Without Recourse
“Without recourse” is a clause used in shipping and financial documents to indicate that the endorser does not take responsibility if payment is not made. When applied to a bill of lading or similar document, it means the endorser transfers the document but does not guarantee payment. The risk of non-payment stays with the holder. This limits the endorser’s liability.
In trade and finance transactions, this clause is often used when documents are endorsed to another party, such as a bank or buyer. By endorsing “without recourse,” the endorser makes it clear that they are not liable if the buyer fails to pay. This protects the endorser from future claims. It is a common risk-management practice.
The use of this clause must be clearly stated in the document to be legally effective. All parties involved should understand its implications before accepting the document. It affects how payment risk is allocated. Proper awareness helps avoid disputes later.
Overall, the without-recourse clause provides clarity on responsibility and risk. It protects endorsers from payment defaults. It supports smoother document transfers. And it helps define financial obligations clearly in trade transactions.
Frequently Asked Questions about Without Recourse
Clear answers to the most common questions people have when learning about Without Recourse.
It means the endorser transfers the document without taking responsibility if the buyer or payer defaults.
Yes. It is often used when endorsing bills of lading to limit liability during document transfer.
It removes payment liability, but the endorser must still ensure the document itself is valid and properly issued.