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Without Recourse Endorsement - Bank’s Recourse
Answer by Ken Golliher, BOL Guru
Guru Bio

Question:  If a customer endorses a check "without recourse" can the bank still take recourse against the deposit account if the check is returned?

Answer:  That depends on the reason why the check was returned. An endorsement "without recourse" eliminates the endorser's obligation to pick up the check if it is returned for insufficient funds. It does not eliminate the endorser's warranties. The endorser still promises that the signatures on the check are good, etc.

If a check endorsed in this manner is returned "insufficient funds", and you debit it back to the endorser's account, you are saying "sue me". If the amount justifies it, he may oblige you. If not, you win only because you are the bank, not because you are right. A check endorsed "without recourse" is the reddest of the red flags and your tellers should know better than to accept it.

First published on 10/26/09

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