Which endorsement restricts further action on a check so that it is no longer negotiable beyond the stated payee?

• A. Restrictive Endorsement
• B. Qualified Endorsement
• C. Balance Sheet
• D. In Personam Jurisdiction

Answer: (A)

The idea tested here is how endorsements can limit what can be done with a check. A restrictive endorsement imposes a restriction on further negotiation, typically by writing something like “for deposit only” or “pay to the order of [payee] for deposit only.” This kind of language binds future holders to the restriction, so the instrument can’t be cashed or reissued by someone other than the named payee or deposited into a specified account. That effectively makes the check non-negotiable beyond the stated payee, because any attempt to transfer it further would violate the restriction.

A qualified endorsement, on the other hand, limits the endorser’s liability but does not restrict how the check can be negotiated by subsequent holders. The other two options aren’t about endorsements at all—one is a balance sheet, a financial statement, and the other is a legal concept about a court’s power over a person.