Question 1

Who is primarily liable on a note?

Accepted Answer

A)  The holder. 
B)  The indorsers. 
C)  The drawee bank. 
D)  The maker. 
A)  The holder. 
B)  The indorsers. 
C)  The drawee bank. 
D)  The maker.

Question 2

A signature may be made by an individual herself or by an authorized agent.

Accepted Answer

A) True 
 B)False

Question 3

Warranty liability applies to persons who:

Accepted Answer

A)  Both  transfer an instrument  and  obtain payment or acceptance of an instrument  are correct. 
B)  have signed the instrument, but not on those who have not signed. 
C)  transfer an instrument. 
D)  obtain payment or acceptance of an instrument. 
A)  Both  transfer an instrument  and  obtain payment or acceptance of an instrument  are correct. 
B)  have signed the instrument, but not on those who have not signed. 
C)  transfer an instrument. 
D)  obtain payment or acceptance of an instrument.

Question 4

A(n) ___________ signs an instrument to lend his credit to an instrument, and his liability is determined by the capacity in which he signs.

Accepted Answer

A)  maker 
B)  indorser 
C)  authorized agent 
D)  accommodation party 
A)  maker 
B)  indorser 
C)  authorized agent 
D)  accommodation party

Question 5

Indorsers of all instruments incur primary liability on the instrument.

Accepted Answer

A) True 
 B)False

Question 6

Warranties of a person obtaining payment or acceptance of an unaccepted draft include:

Accepted Answer

A)  the draft has not been altered. 
B)  the warrantor is a person entitled to enforce the draft. 
C)  the warrantor has no knowledge that the drawer's signature is unauthorized. 
D)  All of these are correct. 
A)  the draft has not been altered. 
B)  the warrantor is a person entitled to enforce the draft. 
C)  the warrantor has no knowledge that the drawer's signature is unauthorized. 
D)  All of these are correct.

Question 7

First Bank returns a check because it lacks a necessary indorsement.This action constitutes a dishonor of the check.

Accepted Answer

A) True 
 B)False

Question 8

If a holder presents a note for payment to the maker, which of the following warranties is/are given?

Accepted Answer

A)  All signatures are genuine. 
B)  All indorsements are genuine. 
C)  The holder has no knowledge that any indorsements are forged. 
D)  The holder is entitled to enforce the note or is authorized to obtain payment on behalf of the person entitled to enforce the note. 
E)  All of these. 
A)  All signatures are genuine. 
B)  All indorsements are genuine. 
C)  The holder has no knowledge that any indorsements are forged. 
D)  The holder is entitled to enforce the note or is authorized to obtain payment on behalf of the person entitled to enforce the note. 
E)  All of these.

Question 9

In Cohen v.Disner the court found that Disner was not liable on the check because he had no enforceable obligation to pay, the check was drawn by him in a representative capacity, and the holder had notice that Disner's signature was in the capacity of an agent.

Accepted Answer

A) True 
 B)False

Question 10

List and generally explain the warranties on presentment.

Accepted Answer

The warranties on presentment depend on

Question 11

What is the difference between the liability of a qualified indorser and an unqualified indorser? Does the fact that a person has given a qualified indorsement mean that the person has no liability? Explain.

Accepted Answer

A qualified indorser's contractual liabi

Question 12

Franz signs a $1,000 note payable to ABC Bank.To help Franz get the loan approved, Amy also signs the note as an accommodation maker.Amy:

Accepted Answer

A)  has $500 of liability to the bank and Franz has $500 of liability. 
B)  and Franz both have primary liability on the note. 
C)  has the same liability as that of an accommodation indorser on a check. 
D)  has secondary liability on the note. 
A)  has $500 of liability to the bank and Franz has $500 of liability. 
B)  and Franz both have primary liability on the note. 
C)  has the same liability as that of an accommodation indorser on a check. 
D)  has secondary liability on the note.

Question 13

A waiver of presentment will waive the requirement of notice of dishonor as well.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a warranty of the transferor?

Accepted Answer

A)  Transferor warrants that all signatures are authentic and authorized. 
B)  Transferor warrants that he is entitled to enforce the instrument. 
C)  Transferor has no knowledge of any insolvency proceedings with respect to the maker, acceptor, or drawer of an unaccepted instrument. 
D)  All of these are warranties of the transferor. 
A)  Transferor warrants that all signatures are authentic and authorized. 
B)  Transferor warrants that he is entitled to enforce the instrument. 
C)  Transferor has no knowledge of any insolvency proceedings with respect to the maker, acceptor, or drawer of an unaccepted instrument. 
D)  All of these are warranties of the transferor.

Question 15

Transferor's warranties and presenter's warranties are implied warranties imposed only on those who sign an instrument.

Accepted Answer

A) True 
 B)False

Question 16

The maker is the primary party on every note.

Accepted Answer

A) True 
 B)False

Question 17

A drawee bank is primarily liable after it accepts the check.

Accepted Answer

A) True 
 B)False

Question 18

a.Discuss primary liability on a note; on a check.
b.What is secondary liability? What must be done before a person with secondary liability can be sued? Who has secondary liability on a note? Who has secondary liability on a check? 
c.How does contractual liability on the instrument differ from warranty liability?

Accepted Answer

a.If a person is primarily liable on a n

Question 19

Warranties on presentment are the same regardless of who is the payor or acceptor.

Accepted Answer

A) True 
 B)False

Question 20

An acceptance must be written on the draft.

Accepted Answer

A) True 
 B)False

Exam 26: Liability of Parties

Who is primarily liable on a note?

A signature may be made by an individual herself or by an authorized agent.

Warranty liability applies to persons who:

A(n) ___________ signs an instrument to lend his credit to an instrument, and his liability is determined by the capacity in which he signs.

Indorsers of all instruments incur primary liability on the instrument.

Warranties of a person obtaining payment or acceptance of an unaccepted draft include:

First Bank returns a check because it lacks a necessary indorsement.This action constitutes a dishonor of the check.

If a holder presents a note for payment to the maker, which of the following warranties is/are given?

In Cohen v.Disner the court found that Disner was not liable on the check because he had no enforceable obligation to pay, the check was drawn by him in a representative capacity, and the holder had notice that Disner's signature was in the capacity of an agent.

List and generally explain the warranties on presentment.

What is the difference between the liability of a qualified indorser and an unqualified indorser? Does the fact that a person has given a qualified indorsement mean that the person has no liability? Explain.

Franz signs a $1,000 note payable to ABC Bank.To help Franz get the loan approved, Amy also signs the note as an accommodation maker.Amy:

A waiver of presentment will waive the requirement of notice of dishonor as well.

Which of the following is a warranty of the transferor?

Transferor's warranties and presenter's warranties are implied warranties imposed only on those who sign an instrument.

The maker is the primary party on every note.

A drawee bank is primarily liable after it accepts the check.

Warranties on presentment are the same regardless of who is the payor or acceptor.

An acceptance must be written on the draft.

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Transfer and Holder in Due Course

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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