Question

Blank Endorsement Restrictive Special Endorsement Endorsement Uses the phrase "For deposit only to restrict the use of the check to only depositing it; it cannot be cashed. Limits who can cash the check by using the phrase "Pay to the order of [Person's name]." Contains only the payee's signature, so that the check is transformed into a bearer instrument. Why is the method used to endorse a check important? Asked differently, why should you care about how you endorse a check? To answer this question, think about the advice you would give to a friend who was endorsing a check in the manner described. Ethan "Wow, my grandmother really came through this year! Look at the great check she sent mel I've got to get this into my bank account, but the bank closes in two hours, and I'm having a big party at my house tonight. What do you think I should do?"

Answer 1

Method of endorsement is important because it depends on what is the motive of endorsing the check. Moreover different methods have different type of requirement while endorsing the cheque.

Example if you want to simply transfer a negotiable instrument then you can use a blank endorsement where in there is only payee's signature on it this type of endorsement is given to the other party for payment which can also be transfer to to third party by the receiver.

Example if you want to restrict the use of endorsement you can use restrictive endorsement wearing the uses of endorsement or check will be limited. The most commonly use phrase in restrictive endorsement is "for deposit only" which means the cheque can only be deposited in the account.

Example if you want to authorise payment xx other than the entity which is mentioned in the check you can use special endorsement wherein you can endorse the cheque to the entity other than mentioned in the cheque.

So overall method of endorsement depends upon your use and the motive of endorsing the cheque

Answers to the last two questions are

When endorsed in the manner, cheque becomes a bearer instrument is called as blank endorsement

Create a two party cheque which is more easily deposited than cashed is called as special endorsement.