Exam 17: Liability, Defenses, and Discharge

Fact Pattern 17-2 Lisa writes a check on her account at Metro Bank to Niklas to pay a debt. Niklas negotiates the check by indorsement to O'Leary, who presents it for payment to Prime Bank. -Refer to Fact Pattern 17-2.Niklas is​

Notice of dishonor can be given in any reasonable manner.

To borrow the money to buy a car, Megan signs a note "payable to the order of Purchase Financing." Olaf cosigns the note to guarantee the repayment of the loan. Olaf's liability on this note is​

If payment of an instrument cannot be obtained within the prescribed time, dishonor occurs.

Fran signs a note "payable to the order of Guaranty Bank." Guaranty indorses the note in blank and negotiates it to Holly, who sells it to Iona. Liability associated with the transfer of the note from Holly to Iona is​

An ordinary holder can recover nothing on an instrument that has been materially altered.

Logan is Mining Corporation's agent and is authorized to write checks on Mining's account in Northwest Bank. Logan writes a check "pay to the order of Oceanside Resort." Logan signs the check "Mining Corporation, by Logan, agent." Northwest Bank dishonors the check. Liability extends to​

Len signs a note "payable to the order of Account Collection Agency." Unless Len has a valid defense against payment, his liability on this note is​

A maker is secondarily liable on an instrument.

A person whose name is forged on an instrument normally has no liability to pay any holder the value of the instrument.

One of the transfer warranties is that the instrument has not been altered.

To properly present a draft for payment, a holder must present it to the drawer.

Presentment warranties can be disclaimed only with respect to checks.

Darby writes a check to Education Loan Management, Inc., that is drawn on Darby's account at Federal Bank. If the bank does not accept the check, liability for its amount is on​

The general law of agency does not apply to negotiable instruments.

An indorser is secondarily liable on an instrument.

Under the fictitious payee rule, the payee's indorsement is not treated as a forgery.

An unauthorized signature binds the person whose name is signed.

Elena, an employee of Builders, Inc., forges the signature of Carly, Builders's president, on a company check and cashes it at Delta Bank. Carly would ratify Elena's actions by​

Home Products, Inc., warrants its goods to be free of defects. Ian issues an instrument to obtain a thermos from Home Products that leaks. With respect to payment on the instrument, Ian​