Legal Definitions - no recourse

No Recourse

"No recourse" describes a legal situation where a person or entity has no right or means to demand payment, compensation, or other satisfaction from another party. Essentially, it means that if a particular event or loss occurs, the party facing "no recourse" cannot legally pursue the other party to recover their losses or enforce an obligation. This term is often used in contracts or on financial documents to explicitly state that certain parties are absolved of future liability under specific circumstances.

• Example 1: Selling Used Equipment "As-Is"

  A small business decides to upgrade its office technology and sells its old, functional but outdated computers and printers to another company. In the sales agreement, they include a clause stating the equipment is sold "as-is, with no recourse for future defects." A month later, one of the purchased printers malfunctions.

  Explanation: Because the sale explicitly stated "no recourse," the buying company cannot legally demand a refund, repair, or compensation from the seller for the broken printer. The seller is protected from any claims related to the equipment's performance after the sale.

• Example 2: A Lender Selling a Loan to a Collection Agency

  A private lender has a portfolio of outstanding personal loans. One borrower defaults, and the lender decides to sell this specific defaulted loan to a collection agency at a discounted price. The agreement between the lender and the collection agency specifies that the loan is sold "without recourse."

  Explanation: If the collection agency is unable to recover any money from the defaulting borrower, they cannot go back to the original private lender and demand their money back or claim that the loan was misrepresented. The "without recourse" clause means the original lender bears no further financial responsibility or risk once the loan is sold.

• Example 3: Endorsing a Check "Without Recourse"

  Sarah receives a check from a client for a service she provided. Instead of depositing it, she endorses the check over to her landlord as payment for rent, writing "Pay to the order of [Landlord's Name] without recourse" above her signature on the back of the check.

  Explanation: By endorsing the check "without recourse," Sarah is transferring ownership of the check to her landlord but is explicitly stating that if the check bounces (i.e., the client's bank account has insufficient funds), her landlord cannot legally come back to her to demand payment for the bounced check. The landlord accepts the check with the understanding that they bear the risk of it not clearing.