Exam 26: Liability For Negotiable Instruments

To pay for a minor repair,May writes a check for $50 to David,who indorses the check in blank and gives it to his sister,Glenda,for her birthday.She indorses the check in blank and gives it to her trash collector to pay her quarterly bill.Which of the following is correct?

Nelson writes Leah a check for mowing his lawn.Leah deposits the check in her bank,but it is not paid by Nelson's bank.Leah calls Nelson to notify him that her bank returned his check to her unpaid.Leah's notice of the dishonor is insufficient; she must provide written notice.

Dwight Stringer signed three promissory notes as an agent for his company.The first,he signed "Dwight Stringer,agent for Park Systems,Inc." The second,he signed "Dwight Stringer,Agent." The third note was signed merely "Park Systems,Inc." Discuss the liability of Dwight and Park Systems,Inc.on each of the notes.

An indorser who writes "without recourse" above her signature on a negotiable instrument is not liable for payment.

The accidental destruction of a negotiable instrument will not result in its cancellation.

James Packard,a lawyer representing Robert Marino,received a check for $16,000 in settlement of Robert's case.Instead of turning over the money to Robert or putting it into a trust fund for him,James forged Robert's indorsement and deposited the money into his own account without notifying Robert.Discuss the claims the parties have.

An agent must clearly indicate that he or she is signing on behalf of a principal in order to bind the principal.

Which of the following will discharge an instrument?

Assume that Joel signs a promissory note to Andrew,who in turn negotiates the instrument to Luke.Of the three,Joel is the only person who has primary liability.

List the warranties a transferor of a negotiable instrument makes.

An accommodation party and a co-maker of a note have the same liability on an instrument.

At the time a check is issued,primary liability falls on:

Sandy may be charged a fee,but will not face criminal penalties for writing checks on an account with insufficient funds to pay them.

Check kiting is defined as:

Anyone who presents a check for payment warrants all EXCEPT:

Negotiable instruments are normally issued to fulfill a contract.

Tom indorsed a check made payable to the order of Tom Jones as follows: Pay Raymond Berry /s/ Tom Jones Raymond negotiated the check to his landlord for his rent.Raymond indorsed the check as follows: Without Recourse /s/ Raymond Berry With regard to Tom's indorsement,which statement is correct?

A person cannot be held liable on a negotiable instrument unless that person has signed the instrument.

All but which of the following serves as a discharge of a negotiable instrument:

Suppose that Emmett impersonates a famous clown.He goes into an advertising agency and convinces the manager to issue a check to him in the name of the famous clown,purportedly as part of a fund-raising campaign for a nursing home for old retired clowns.If Emmett negotiates the check to a check-cashing store by forging the name of the famous clown,then the ad agency will be able to argue that the bank must reimburse the account because the bank paid a check on a forged signature.