Exam 28: Liability of Parties

Presenters' warranties are exactly the same as transferors' warranties.

Kelly wrote a check to Trish, which Trish immediately changed from $20 to $120.She negotiated the check to Carl for value, who in turn took it to Kelly's bank for certification.Kelly's bank checked his account and certified the check since there were sufficient funds to cover the check.Thereafter, Carl gave the check to Central Motors (CM) as part of the down payment for his car.CM presents the check to Kelly's bank for payment and they discover the alteration.What consequence?

Brad wrote a check to Clara for $1,000 on his account at First Bank.He then took it to his bank for certification. The bank wrote "certified" on the face of the check.Brad then gave the check to Clara.When Clara took the check to First Bank, they refused to pay, claiming that there was not enough money in Brad's account to cover the check.Which of the following is correct?

The signature of the maker of a note may be typewritten or by means of a signature stamp so long as it represents an intention to authenticate the instrument.

Wanda makes a note payable to Henry in return for Henry's car.Henry negotiates the note to his cousin, Sharon, who accidentally drops it on the floor where it is swept into the garbage.What effect?

Warranty liability may be imposed on both nonsigners and signers of an instrument.

A drawee bank's refusal to certify a check constitutes a dishonor of the instrument.

A demand note is dishonored if the maker does not pay it:

When a draft is accepted by a bank, prior and subsequent indorsers are discharged.

Zelda signs a note for $500 to First Bank.If, at the request of both Zelda and the Bank, Ann also signs the note as an accommodation maker:

Philip uses a signature stamp to sign his checks and carelessly leaves it accessible to third parties.Jeremy finds the stamp and uses it to write several checks without Philip's authorization.Renee, who takes a check for value and in good faith, will be subject to Philip's defense of unauthorized signature.

Presentment is a condition to the holder's right to recover from parties with primary liability.

Before an indorser can be held responsible for payment of a check, the check must be presented to the drawee bank for payment.

By paying the holder on an instrument, a party may be discharged from liability.

Delay in notice may be excused where the holder was too busy at work to send notices that day.

Presentment is excused where the acceptor is undergoing bankruptcy.

Mary Lou takes her paycheck to Al's Place on Friday night and gives it to the bartender as payment for her running bar bill.If the company she works for goes bankrupt the following Monday, Mary Lou is liable for breach of warranty of no insolvency.

What warranties are given by presenters depend upon who is the payor or acceptor.

A time draft presented for payment is due on the due date or presentment date, whichever is later.

A bank must give notice of dishonor within one business day and a nonbank within three business days of the day on which it receives notice of dishonor.