Report No. 11

40. Conditional indorsement.-

(1) The indorser of an instrument may, by express words in the indorsement make his liability or the right of the indorsee to receive the amount due thereon depend upon the happening of a specified event, although such event may never happen.

(2) Such a condition is valid only as between the indorser and the indorsee.

(3) Where an instrument purports to be indorsed conditionally, the condition may be disregarded by the payer, and payment to the indorsee is valid whether the condition has been fulfilled or not.1

1. See section 33, BEA and section 39, NIL (USA).

[Section 52, para. 1, part]