Also known as: unqualified indorsements · unqualified endorsement · unqualified endorsements · blank indorsement
Written by attorneys — see sources 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.
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.
Supporting sources
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.
Supporting sources
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.