restrictive endorsement definition

An endorsement signature on the back of a check that specifies the conditions under which the check can be transferred or paid out. Source: Merriam-Webster's Dictionary of Law ©1996. § 11-3-206 - Restrictive indorsement O.C.G.A. An endorsement signed on the back of a check, note, or bill of exchange that restricts to whom the paper may be transferred -- for example, "for transfer only to Frank Lowry." Restrictive endorsements are made by signing at the reverse of the instrument by noting the limitations effected there in. (n) Restrict endorsement is the restriction made in a financial instrument whereby its free transferability is restricted to a specific person noted in that endorsement. Restrictive endorsements may be contained in a letter or note that accompanies a check. For Deposit Only—Restrictive Endorsement. Accord and Satisfaction - how it creates an agreement. A restrictive endorsement limits the use of a financial instrument (usually a check). For example, the model UCC defines a restrictive indorsement as "an indorsement limiting payment to a particular person…" and bears a signature. The result of a restrictive endorsement is that a financial instrument is no longer a negotiable instrument that can be passed from the stated payee to a third party. Restrictive Endorsement restrictive endorsement see endorsement. restrictive endorsement — An endorsement that restricts the negotiability of a document. Restrictive indorsement (a) An indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument. If you are a creditor, you now have more latitude in your ability to cash checks that are tendered for less than the amount owed. Also spelled "indorsement." 11-3-206 (2010) 11-3-206. (Examples & Definition) Restrictive Endorsements via endorsement of a check. UCC Codes. Definition from Nolo’s Plain-English Law Dictionary. Search for a definition or browse our legal glossaries. restrictive endorsement Primary tabs. This seems to indicate that the credit union's name should be listed in the indorsement to meet the definition of a "restrictive indorsement" under the UCC. The most secure way to endorse a check is to: Write: “For Deposit Only to Account Number XXXXXXXXXX” Sign your name below that, but still within the endorsement … A restrictive endorsement is a way of paying an account in a strategic way to improve your credit rating. Restrictive endorsement is one which either by express words restricts or prohibits the further negotiation of a bill or which expresses that it is not a complete and unconditional transfer of the instrument but is a mere authority to the endorsee to deal with bill as directed by such endorsement. Most Popular Terms: Should an association receive a check with a restrictive endorsement, it essentially has two options: 1) reject the check and continue collecting on the amount due; or 2) cash the check and run the risk of being held to the terms of the endorsement. The endorsement area is typically about 1.5” long and covers the breadth of the check. Safe Harbor - The creditor's protection from settlements. The act of a payee or other holder of an instrument, such as a check, that consists of signing his or her name upon the back of the instrument in order to transfer it to another and wording the signature in such a manner as to bar the further negotiability of the instrument. Restrictive Indorsement. Restrictive endorsement. Simply using a memo, restrictive endorsement, or cover letter will not do the trick. 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