It is a slip of paper affixed to a negotiable instrument, such as a promissory note or bill of exchange, to provide space for endorsements when the original instrument lacks room. This attachment becomes part of the original document and carries the same legal weight as endorsements placed directly on the instrument itself. For example, if a promissory note requires multiple transfers of ownership, and the back of the note is filled with signatures, it allows for continued transfer via subsequent endorsements.
This practice offers a crucial benefit by ensuring the continued negotiability of the underlying instrument. Without the ability to add further endorsements, the instrument might become difficult or impossible to transfer, hindering its usefulness in commercial transactions. Historically, it enabled the efficient circulation of financial instruments, particularly in contexts where transactions were frequent and involved multiple parties. This facilitated trade and commerce by providing a mechanism for transferring ownership without creating entirely new documents for each transaction.
