Exam 26: Liability for Negotiable Instruments

Jessie is the maker of a $1000 promissory note in favor of Tyler.Tyler subsequently indorses the note to Ryan by signing just his name.Ryan in turn indorses it to Breanna by indorsing the back of the note,"Without recourse,Ryan." Breanna then indorses it to Liz,the present holder.If Liz collects payment from Tyler,then Tyler can demand payment from

Assume that Joel signs a promissory note to Andrew,who in turn negotiates the instrument to Luke.Of the three,Joel is the only person who has primary liability.

A drawee has primarily liability on a draft.

An instrument ordering someone else to pay money is called

Suppose that Emmett impersonates a famous clown.He goes into an advertising agency and convinces the manager to issue a check to him in the name of the famous clown,purportedly as part of a fund-raising campaign for a nursing home for old retired clowns.If Emmett negotiates the check to a check-cashing store by forging the name of the famous clown,then the ad agency will be able to argue that the bank must reimburse the account because the bank paid a check on a forged signature.

What term is used to indicate the termination of liability on an instrument?

Cecilia made a check out to Gideon for $15.Gideon fraudulently changed the check to read $150,and cashed it at Corner Bank.Is Cecilia discharged from liability on the check?

Sandy may be charged a fee,but will not face criminal penalties for writing checks on an account with insufficient funds to pay them.

Micah signed a check in the lower right-hand corner and Andrew signed on the back.The presumption is that

Check kiting is defined as

Nelson writes Leah a check for mowing his lawn.Leah deposits the check in her bank,but it is not paid by Nelson's bank.Leah calls Nelson to notify him that her bank returned his check to her unpaid.Leah's notice of the dishonor is insufficient;she must provide written notice.

Lance indorses a promissory note to Connie in exchange for consideration.Unknown to Lance,the note is not good because the maker's signature was forged.Connie later attempts to present the instrument for payment to the original alleged maker,Lilly,who is able to deny liability for payment due to the forged signature.Connie may later sue Lance for breach of a transfer warranty.

Which rule states that if someone issues an instrument to a person who does not exist,then any indorsement in thename of the payee is valid as long as the person who pays the instrument doesnot know of the fraud?

Which of the following statements regarding instrument liability is TRUE?

James Packard,a lawyer representing Robert Marino,received a check for $16,000 in settlement of Robert's case.Instead of turning over the money to Robert or putting it into a trust fund for him,James forged Robert's indorsement and deposited the money into his own account without notifying Robert.Discuss the claims the parties have.

Jane received a check as payment for her performance at a night club.In turn,she gives the check to Paul as a gift,but the check turns out to be worthless when he tries to cash it 45 days later.Does Paul have a claim against Jane?

When a person indorses a check,the indorser assumes contractual liability based on the indorsement.This liability expires unless presentment is made

List the warranties a transferor of a negotiable instrument makes.

Negotiable instruments are normally issued to fulfill a contract.

List and explain the five different ways to discharge an instrument according to Article 3 of the UCC.