Section 35Part 2 — Bills of Exchange
Restrictive indorsement
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An indorsement is restrictive which prohibits the further negotiation of the bill, or which expresses that it is a mere authority to deal with the bill, as thereby directed, and not a transfer of the ownership thereof, as, for example, if a bill be indorsed “pay D only”, “pay D for the account of X” or “pay D or order for collection”.
A restrictive indorsement gives the indorsee the right to receive payment of the bill, and to sue any party thereto that the indorsee’s indorser could have sued, but gives the indorsee no power to transfer the indorsee’s rights as indorsee, unless it expressly authorises the indorsee to do so.
Where a restrictive indorsement authorises further transfer, all subsequent indorsees take the bill with the same rights, and subject to the same liabilities, as the first indorsee under the restrictive indorsement.
Defined Terms
restrictive indorsement