Legal Definitions - endorser

An endorser is a person who signs their name on the back of a negotiable instrument, such as a check or a promissory note, to transfer their rights in that instrument to another party or to guarantee its payment. By endorsing, the person typically takes on certain legal obligations related to the instrument.

Here are some examples to illustrate the concept of an endorser:

• Cashing or Depositing a Check: Imagine Sarah receives a check for $750 from a client for services rendered. To deposit this check into her bank account or to cash it, Sarah must sign her name on the back of the check. In this action, Sarah becomes the endorser. She is transferring her right to the funds represented by the check to her bank, which then processes the payment.

• Transferring a Check to Another Person: Suppose Mark receives a refund check from his utility company. Instead of depositing it, he wants to use it to pay his friend, Lisa, for a debt he owes her. Mark can sign the back of the check and write "Pay to the order of Lisa Chen" above his signature. When he gives the check to Lisa, Mark acts as the endorser, legally transferring his claim to the funds to Lisa.

• Guaranteeing a Promissory Note: Consider a small business owner, Alex, who needs a loan from a bank. The bank agrees to lend the money but requires a personal guarantee from Alex's business partner, Ben, due to Alex's limited credit history. Ben signs the back of the promissory note (the formal document outlining the loan terms and promise to repay) in addition to Alex. In this scenario, Ben is an endorser (specifically, an accommodation endorser or guarantor), promising to pay the bank if Alex's business defaults on the loan.