Endorsement and Termination of Negotiable Instruments

Question 1

How can a drawer endorse a negotiable instrument?

Answer 1

By writing the following phrases on it :
- Payable to [Name of Payee]
- Payable from [Account number of drawer]
- For deposit only
- Signature of drawer[blank endorsement]

Question 2

What are the ways in which a negotiable instrument can end?

Answer 2

Mnemonic: So Many Wholes
- Settlement
- Material Cancellation
- When the negotiable instrument is stale

Question 3

How does a negotiable instrument end when: it is settled ?

Answer 3

A negotiable instrument is said to be settled when the pay has cashed it or has been paid the fixed amount stated on it, after that the negotiable instrument shall no longer be accepted by anyone.

Question 4

How does a negotiable instrument end when: Material cancellation occurs?

Answer 4

Material cancellation occurs when the drawer initiates a substantial cancellation of the negotiable instrument, after that, said negotiable instrument shall no longer be accepted by anyone.

Question 5

How does a negotiable instrument end when it becomes stale?

Answer 5

A negotiable instrument is stale when it has not been cashed within 6 months of it being issued, By law after that period no person or bank shall accept said negotiable instrument.