Conditional Indorsement Law and Legal Definition

Conditional indorsement refers to an indorsement restricting the instrument in some way. Conditional indorsement is also an indorsement that entitles possession to the indorsee, but retains title until the occurrence of some condition named in the indorsement. Under conditional indorsement, indorsement of a note before delivery to payee may be based on a particular contingency. However, if indorsement of a note before delivery is conditional, such conditions, to be binding upon the payee, must be accepted by him/her, made with notice to him/her, or acknowledged on his/her part before or accompanying delivery. Where a conditional indorsement is relied on as a defense, the fact that the conditions were accepted by or made with notice to or acknowledged on the part of the payee before or accompanying delivery must be pleaded and proved with common certainty.[Farmers' & Stockgrowers' Bank v. Pahvant Valley Land Co., 50 Utah 35 (Utah 1917)].