restrictive endorsement

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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. Also spelled “restrictive indorsement.” The Uniform Commercial Code § 3–206 lays out generally accepted rules on restrictive endorsements. For example, § 3–206(a) prevents a restrictive endorsement from being effective beyond the payment for which the endorsement applies.

[Last updated in April of 2021 by the Wex Definitions Team]