The law of negotiable instruments stipulates that endorsement shall not be conditional. Because the bill is a completely valuable securities, the holder must have the legally obtained bill to claim his own bill rights. Endorsement is an incidental bill behavior. The endorser transfers the bill rights created by the drawer through legal records, and the endorser has no right to increase or decrease the bill rights created by the drawer. Therefore, the endorser can transfer the rights of negotiable instruments without conditions. Conditional endorsement has no effect on the bill, but the endorsement itself is still valid. This is different from the conditional contract in civil law. Conditional contract means that the parties to the contract agree in the contract that the contract can only take effect when certain conditions are met. The bill is different. The nature of bills and the realistic requirements of normal circulation of bills require that endorsement can only be a simple endorsement, that is, endorsement is unconditional.
What are the specific circumstances in which endorsement is not allowed?
The prohibition of endorsement by law refers to the situation that endorsement transfer is prohibited according to the provisions of the negotiable instruments law. Because the law stipulates that a bill of exchange may not be transferred by endorsement under certain circumstances, an endorser who negotiates such a bill shall bear the bill liability. Article 36 of the Negotiable Instruments Law stipulates that: if a bill is refused to be accepted, refused to pay or exceeds the time limit for presenting payment, it shall not be endorsed or transferred; Where a bill is transferred by endorsement, the endorser shall bear the bill liability.
According to this provision, there are three situations in which endorsement is prohibited by law:
One is a bill of exchange that has been refused acceptance.
Refers to the bill that the holder presented to the drawee for acceptance before the maturity date of the bill, but was refused to accept it. The drawee of a bill of exchange is the main debtor of the bill only after acceptance. If the drawee refuses to accept the bill of exchange, he does not have the status of the debtor of the bill of exchange and is not liable for paying the amount of the bill. Therefore, although the payee or holder has obtained the right of claim for payment when the bill is established, the payer's refusal to accept it cannot determine the right of claim for payment, and of course it cannot be endorsed again. In the case that the drawee refuses to accept the bill, the payee or the holder can only exercise the right of recourse to his predecessor to obtain the amount of the bill; If it transfers the bill, the transferee can only obtain the bill amount by exercising the right of recourse against his predecessor when obtaining the bill.
The second is the dishonored bill of exchange.
This refers to a bill that does not need to be accepted by the drawee or has been accepted by the drawee, and the holder presents payment to the drawee on the maturity date of the bill and is rejected. For a bill that has been refused payment, even if the payer has accepted the bill, he is still responsible for unconditional payment on the maturity date of the bill. However, if the drawee refuses to pay on the maturity date of the bill, the payee or the holder's right to claim payment cannot be realized. If the holder transfers the bill again, the transferee can also get the right to claim payment, but the possibility of realization is extremely small. Therefore, the Negotiable Instruments Law prohibits the negotiable instruments from being transferred by endorsement again. Where a bill is transferred by endorsement, the endorser shall bear the bill liability, and the transferee shall have the right to exercise the right of recourse against his prior party.
The third is the bill of exchange that exceeds the time limit for payment presentation.
Refers to a bill in which the holder fails to present payment to the drawee within the statutory time limit for presenting payment. The legal payment presentation period is the time limit stipulated by law for the payee or the holder to exercise the right to pay. The payee or the holder shall exercise the right of claim for payment from the due date of the bill to the expiration of the legal presentation period. If the payee or holder fails to exercise the right of claim for payment within this time limit, he will lose the right of recourse against his predecessor. Therefore, the Negotiable Instruments Law stipulates that such instruments shall not be transferred again, otherwise the interests of the transferee may be harmed. An endorser who negotiates a bill by endorsement shall be liable for the bill.
I hope the above content can help you. Please consult a professional lawyer if you have any other questions.
Legal basis: People's Republic of China (PRC) Bill Law.
Article 33 The effect of conditional endorsement, partial endorsement and separate endorsement is unconditional. Where conditions are attached to the endorsement, the attached conditions are not valid for the bill. An endorsement to transfer part of the amount of a bill of exchange or an endorsement to transfer the amount of a bill of exchange to two or more persons respectively is invalid.
Article 34 Prohibition of Endorsers' Endorsement and Its Effect If an endorser records the word "non-negotiable" on a bill of exchange and then negotiates it, the original endorser is not responsible for the subsequent endorsee.
Article 35 Endorsement of entrusted collection and endorsement of pledge and their effects If the words "entrusted collection" are recorded in the endorsement, the endorsee has the right to exercise the right to entrust the bill of exchange on behalf of the endorser. However, the endorsee may not transfer the rights of the bill of exchange by endorsement. Bills of exchange can be pledged; When pledging, the word "pledge" shall be recorded by endorsement. When the endorsee realizes his pledge right according to law, he may exercise the right to draft.
Article 36 Where a bill of exchange is refused to be accepted, paid or presented for overdue payment, it may not be transferred by endorsement; Where a bill is transferred by endorsement, the endorser shall bear the bill liability.