Exam 24: Liabilities of Parties, Holders in Due Course and Defenses

Indorsers and drawers are the parties whose liability on negotiable instruments is ordinarily primary.

Which of the following is legally permissible in the case of a theft of a negotiable instrument?

A holder for value and in good faith with no knowledge of dishonor, defenses, or claims, or that paper is overdue is known as a .

An agent who signs an instrument indicating a representative capacity cannot have personal liability on the instrument.

In general, the defenses available in a dispute over a contract can be raised against holders in due course.

A check is considered dishonored if it is returned to the holder stamped "insufficient funds."

Which of the following best describes alteration?

Which of the following is true of primary liability? ​

is the demand for acceptance or payment made on the maker, acceptor, drawee, or other payor of commercial paper.

Which of the following is an example of a dishonor?

Even in cases in which the defendant's negligence made the forgery possible, forgery may be raised successfully against any holder.

​ When an alteration is fraudulently made, the party whose obligation is affected by the alteration is discharged.

Which of the following is a definition of a universal defense?

In order to attain the specially favored status of being a holder in due course, the holder need not give value for the paper.

​ A maker of a note is primarily liable and may be called on for payment.

Those defenses thought to be so important that they are preserved even against a holder in due course are called real.

​ Explain any two types of hybrid defenses.

Which of the following is a scenario where a universal defense can be applied?

Generally, the rights of the holder of consumer paper are subject to all claims, defenses, and setoffs of the original purchaser arising from the consumer transaction.

A thief can pass good title of an instrument to a holder in due course.