Exam 21: Holder in Due Course and Liability of Parties

Give an example of a situation where a personal defense cannot be raised against an HDC.

Those who are secondarily liable on negotiable instruments they endorse are known as ________.

Jennifer signs a promissory note to pay $2,500 to Clara.Clara negotiates the instrument and indorses it to Anthony.Anthony alters the note to make the payment amount $25,000 and negotiates the note to Nicholas.Nicholas indorses the note and negotiates it to Mack.Nicholas and Mack are both unaware of the alteration done by Anthony.At this point,who has primary liability over the note?

Most indorsements appear on the front of an instrument.

Those who disclaim liability and are not secondarily liable on instruments they endorse are referred to as ________.

Which of the following defenses,if proven,may be deemed unenforceable by a holder but enforceable by an HDC?

Jennifer signs a promissory note to pay $2,500 to Clara.Clara negotiates the instrument and indorses it to Anthony.Anthony alters the note to make the payment amount $25,000 and negotiates the note to Nicholas.Nicholas indorses the note and negotiates it to Mack.Nicholas and Mack are both unaware of the alteration done by Anthony.If Mack presents the note to Jennifer for payment,how much,if anything is Jennifer obligated to pay?

Maria is the treasurer of Rex Caldwell Corporations.As treasurer,she makes out and signs the payroll checks for the company.Maria draws a payroll check payable to the order of her maid,Carolyn Doss,who does not work for the company.Maria does not intend Carolyn to receive this money.She indorses Carolyn's name on the check and names herself as the indorsee.She cashes the check at a liquor store.Under which rule of forged instruments is Maria accountable?

Martha draws a check payable to the order of Stella.Stella indorses the check to Karen.But Leslie steals the check from Karen,forges Karen's indorsement,and cashes the check at a liquor store.When the forgery is exposed,who can the liquor store legally recover from?

Liability in which a person cannot be held contractually liable on a negotiable instrument unless his or her signature appears on the instrument is referred to as ________.

When an indorsement on an instrument has been forged or is unauthorized,the loss falls on the party who first takes the forged instrument after the forgery.Which of the following is an exception to this rule?

Which of the following is a personal defense?

Commercial paper held by a holder in due course is virtually as good as money.

Stanley,who owes Milton money,indorses a draft to him with the term "without recourse." The instrument later is dishonored.What liability does Stanley have on the instrument?

Martha draws a check payable to the order of Stella.Stella indorses the check to Karen.But Leslie steals the check from Karen,forges Karen's indorsement,and cashes the check at a liquor store.Who is liable to the check?

Under the UCC's ________ requirement,a person cannot qualify as an HDC if he or she has taken an instrument after detecting that it has been dishonored.

Primary liability refers to the liability on a negotiable instrument that is imposed on a party only when the party primarily liable on the instrument defaults and fails to pay the instrument when due.

Mara draws a $1,000 check on Royal Bank "payable to the order of Peyton." Peyton cleverly raises the check to $10,000 and indorses and negotiates the check to Nathan.Nathan presents the check for payment to Royal Bank.Royal Bank pays the check as altered ($10,000)and debits Mara's account.When Mara discovers the alteration,she demands that the bank re-credit her account,which the bank does.Who are the parties that can recover against the wrongdoing and how?

A ________ defense is a type of defense that can be raised against both holders and HDCs.

An agent is a person who is in possession of a negotiable instrument that is drawn,issued,or indorsed to him or to his order,or to bearer,or in blank.