What are qualified indorsements?
What will be an ideal response?
The Uniform Commercial Code (UCC) permits qualified indorsements, which are indorsements that disclaim or limit liability on the instrument. A qualified indorser does not guarantee payment of the instrument if the maker, drawer, or acceptor defaults on it. A qualified indorsement is created by placing a notation such as "without recourse" or other similar language that disclaims liability as part of the indorsement. A qualified indorsement protects only the indorser who wrote an indorsement on the instrument. Subsequent indorsers must also place a qualified indorsement on the instrument to be protected from liability. An instrument containing a qualified indorsement can be further negotiated. A qualified indorsement is often used by persons who sign instruments in a representative capacity.
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