Exam 26: Liability of Parties

Molly makes a note payable to the order of Patrick; Patrick indorses it to Amy; Amy indorses it to Blake; and Blake indorses it to Homer.Homer presents the note to Molly within a reasonable time,but she refuses to pay.If Homer notifies only Patrick of the dishonor,Amy and Blake are discharged from liability.

Zelda signs a promissory note for $2,500 to First Bank.At the request of both Zelda and the bank,Ann also signs the note as an accommodation maker.In this situation:

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

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

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

Unauthorized signatures include both forgeries and signatures made by an agent without authority.

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

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.

Zoron Company purchased a truck from Ace Motors.The sales personnel at Ace know that Anton Green is an executive at Zoron.To pay for the truck,Anton delivered a $26,000 note to Ace and signed it "Anton Green,Agent." In this case:

Discuss the effect of an unauthorized signature on an instrument.

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

Notice of dishonor of an instrument must be given:

An obligation to pay a negotiable instrument subject to conditions precedent is known as:

Under Revised Article 3 of the UCC,failure to give notice of dishonor will discharge the drawer from having to pay on the instrument.

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

Discharge applies to the individual,not to the instrument,and a person's liability may be discharged with regard to one party but not to another.

Which of the following is true of warranty liability as it affects negotiable instruments?

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

Parties that are usually secondarily liable for an instrument are: a.indorsers and drawers. b.makers and indorsers. c.makers and acceptors. d.acceptors and drawers.