Special Indorsement Law and Legal Definition

Indorsement is the act of writing on the back of a negotiable instrument. Pursuant to U.C.C. § 3-205, when an indorsement is made by the holder of an instrument and the indorsement identifies a person to whom it makes the instrument payable, it is a special indorsement. In special indorsement, the instrument may be payable to an identified person or payable to bearer. An instrument becomes payable to an identified person and can be negotiated only by the indorsement of that person on special indorsement.