A restrictive endorsement is this: A notation on the back of a check (NOT THE FRONT) reminding the creditor about their agreement to the terms by which you agreed to pay them some money. Why do banks require you to sign the back of the check when cashing? The front of the check is the contract. It defines a date, an amount, the place where the funds are and the person or institution to whom you are contracting to pay the funds to. When you endorse the back of a check, it merely is a completion of the terms described on the front of the check.
A recipient of a check with a restrictive endorsement cannot cross out the terms. PERIOD! That is case law. When a party does not conform to the agreement, they have breached a contract and the payee of the check is entitled to relief in the courts. Courts have recently ruled that abuse of the "Satisfaction and Accord" doctrine can make endorsements null and void.
Let's assume you owe $300 to some lender. You might think you're pulling a fast one and send a check for only $10 thinking if they cash it that you no longer owe the remainder. This particular tactic has been reversed on almost every occasion. It is advised that when you send a check with a restrictive endorsement that you also send an accompanying letter that identifies the amount being sent and the fact that it is a follow up to a previous written agreement. This type of correspondence has always held up in court.
Here is the verbiage to print on the back of your check: "Depositing of the funds constitutes acceptance of the enclosed settlement agreement and full satisfaction of the debt described."
Although the topic I've covered may seem out of sequence with the rest of what I've covered it will all start making sense soon. In my next article we'll cover how to negotiate debts without any money.
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