Exam 28: Liability of Parties

If a person entitled to enforce an instrument refuses a tender of payment,the refusal wholly discharges to the extent of the amount of tender every party who has a right of recourse against the party making tender.

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

Delay in notice may be excused if the holder was too busy at work to send notices that day.

Warranty liability applies to persons who:

Presentment for payment is excused if the person entitled to enforce the instrument cannot with reasonable diligence present the instrument.

In all instances other than a drawee of an unaccepted draft or uncertified check,the only presentment warranty that is given is that the warrantor is a person entitled to enforce the instrument or is authorized to obtain payment on behalf of the person entitled to enforce.

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

A drawee bank's refusal to certify a check constitutes a dishonor of the instrument.

Waylon uses a signature stamp to sign his checks and carelessly leaves it accessible to third parties.Jeremy finds the stamp and uses it to write several checks without Waylon's authorization.Renee,who takes a check for value and in good faith,will be subject to Waylon's defense of unauthorized signature.

Mary Lou takes her paycheck to Al's Place on Friday night and gives it to the bartender as payment for her running bar bill.If the company she works for goes bankrupt the following Monday,Mary Lou is liable for breach of warranty of no insolvency.

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 the language.

A time draft presented for payment is due on the due date or presentment date,whichever is later.

Notice of dishonor is waived if presentment has been waived.

Wanda makes a note payable to Henry in return for Henry's car.Henry negotiates the note to his cousin,Sharon,who accidentally drops it on the floor where it is swept into the garbage.What effect?

Drawers of checks may disclaim contractual liability by using the words "without recourse."

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:

Presentment is excused where the acceptor is undergoing bankruptcy.

Charles is the holder of a promissory note,the maker of which is Charles' niece,Margaret.As a birthday gift to Margaret,Charles marked "Canceled" across the face of the note.Margaret remains liable on the note because she did not give Charles anything of value for the cancellation.

Warranty liability may be imposed on both nonsigners and signers of an instrument.

A party liable on an instrument who makes proper tender of full payment to a person entitled to enforce the instrument is discharged from liability for the face amount of the instrument and for any interest accrued even if the tender is refused.