Exam 28: Liability, Defenses, and Discharge

A defense that is available to a party who is tricked into signing a negotiable instrument without having a chance to determine that it is, in fact, a negotiable instrument is known as ________.

A bank is primarily liable for the amount of a check when it accepts the check.

Carl, without Austin's knowledge, impersonates Austin and thereby convinces Lucía, who has never seen Austin, to write a check to Austin for upcoming yard work. Carl then forges Austin's name and deposits the check into his, Carl's, account. Which of the following is true regarding whether Lucía will be liable for the amount of the check?

Which of the following is true regarding the liability of an accommodation party?

Serayah received a check written by Sam whom she did not really trust. Accordingly, she rushed to his bank to get the check cashed. The bank told her that presentment would be considered as being made on the next business day and refused to immediately give her the funds. The bank representative told her that the bank's cut-off hour was 2:00 p.m. and that she did not present the check until 3:00 p.m. Serayah was upset and told the bank that it wrongfully dishonored the check in violation of provisions of the UCC. Discuss the rights of the parties.

List the five items that a party warrants when the party transfers an instrument for consideration.

The principal's name must be shown on the instrument in order for the principal to be held liable when an agent signs a note on behalf of the principal.

[Run Around] Hema issues a promissory note to Rahul. Rahul endorses the note and transfers it to Anne. Anne endorses the note and transfers it to Floyd. Floyd presents the note to Hema for payment. When Floyd presents the note to Hema, she asks him for reasonable identification. He did not have any identification with him and told her that she had no right to dishonor the instrument. Hema continued to insist, so finally, on the same day, Rahul obtained clear identification and presented it to her. Nevertheless, even with proper identification, Hema refused to pay the note, claiming that she lacked the funds with which to do so. After properly providing notification of dishonor to both Anne and Rahul, Floyd requested that Anne pay the note, but she told him that he would have to get his money from Rahul. Floyd has been trying to call Rahul for 35 days, but Rahul did not return his telephone calls. Floyd is exasperated; and within 40 days of when Hema refuses payment, he notifies Hema, Rahul, and Anne that the promissory note has been dishonored by Hema and that he is asserting liability on the note against all of them. Hema calls him up and says that she never dishonored the note, she simply lacks the funds with which to immediately pay and thinks that he should seek recovery elsewhere. -Which of the following is the likely result if Floyd sues Anne, Rahul, and Hema?

Which of the following is false regarding the means by which an instrument may be cancelled by a person entitled to enforce it?

[Roommate Troubles] Dexter, Bernard, and Garren were roommates who do not get along and decide to go their separate ways when their lease expires on May 31. Dexter owes Bernard $500 and signs a promissory note that he will pay Bernard $500 by July 1. Bernard, who owes Garren money, endorses the back of the note and writes "Pay to the order of Garren" on the back and gives the note to Garren. On July 2, Garren tells Dexter that Bernard signed the promissory note to him, so Dexter should just pay Garren the $500. Dexter refuses to pay Garren anything. Garren then tells Bernard that Dexter dishonored the note and sues Bernard for the value of the note. -Assuming there is proper presentment and notice of dishonor, can Bernard be held liable on the promissory note?

According to the UCC, a party's signature can be any name or word, but cannot be a mark or symbol to authenticate a writing.

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account, but the principal does nothing until two months later after the agent leaves town with the funds?

After notice of dishonor is received, how long do parties other than a collecting bank have in order to give notice of dishonor to a secondarily liable party?

A(n) ________ is a party who has authority to act on behalf of and bind another party.

[Roommate Troubles] Dexter, Bernard, and Garren were roommates who do not get along and decide to go their separate ways when their lease expires on May 31. Dexter owes Bernard $500 and signs a promissory note that he will pay Bernard $500 by July 1. Bernard, who owes Garren money, endorses the back of the note and writes "Pay to the order of Garren" on the back and gives the note to Garren. On July 2, Garren tells Dexter that Bernard signed the promissory note to him, so Dexter should just pay Garren the $500. Dexter refuses to pay Garren anything. Garren then tells Bernard that Dexter dishonored the note and sues Bernard for the value of the note. -Who is primarily liable on the promissory note and who is secondarily liable?

Who is the drawee of the check Chloe presented to The Furniture Shop?

There are two types of relevant warranties in regards to instruments: ________ and ________

When, if ever, will a party's negligence block a party from escaping liability for an unauthorized signature?

Under what circumstances might Charla be held personally liable for the note?

If an accommodation party pays a note for an accommodated party, the accommodation party has a right of action against the accommodated party to recover the money paid.