Exam 26: B: Liability,defenses,and Discharge

Nero signs a check "pay to the order of Olive" drawn on Nero's account in Peachtree Bank.Olive signs the back of the check.Secondary liability on this check extends to

Presentment war?ranties protect the person to whom an instrument is presented for payment.

Fact Pattern 26-1A Seymour writes a check on his account at Platinum Bank to Teri to pay a debt.Teri negotiates the check by indorsement to Rosanna,who presents it for payment to Onyx Bank. -Refer to Fact Pattern 26-1A.Teri is

A maker is secondarily liable on an instrument.

Transfer of an order instrument by indorsement and delivery extends warranty liability to any subsequent holder who takes the instrument in good faith.

Birdie,an accountant for Country Custom Furniture,Inc. ,issues company checks payable to nonexistent persons drawn on Country's ac?count at Debit Bank.Birdie indorses the checks and deposits them in her account.Country discovers the theft and demands that Debit recredit its account.Debit's best defense is that

To borrow the money to buy a car,Klaus signs a note "payable to the order of Lake City Auto Financing." Minnie cosigns the note to guarantee the repayment of the loan.Minnie's liability on this note is

Dirk is the maker of a note,on which Erv is secondarily liable.Friendly Credit Company is the current holder of the note.Erv will be obli?gated to pay the note if

Chris convinces Dion,who does not understand English,to sign a $1,000 note that Dion believes is an application for a credit card.Chris negotiates the note to EZ Finance Company.Dion

All parties to a negotiable instrument will be discharged when the party primarily liable on it pays to a holder the full amount due.

Toby signs a note "payable to the order of United Credit Union." Unless Toby has a valid defense against payment,Toby's liability on this note is

Celia,an employee of Delite Dairy Company,forges the signa?ture of Elin,Delite's president,on a Delite check and cashes it at First Federal Bank.Elin would ratify Celia's actions by

Quincy signs a check payable to Richland Investors,Inc. ,and gives it to Richland,leaving the amount blank but authorizing Richland to fill in the check for $1,000.Richland fills in $1,459 and negotiates the check to Silverado Bank,to whom Richland owes $1,459.Silverado Bank,an HDC,can enforce the check for

A drawer's liability does not arise until presentment and notice of dishonor.

An authorized agent is never personally liable on a negotiable instrument.

Signature liability is contingent liability.

Destruction or mutilation of a negotiable instrument by accident discharges it.

An authorized agent binds a principal on an instrument if the agent clearly names the principal in the signature.

To properly present a draft for payment,the holder must present it to the drawer.

Failure to present an instrument on time is not improper presentment.