We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What does "Without Recourse" Mean?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

In a financial setting, “without recourse” means a buyer is assuming liability for a purchase, with the creditor washing her hands of any credit risk. In a simple example, Jane writes a check to Jim. Jim endorses the check and signs it over to Sally, with a note indicating that he makes the transfer “without recourse.” If the bank refuses to cash the check for Sally, she must go to Jane to recover the funds, as Jim has signed away liability. This situation can come up in many kinds of transactions where an endorser signs a financial instrument over to a third party.

Accepting something without recourse can be risky, unless the buyer is confident that the financial instrument will be honored. If there is a problem, the person who sold it is not liable and takes no responsibility for helping the buyer recover damages. Instead, the buyer must go to the person who originally issued the instrument, and may have to trace it through several owners and handlers to find the right person.

Buyers who accept something without recourse may expect a discount on the price in compensation for their risk. People purchasing things like mortgages, bonds, and similar instruments can negotiate a better asking price or other terms on the grounds that if they are going to assume more financial risk, it is only fair to provide them with an incentive to do so. This can be especially important in large financial markets, where people may be dealing in substantial sums of money, with instruments involving variable risk, and the discount is an important part of the negotiation.

For individuals evaluating a situation where they can acquire a financial instrument without recourse, it is important to consider the risks. These may be low, as in the case where Sally accepts a check and knows Jane is good for the money, so there should be no problems with cashing the third party check. If they are higher, the buyer may want to think about how to recover damages in the event of the problem, and whether the deal being offered is fair and reasonable.

The term “without recourse” can also show up in law, referring to contracts where a person has no legal recourse to claim damages in the event of a problem. These types of contracts put people at a disadvantage, and it is important to review terms carefully and to ask an attorney for advice before signing such agreements. Once people have committed to accepting full liability by signing the contract, they cannot back out unless they were deceived in some way and can prove it.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.