Restrictive Indorsement

Restrictive Indorsement

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.

For example, the phrases Pay the contents to A only, or to A for my use, are restrictive indorsements and terminate the transferability of the document.An indorsement is restrictive if it (1) is conditional; (2) purports to proscribe further transfer of the instrument; (3) includes the terms for collection, for deposit, pay any bank, or similar terms denoting a purpose of deposit or collection; or (4) states that it is for the benefit or use of the indorser—the one who signs the back of the instrument in order to transfer it—or of another person.

RESTRICTIVE INDORSEMENT, contracts. One which confines the negotiability of a promissory note or bill of exchange, by using express words to that effect, as by indorsing it "payable to A,B only." 1 Wash. C. C. 512; 2 Murph. 138; 1 Bouv. Inst. n. 1138.