2026 RFBT CEGG Complete Practice Exam

Restrictive indorsement is about placing a limitation on how the instrument may be used. The phrase “for deposit only” is the classic example, directing that the check must be deposited into the named payee’s account (usually at a specific bank) and not cashed or endorsed to another party. This restricts transferability and protects funds by keeping the instrument tied to a particular deposit.

That’s why this option fits best: the wording creates a restriction on negotiation, rather than altering liability (as with a qualified endorsement), conditioning payment (as with a conditional endorsement), or leaving the instrument bearer-only (as with a blank endorsement).