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CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

A bearer promissory note is endorsed by Bala with the words "Pay C." and delivered to C. Under Section 50 illustrations, what is the effect on C's right?

C may negotiate the note further. The illustrations to Section 50 show that a simple endorsement 'Pay C' does not exclude further negotiation. Only express words of restriction, like 'Pay the contents to C only', take away the endorsee's right to negotiate onward.

  1. AC cannot negotiate it further because the endorsement names only C
  2. BC may negotiate it further, as the words do not exclude the right of further negotiationCorrect
  3. CC may only collect the amount as Bala's agent
  4. DThe instrument ceases to be negotiable

Explanation

Under the illustrations to Section 50, an endorsement reading simply "Pay C" does not exclude the right of further negotiation. Words such as "Pay the contents to C only" would exclude it. Naming the endorsee alone is not a restriction.

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