U.C.C. § 3-206 (Am. L. Inst. & Unif. L. Comm'n 1990) — Restrictive Indorsement — Reading Room

U.C.C. § 3-206 — Restrictive Indorsement

Editorial summary. Section 3-206 governs indorsements that purport to prohibit further transfer of the instrument or that condition payment. Prohibitions on further transfer are ineffective; conditional or 'for deposit only' indorsements bind the parties in the manner and to the extent specified.

Citation: U.C.C. § 3-206 (Am. L. Inst. & Unif. L. Comm'n 1990)Jurisdiction: United StatesEffective: 1990-08-01

Governing Rule

Codified text.

Editorial note. Section 3-206(a) provides that an indorsement restricting further transfer of the instrument is not effective to prevent further transfer or negotiation. Section 3-206(c) treats 'for deposit only' and similar indorsements: a subsequent taker for value must comply with the restriction to acquire the rights of a holder.

Judicial Interpretation

Codified text.

Editorial note. Restrictive indorsements ('for deposit only') are heavily litigated in check-conversion and bank-liability cases.

Cross References

Codified text.

Editorial note. See U.C.C. §§ 3-204; 3-205; 3-420 (conversion of instrument).

Revision history

1990-08-01 — Promulgated with Revised Article 3.

Canonical source: https://www.law.cornell.edu/ucc/3/3-206