Exam 26: Liability of Parties

An acceptor should always indicate on the instrument the amount accepted.

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

"Presentment" is necessary within 10 days of the date of issuance of a check.

Thomas is the treasurer of Oklaw, Inc. He has authority to sign on behalf of the company. One day, he signs a note as follows: "Thomas Maurtin, as treasurer." The company's name does not appear on the note. Is the company liable on the note? Is Thomas liable on the note? Explain.

Parties that are usually secondarily liable for an instrument are:

An acceptance must be written on the draft.

Elder, an authorized agent for Mullins, signs a negotiable instrument, "Mullins, principal, by Elder, agent." Mullins has primary liability and Elder has secondary liability on the instrument.

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

The time for dishonor of a check can vary greatly depending on the number of banks involved in the collection process.

a. What warranties are given by an indorser? b. What warranties are given by a transferor by delivery without indorsement? c. If a person has no contractual liability on the instrument, does that mean he has no liability as a result of the transaction involved? Explain.

An accommodation maker is not liable on a note since he only agreed to sign as a favor to the maker.

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.

Conversion of an instrument will occur if:

Mark gives a bearer note for $50 to Joe in exchange for an excellent dinner at Joe's restaurant. Joe delivers the note to Sue for $50 and Sue takes it to Mark to be paid. If Mark says the note was originally written for only $5, what can Sue do?

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

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

An unauthorized signature cannot be ratified by the person whose name appears on the instrument.

The drawer is obligated to pay the draft only if the drawee fails to pay the instrument.

Misty wrote a check to Acme for $220. She is discharged from liability on the check if Acme does not present the check for payment within 30 days after the date the check was signed.

Bob, a guest in Jim's house, opens Jim's desk and writes a check to himself on Jim's checking account, forging Jim's signature. He indorses the check "Bob Saunders" and presents it to Jim's bank for payment. If the bank pays, can it collect from Jim's account?