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Difficulty: MediumForms and Instruments of Credit

A bill of exchange that has been endorsed in blank by the holder becomes payable to bearer and may subsequently be negotiated by mere physical delivery.

Answer: Answer

Answer

True
The statement is true because placing an endorsement in blank on a bill of exchange converts it into a bearer instrument, which legally allows title to pass through simple delivery without further signature.

Step-by-Step Solution

1
Analyze the legal definition of an endorsement in blank on a negotiable credit instrument.
An endorsement in blank occurs when the payee or holder signs the back of the bill of exchange without specifying to whom payment is to be made.
Identifying the structural feature of a blank endorsement is essential to determining its impact on negotiability.
2
Evaluate the effect of a blank endorsement on the mode of negotiation.
The instrument transitions from order paper to bearer paper, meaning ownership is transferred by delivery alone.
Subsequent holders can negotiate the bill without adding further written signatures or endorsements.

Key Concept

Types of Endorsement and Negotiability of Bills of Exchange
Estimated Time:1m 0s
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Topics

Forms and Instruments of Credit

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