Legal Definitions - in blank

The term "in blank" refers to a type of endorsement or signature on a document, typically a negotiable instrument like a check or a promissory note, where the signer does not specify a particular person or entity as the new recipient. When a document is endorsed "in blank," it becomes payable to whoever possesses it, making it easily transferable. Essentially, it transforms the document into a "bearer instrument," meaning the person holding it is presumed to be its rightful owner.

• Example 1: Endorsing a Check

  Imagine Sarah receives a check for $500. She plans to deposit it into her bank account later, but for now, she simply signs her name on the back of the check without writing "Pay to the order of [Bank Name]" or "Pay to John Smith."

  How it illustrates "in blank": By merely signing her name, Sarah has endorsed the check "in blank." This action makes the check payable to whoever holds it. If she were to lose the check, anyone who found it could potentially cash or deposit it, as it has become a bearer instrument due to the "in blank" endorsement.

• Example 2: Transferring a Promissory Note

  A small business, "Innovate Corp.," holds a promissory note from a client, promising a payment of $10,000. Innovate Corp. decides to sell this note to a financial institution, "Capital Bank," to get immediate cash. The CEO of Innovate Corp. signs the back of the promissory note without writing "Pay to Capital Bank."

  How it illustrates "in blank": By endorsing the note "in blank," Innovate Corp. makes the note transferable by simple delivery. Capital Bank can now hold the note and demand payment from the client. If Capital Bank later wanted to sell the note to another entity, they could do so without needing a new endorsement, as the note is already a bearer instrument due to the "in blank" endorsement.

• Example 3: A Bill of Lading for Goods

  A manufacturer, "Global Goods," ships a container of electronics to a distributor. The bill of lading, which is a document acknowledging receipt of goods for shipment and specifying the terms of delivery, is initially made out to "Global Goods." Global Goods wants the distributor to be able to pick up the goods without needing a specific transfer document from them.

  How it illustrates "in blank": A representative of Global Goods signs the back of the bill of lading without naming the distributor or any other specific party. When Global Goods endorses the bill of lading "in blank," it means that whoever presents the bill of lading to the shipping company is entitled to receive the goods. This allows for flexible transfer of ownership or the right to claim the goods, as the document itself, by its mere possession, confers the right to the holder.