Which statement best describes a special endorsement?

Which statement best describes a special endorsement?

• A. It lists another payee and requires manager approval and a T-bar for both.
• B. It lists only one payee and requires no approval.
• C. It is the same as a blank endorsement.
• D. It restricts the check to deposit only.

Answer: (A)

A special endorsement transfers the right to the check to a new payee by naming that person or entity on the endorsement. Because this moves value to someone else, banks often require extra safeguards, such as manager approval and a T-bar notation, to document the transfer and reduce the risk of misuse. That’s why listing another payee and including those controls describes the action most accurately. The other scenarios don’t fit as well. Endorsing to a single payee with no approval describes a standard, non-transfer endorsement. Being the same as a blank endorsement means no specific payee is named. Restricting to deposit only is a restrictive endorsement focused on how the check can be used rather than transferring it to another party.

A special endorsement transfers the right to the check to a new payee by naming that person or entity on the endorsement. Because this moves value to someone else, banks often require extra safeguards, such as manager approval and a T-bar notation, to document the transfer and reduce the risk of misuse. That’s why listing another payee and including those controls describes the action most accurately.

The other scenarios don’t fit as well. Endorsing to a single payee with no approval describes a standard, non-transfer endorsement. Being the same as a blank endorsement means no specific payee is named. Restricting to deposit only is a restrictive endorsement focused on how the check can be used rather than transferring it to another party.