What does endorsing a cheque mean?

An cheque is a document containing an order to pay a certain amount of money. When a cheque is endorsed, the amount shown on the cheque is transferred to a third party. According to the dictionary, endorse means "making a transfer to someone of a bill of exchange or other document of credit issued to order, stating this on the back or reverse.” Endorsed cheques are liable for Capital Transfer Tax and Stamp Duty.

Steps to endorse a cheque

A number of steps have to be taken to endorse a cheque properly. The beneficiary, known as the endorser, who holds the cheque, must sign the reverse of the cheque to make the transfer official. If the beneficiary only signs and does not specify the name of the endorsee, i.e. the person to whom the cheque is transferred, this will be a blank endorsement.

If, on the other hand, the endorsee's name is specified, this person can cash the cheque. In this case, the full name and other identificatory data such as the ID card must be specified. The cheque is always endorsed for its full amount. The new beneficiaries may also endorse the cheque again as stipulated in Foreign Exchange and Cheques Law 19/1985 of 16 July.

For a cheque to be considered valid, it must contain the written word cheque, the payment mandate in the amount specified, and the name of the party that will pay, which will necessarily be a bank. It must also show the place of payment, the date and place of issue of the cheque and the signature of the person issuing it.

Which cheques can be endorsed?

Not all cheques can be endorsed. The most frequent types are bearer cheques and nominative cheques. A bearer cheque does not specify the name of the person it concerns, i.e. it may be cashed by anyone presenting it at the bank. This type of cheque can be endorsed.

A nominative cheque, on the other hand, shows the name of the beneficiary, which may be an individual or a legal entity. To endorse a nominative cheque, either the words "to order" must appear, or nothing should be specified. The only scenario in which it cannot be endorsed is when the clause "not to order" follows the name of the beneficiary.

Endorsing a cheque, therefore, is a simple process you can carry out to ensure that a third party can cash the amount stipulated on it.


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