Restrictive endorsement

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A restrictive endorsement limits the use of the check to the purpose given in the endorsement. For example, you may have several checks that you want to mail to the bank. You could write "For Deposit Only" above your signature, followed by your account number. This endorsement restricts the use of the check so it can only be deposited to your account[1]. An endorsement restricting further transfer of a check's ownership is called a restrictive endorsement. The common use of it is depositing a check in a bank account. A restrictive endorsement limits use of the check to whatever purpose is stated in the endorsement. Many businesses have a stamp prepared with such an endorsement. When a check is received, it is immediately stamped with it. A restrictive endorsement prevents unauthorized person from cashing the check if it is lost or stolen[2].

Three rules of restrictive endorsement

The rules of restrictive endorsement[3]:

  1. Requires endorsers to comply with certain conditions
  2. Note that conditions in restrictive endorsements do not destroy negotiability even though conditioned placed on front of instruments to destroy negotiability because they create conditional promises or orders to pay
  3. Endorsements cannot prohibit subsequent negotiation

The type of support that affects the negotiability of the instrument

Types of endorsement: Blank, restrictive, full and qualified.

Restrictive endorsement - The holder of a check may wish to prescribe a little more carefully how the check is negotiated. A restrictive endorsement limits the use of the instrument to a means specified by the endorser. In theory, a restrictive endorsement ends further negotiation of the check. The most common restriction is "For Deposit Only", which limits the negotiation of the endorsed check to deposit in an account. By ending the instrument's transferability, a restrictive endorsement renders the instrument no longer negotiable. Restrictive endorsements do not necessarily guarantee the end of negotiation, though. Perhaps an inattentive teller may not respond to the restriction properly, or perhaps the check might be deposited into another account other than that of the intoned payee. Such cases are more common when business accounts are involved, or when the payee has many accounts. More restrictive endorsements such as "For Deposit Only, Hobbit Corporation" provide greater protection. Specifying the name of a particular account if a company has multiple accounts restricts negotiation more effectively. A split deposit occurs when a depositor designates that a single check should be divided to have portions of it deposited in different accounts[4].

Examples of Restrictive endorsement

  • For Deposit Only - This restrictive endorsement limits the check to be deposited into your account only.
  • Pay to the Order of [Name] - This endorsement restricts the check to be paid to the specified name on the check.
  • Void After 90 Days - This endorsement restricts a check from being cashed or deposited after the specified date.
  • Not Transferable - This endorsement restricts the transfer of the check to another person or entity.
  • Non-Negotiable - This endorsement restricts the check from being used as a negotiable instrument.

Advantages of Restrictive endorsement

A restrictive endorsement offers several advantages. * It helps to ensure that the check is only used for the intended purpose, which reduces the risk of fraud or misappropriation of funds. * It also helps to ensure that the funds are deposited into the correct account and that they are not used for other purposes. * It can also help to speed up the processing of the check, since the endorsement provides clear instructions as to what should be done with the funds. * Finally, it can help to protect against any disputes that may arise from a check being used for an unintended purpose.

Limitations of Restrictive endorsement

A restrictive endorsement can be a useful tool for keeping track of your finances, but it does have a few limitations. These include:

  • It is only valid if the check is cashed by the original payee. If the check is cashed by another person, it is not binding.
  • It can only be used to limit the use of the check to a specific purpose, so you cannot use it to restrict payments to certain people.
  • Restrictive endorsements can be difficult to enforce, as it can be hard to prove that the endorsement was valid and was adhered to.
  • Restrictive endorsements are not accepted by all banks and financial institutions, so you should check before using one.

Other approaches related to Restrictive endorsement

A restrictive endorsement is an endorsement that limits the use of a check. Other approaches related to restrictive endorsements include:

  • Endorsing the check to "For Deposit Only" followed by your account number. This restricts the check to being deposited into the designated account.
  • Endorsing the check to "For Payment to the Order of" followed by the name of the desired payee. This restricts the check to only being cashed or deposited by the payee specified in the endorsement.
  • Endorsing the check to "For Collection Only" followed by the name of the bank. This restricts the check to only being collected by the bank specified in the endorsement.

In summary, restrictive endorsements are used to limit the use of a check, and other approaches involve endorsing the check to specific instructions.


  1. Les Dlabay, James L. Burrow, Brad Kleindl 2008, p.437
  2. Claudia Bienias Gilbertson, Mark W. Lehman, Debra Gentene 2013, p.125
  3. O. Ray Whittington, Patrick R. Delaney 2007, p.191
  4. Center for Financial Training 2010, p.161

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Author: Dominika Grzyb