument depend upon
the happening of a specified event.
When an instrument bears a conditional endorsement, the liability of the endorser will arise,
or the property in the instrument will pass to the endorsee only if the specified event takes
place or if the particular condition is fulfilled.
5. Sans Recourse Endorsement (Sec. 52):
When the endorser expressly excludes his own liability on the negotiable instrument to the
endorsee or any subsequent holder in case of dishonour of the instrument, the endorsement is
known as ‘sans recourse’ endorsement. Such an endorsement is generally made by adding the
words ‘sans recourse’ or ‘without recourse.’ Thus, “Pay X or order sans recourse” or “Pay X
without recourse to me” or “Pay X or order at his own risk” is examples of this type of
endorsement.
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6. Facultative endorsement: When an instrument bears a facultative endorsement, the

endorser will be liable on the instrument in case of dishonour, even if he is not given any notice
of dishonour.
Generally, the endorser of an instrument is entitled to receive a notice of dishonour from the
holder in case dishonour of the instrument, if he is to be held liable on the instrument. If he is
not served with the notice of dishonour, he will not be liable to the holder. But, in the case of
facultative endorsement, the endorser waives or surrenders his right to receive the notice of
dishonour by writing the words “Notice of Dishonour Waived”, after writing the name of the
endorsee.
7. Sans Frais Endorsement:
A sans frais endorsement is an endorsement in which, by writing the words “Sans
Frais”(without expense), the endorser makes it clear that no one should incur any expenses on
his/her account in respect of the negotiable instrument.

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