Endorsement

How BC law treats it

The word has three distinct legal meanings. Under the Bills of Exchange Act, RSC 1985, c B-4, an endorsement is the signature of the holder of a cheque, bill of exchange or promissory note, usually on the back, which transfers the instrument to another person. It is signed by the holder alone. A special endorsement names the new holder, a blank endorsement makes the instrument payable to whoever holds it, and a restrictive endorsement, such as "for deposit only", limits further transfer. An endorser generally becomes liable to later holders if the instrument is dishonoured. In insurance, an endorsement is a written amendment issued by the insurer that adds, removes or changes coverage under an existing policy, such as adding an additional insured for a commercial landlord. It forms part of the policy. An endorsement is not the same as a general contract amendment, which normally requires the agreement of all parties to the contract. In marketing, endorsements and testimonials are regulated mainly by the deceptive marketing provisions of the federal Competition Act, RSC 1985, c C-34 (ss. 52 and 74.01), and s. 74.02 specifically addresses unauthorized or misrepresented testimonials. A business must not make, or rely on, a representation to the public that is false or misleading in a material respect, including fake reviews, undisclosed paid endorsements and testimonials that do not reflect real opinions. Consumer transactions in BC are also subject to the deceptive acts rules in the Business Practices and Consumer Protection Act, SBC 2004, c 2.

What it means for your business

Business owners meet all three meanings. Endorsing cheques correctly avoids fraud losses and liability on dishonoured instruments. Reading insurance endorsements tells a tenant or contractor whether it actually has the coverage its lease or contract requires. Using influencers or customer reviews without clear disclosure of payment, free products or other connections can bring Competition Bureau enforcement and substantial monetary penalties. Example: A Kelowna contractor's commercial general liability policy is changed by an endorsement adding the property owner as an additional insured, which the construction contract required. Separately, the contractor's marketing team discloses that the homeowners featured in its video testimonials received a discount.

Risks and common mistakes

Endorsing a cheque in blank and losing it, which lets anyone holding it negotiate it. Assuming an insurance policy covers a risk without checking the endorsements that modify it. Treating a contract amendment as an endorsement that one party can add alone. Paying influencers or giving free products without requiring clear disclosure of the relationship. Posting fake or employee-written reviews as genuine customer testimonials.