What is restrictive endorsement?
A restrictive endorsement is a conditional guaranty of a transfer of a negotiable instrument. That is, an endorsement that takes effect only on the occurrence or non-occurrence of another act or event.
What does UCC 3-104 mean?
Section 3-104 – Negotiable instrument (a) Except as provided in subsections (c) and (d), “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it: (1) is payable to bearer or to order at the time it …
What are the 5 types of endorsements?
These are applicable for endorsement in banking and various types of endorsement cheques:
- Blank or General Endorsement.
- Full Endorsement or Special Endorsement.
- Conditional Endorsement.
- Restrictive Endorsement.
- Partial Endorsement.
- Facultative Endorsement.
What is an example of a restrictive endorsement?
A restrictive endorsement on a check can be used to limit the use of the check. For example, the most common form of restrictive endorsement is “For Deposit Only,” which limits the ability to cash a check over the counter or endorse the check over to another party.
What is the most common restrictive endorsement?
For Deposit Only
Examples of Restrictive Endorsements The most common restrictive endorsement is the phrase For Deposit Only written along with the payee’s signature on the back of a check. A similar restrictive endorsement might be Pay to the Order of Sample Bank for deposit to account #xxxx followed by the payee’s signature.
What is the difference between articles 3 and 4 of the UCC?
This is because the code does not apply outside the sale of goods. Provisions of Article 3 of the UCC govern negotiable instruments. Article 4 of the UCC deals with the liability of a bank for action or non-action with respect to an item handled by it for purposes of presentment, payment, or collection.
How do you write a restrictive endorsement?
Restrictive Endorsement To make one, you should, in any order: Write “For Deposit Only” on one line. Write the account number on another line. Sign your name on another line.
What are two examples of a restrictive endorsement?
An example of a restrictive endorsement is the “For Deposit Only” stamp used by most companies on the back of a received check. This stamp effectively limits further action on the check by the stated payee to only being able to deposit it.