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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.
INDORSEMENT. (a) " Indorsement " means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless ...
DISCHARGE OF INDORSERS AND ACCOMMODATION PARTIES. PART 1. GENERAL PROVISIONS AND DEFINITIONS. PART 2. NEGOTIATION, TRANSFER, AND INDORSEMENT. PART 3. ENFORCEMENT OF INSTRUMENTS. PART 4. LIABILITY OF PARTIES.
The endorsement placed on a bearer security presented for payment or exchange by a bank should be in the following form: For presentation to the Federal Reserve Bank of __________, Fiscal Agent of the United States, for redemption or in exchange for securities of a new issue, in accordance with written instructions submitted by __________.
Note that Regulation CC is not the only rule that applies to checks; there may be some applicable state law that provides additional guidance on what constitutes a restrictive indorsement. For example, the model UCC defines a restrictive indorsement as "an indorsement limiting payment to a particular person…" and bears a signature.
Whether or not a restrictive endorsement would be binding on the creditor or collection agency depends on numerous factors, including your state laws, including your state’s version of the Uniform Commercial Code (UCC), your contract with the lender, your intent, and the creditor’s actions once it receives the check.
Restrictive Indorsement. A restrictive indorsement attempts to limit payment to a particular person or otherwise prohibit further transfer or negotiation. We say “attempts to limit” because a restrictive indorsement is generally invalid.
(UCC 3-206) 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.
All matured coupons, including coupons which will mature on or before the date of redemption or exchange (except as otherwise specifically provided in an announcement of an exchange offering), should be detached from securities upon which restrictive endorsements are to be imprinted.
Effect of Restrictive Indorsement. (1) No restrictive indorsement prevents further transfer or negotiation of the instrument. (2) An intermediary bank,…