Exam 24: Liability, Defenses, and Discharge

The person represented by a representative agent is known as the principal.

________ is a demand for acceptance or payment of an instrument made upon the maker, acceptor, drawee, or other payer by or on behalf of the holder.

A(n)________ defense is a type of defense that can be raised against enforcement of a negotiable instrument by an ordinary holder but not against an HDC.

The ________ states that a drawer or maker is liable on a forged or unauthorized indorsement if the person signing as or on behalf of a drawer or maker intends the named payee to have no interest in the instrument or when the person identified as the payee is a fabricated person.

The holder of a negotiable instrument can discharge the liability of any party to the instrument by cancellation.

What is the similarity between the fictitious payee rule and the imposter rule?

An accommodation party who signs an instrument guaranteeing payment is secondarily liable on the instrument.

Martin borrows $15, 000 from Tom, in the form of a check, and signs a promissory note, promising to pay Tom this amount plus 10 percent interest in one year.Tom indorses the note and negotiates it to Fronston.Fronston indorses the note and negotiates it to Liza.Liza presents the note to Martin for payment when the note is due.Martin refuses to pay the note.Who is secondarily liable to pay Liza?

A person who authorizes an agent to sign a negotiable instrument on his or her behalf is known as a(n)________.

Jennifer signs a promissory note to pay $2, 500 to Clara.Clara negotiates the instrument and indorses it to Anthony.Anthony alters the note to make the payment amount $25, 000 and negotiates the note to Nicholas.Nicholas indorses the note and negotiates it to Mack.Nicholas and Mack are both unaware of the alteration done by Anthony. -At this point, who has primary liability over the note?

List out the presentment warranties.

What is transfer of an instrument?

A contract made by a person of nonadjudicated mental illness is considered void.

Which of the following is a rule that eliminates HDC status with regard to negotiable instruments that arise out of certain consumer credit transactions?

Which of the following is a characteristic of a presentment warranty on an instrument presented for payment?

A signature in the lower-right corner of a promissory note indicates that the signer is the drawer of the note.

Sylvester, acting as a representative agent for Jerry, signs a negotiable instrument with the signature-Sylvester, by Jerry, agent.What kind of liability does Sylvester have for this type of signature?

Calvin, a college student, wants to purchase an automobile on credit from IronTilt Motors.He does not have sufficient income or the credit history to justify the extension of credit to him alone.Calvin asks his father to cosign a note to IronTilt Motors, which he does. -What kind of liability does Calvin's father come under?

Discharge of an instrument by payment or cancellation is a type of ________.

A holder in due course takes an instrument free from personal defenses but not universal defenses.