When a special indorsement is made, the instrument continues to be order paper and may be negotiated only by an indorsement and delivery.

Question

Quizplus · Accepted Answer

A special indorsement restricts further negotiation of the instrument by requiring a specific person to whom it is payable or to whose order it can be negotiated. Thus, the instrument remains order paper and can only be negotiated through indorsement and delivery to the designated party.

When a Special Indorsement Is Made, the Instrument Continues to Be