Exam 28: Liability of Parties

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

Once a check is issued,the drawee bank becomes primarily liable.

Which of the following is a warranty of the transferor?

Tanika has a checking account at First Bank.Orrin steals one of her blank checks,writes a check for $250 to himself,and then forges Tanika's signature.Orrin then indorses the instrument to Paul in payment of a debt.Paul 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?

By paying the holder on an instrument,a party may be discharged from liability.

Who is primarily liable on a note?

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

Before an indorser can be held responsible for payment of a check,the check must be presented to the drawee bank for payment.

How can drawers and indorsers disclaim liability on an instrument? Does any different rule apply to drawers of checks?

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

If an agent is authorized to execute an instrument on behalf of a principal and signs "Cornwall,principal,by Lyons,agent," only the principal is liable on the instrument.

If a drawee bank pays an instrument containing a forged indorsement,the bank is liable for conversion.

To certify a check,the bank must:

When a severe weather warning has been declared,a delay in notice is excused to the holder who was prevented from giving the notice until after the severe weather passed.

An accommodation party will always be secondarily liable on an instrument.

When a draft is accepted by a bank,prior and subsequent indorsers are discharged.

Franz signs a $1,000 note payable to LongView Bank.If,to help Franz get the loan approved,Amy also signs the note as an accommodation maker:

Which of the following is unconditionally liable on a draft or check as issued?

All of the following except which one are warranted by the transferor of a negotiable instrument?

The signature of the maker of a note may be typewritten or by means of a signature stamp so long as it represents an intention to authenticate the instrument.