Exam 27: Liability of Parties

Primary liability does not apply to issuers of cashier's checks.

In order for a notice of dishonor to be effective, a protest must be made through a notary public or U.S.consul.

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, 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.

Sarah has a checking account at First Bank.Orrin steals one of her blank checks, writes a check for $250 to himself, and then forges Sarah's signature.Orrin then indorses the instrument to Paul in payment of a debt.Paul, who does not know of the forgery, presents the instrument to First Bank for payment.At First Bank's request, Paul indorses the instrument, and the bank then pays him $250.Which of the following is correct?

Return for lack of proper indorsement constitutes a dishonor of the check.

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

Jan Arthur writes a $200 check to Bruce Nole who indorses it "Bruce Nole." Bruce gives the check to Anne Tate who indorses it "Without Recourse.Anne Tate." Anne sends the check to Joe Black, MD to pay her medical bill.If the bank refuses to honor the check, Black:

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

First Bank returns a check because it lacks a necessary indorsement.The check has been dishonored.

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?

Dishonor of an instrument involves which of the following?

The liability of the maker of a demand note is affected by failure of proper presentment.

Presentment for payment is one step necessary to charge an indorser with the obligation to pay.

The use of the qualifying word(s) __________ is/are understood to place purchasers on notice that they may not rely on the credit of the person using this language.

Kelly wrote a check to Trish, which Trish immediately changed from $20 to $120.She negotiated the check to Cam 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, Cam gave the check to Ford as part of the down payment for his car.Ford presents the check to Kelly's bank for payment and they discover the alteration.What consequence?

Which of the following is a warranty of the transferor?

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 drawee bank is primarily liable after it accepts the check.

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.

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