Exam 17: Liability, Defenses, and Discharge

Failure to present an instrument on time is improper presentment.

Fact Pattern 17-1 Chuck is the maker of a $200,000 promissory note payable to Investors Corporation. Investors indorses the note to Equity Lenders, which in turn indorses it to Select Holdings LLC, which then indorses it to Global Bank, the present holder. -Refer to Fact Pattern 17-1.Global Bank properly presents the note to Chuck for payment, but he dishonors it. With timely notice to the proper parties, Global Bank may collect payment on the note from​

Hilltop Bank is an HDC of a note for $1,000 on which there is the forged signature of "Rob." If sued on the note by Hilltop, Rob's best defense would be​

Resource Industries Inc.'s agent Polly is authorized to draw checks on the company's account in Sterling Bank. The checks are preprinted with the company name. Polly writes a check "pay to the order of Don [signed] Polly." Don presents the check for payment. If the bank dishonors it, liability extends to​

Rona issues a check for $4,000, dated May 1, to Stavros. The check is drawn on United Bank. Stavros indorses the check and transfers it to Tony. Stavros will be liable on the check if​

Vera gives Will a $500 check as payment for a debt. Will crudely increases the amount of the check to $5,000 and deposits the check in his First Bank account. Vera is liable for the payment of $5,000 to​

Community Bank receives a check drawn by Dennis. The check lacks a proper indorsement. Payment can be postponed without dishonor​

Jen is the maker of a note, on which Bart is secondarily liable. Credit Instruments Company (CIC) is the current holder of the note. Bart will be obligated to pay the note if​

Duke signs a note "payable to the order of Equity Bank." Unless Duke has a valid defense against payment, his liability on this note is​

Personnel Company draws a check payable to Felix. Felix indorses the back and negotiates the check to Guaranty Bank. Primarily liable on the check is​

When there is a breach of an underlying contract for which an instrument was issued, the drawer of a check can order his or her bank to stop payment.

Orson signs a check "pay to the order of Painless Dental" drawn on Orson's account in Quantum Bank. To impose liability on Orson if the bank dishonors the check, Painless Dental should present it for payment within​

If delivery of goods becomes impossible, a party who has issued a draft or note on the contract has a defense for not paying it.

The key to liability on a negotiable instrument is a signature.

A drawer's liability does not arise without notice of dishonor.

An imposter's indorsement on an instrument can be effective as if the real payee had signed.

Primary liability on a negotiable instrument is conditional.

Flo is an administrative assistant with Global Dispatch & Shipping Corporation, but has no authority to sign Global Dispatch checks. Flo orders merchandise from Home & Office Furnishings Company delivered to her home and pays with a Global Dispatch check, signing "Global Dispatch & Shipping Corp. by Flo, admin. assist." Home & Office does not know that Flo has no authority to sign the check. Who is liable on the check, and why?

Lewis makes a note payable to MaxiFinance Corporation. MaxiFinance indorses the back of the note and negotiates it to Hedge Investments Inc. Primarily liable on the note is​

An authorized agent binds a principal on an instrument if the agent clearly names the principal in the signature.