A conditional indorsement is one by which the indorser makes the rights of the indorsee subject to the happening or nonhappening of a specified event, but such an indorsement is ineffective under Revised Article 3.

Question

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This statement is true. Revised Article 3, which governs negotiable instruments such as checks and promissory notes, does not allow for conditional indorsements. The indorsement must be an unconditional promise to pay or order payment.

A Conditional Indorsement Is One by Which the Indorser Makes