Question

For an endorsement to be called as Restrictive endorsement, it should satisfy the following conditions _______.

• A. if the endorse signs his name only.
• B. if the endorse signs a direction to pay the amount mentioned in the instrument to or to the order of a specified person.
• C. if the endorser restricts or excludes the right to further negotiate the instrument.
• D. if the endorser purports to transfer to the endorsee only a part of the amount payable.

Answer 1

The correct option is C if the endorser restricts or excludes the right to further negotiate the instrument.

For an endorsement to be called as Restrictive endorsement, it should satisfy the following condition- if the endorser restricts or excludes the right to further negotiate the instrument. 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.