Endorsement of Bill of Exchange

When a bill of exchange is transferred to third party or creditor/account payable to settle his debt is called endorsement of bill.

The drawer or holder of the bill may endorse (transfer) the bill in favor of his creditor for the clearance of his own debts. A bill of exchange may be a "negotiable instrument" i.e. a document that is transferable by delivery abruptly to the party liable (drawee).

If the holder of the bill puts his signature on the back of the bill with a read to transfer the property contained in it (right to receive money from the acceptor), then he becomes endorser, and therefore the person to whom the bill of exchange is transferred will become endorsee. This procedure by that a bill is transferred from one person to another person for the settlement of debts is named "endorsement".