Report No. 11
39. Restrictive indorsement.-
(1) An indorsement is restrictive which either-
(a) restricts or excludes the further negotiation of the instrument; or
(b) constitutes the indorsee the agent of the indorser....
Provided that the mere absence of words implying power to negotiate does not make the indorsement restrictive.
(2) A restrictive indorsement confers upon the indorsee the right-
(a) to receive payment of the instrument;
(b) to sue any party thereto that his indorser could have sued, but gives him no power to transfer his rights as indorsee unless it expressly authorises him to do so.
(3) Where a restrictive indorsement authorises further transfer, all subsequent indorsees take the instrument with the same rights and subject to the same liabilities as the first indorsee under the restrictive indorsement.1
1. See section 36 and 37, NIL. (USA) and section 35, BEA.
[Section 50, latter half, modified]]