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Q.5. a).A endorsed a cheque in blank in favour of B who becomes its holder. He
negotiates it in favour of C and C transferred this to D without endorsement. In the
event of dishonor, explain the position of D.
Answer:
A is the drawer of the cheque (account holder)
B is the payee and holder. Since B negotiates in favour of C..
C is also holder in due course. Since C has transferred this without endorsement D is not
holder in due course.
In the event of dishonour of cheque, D cannot claim from A, B, or C.
Q.2. X issues a cheque in favour of Y and puts a condition that the payment is to be
made only when Y fulfills a condition. Y obtains the payment from the bank without
compliance of this condition. X demands damages from the bank for not ensuring the
compliance. What is conditional endorsement and how is it effective between the
parties mentioned above?
Answers:
When drawer/holder of cheque puts a condition while endorsing in favour of other person
or persons, that the endorsee should fulfill a condition mentioned in order to get the
payment of the cheque. If condition is not fulfilled the endorsee is not entitled for
payment of cheque. Such endorsement is conditional endorsement.