What is an Indorser and How Do They Work?

Indorsers are individuals or entities that sign a negotiable instrument, such as a check or a promissory note, to accept responsibility for the payment of the amount stated in the instrument. In other words, they guarantee the payment of the amount to the payee.

When an indorser signs a negotiable instrument, they become liable for the payment of the amount if the primary obligor (the person or entity who issued the instrument) fails to make the payment. This means that the payee can seek payment from the indorsers if the primary obligor is unable or unwilling to pay.

Indorsers are often used in business transactions where one party wants to ensure that the other party has a guarantee of payment. For example, a supplier may require an indorser from the buyer before providing goods or services, to ensure that the buyer has the financial resources to pay for the goods or services.

It's important to note that indorsers are not necessarily responsible for the underlying debt or obligation, but rather they are guaranteeing the payment of the amount stated in the negotiable instrument.