Exam 26: Liability,defenses,and Discharge

Dishonor occurs if payment of an instrument is refused with the prescribed time.

Cash National Bank is an HDC of a note for $1,000 on which there is the forged signature of "Dudley." If sued on the note by Cash

A maker is secondarily liable on an instrument.

Puck signs a check "pay to the order of Quik Mart" drawn on Puck's account in Regional Bank.Puck shows the check to Silky,who agrees that the signature is Puck's and that Quik Mart is owed the amount that the check represents.Quik Mart signs the back of the check.Liability on this check extends to

An unauthorized signature binds the person whose name is signed.

Rodeo Ranch's agent Slim is authorized to write checks on Rodeo Ranch's account in Town Bank.Upper Range Corporation is a Rodeo Ranch supplier.Slim writes a check on Rodeo Ranch's account "pay to the order of Upper Range [signed] Slim," indorses it in Upper Range's name,and deposits it in his own account in Verity Bank.If Verity Bank collects payment,the ultimate party most likely to suffer the loss is

Presentment war?ranties protect the person to whom an instrument is presented for payment.

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

Quincy signs a check payable to Richland Investors,Inc.,and gives it to Richland,leaving the amount blank but authorizing Richland to fill in the check for $1,000.Richland fills in $1,500 and negotiates the check to Silverado Bank,to whom Richland owes $1,500.Silverado Bank,an HDC,can enforce the check for

Laptop Assembly Company gives a $3,000 promissory note to My-T-Fast Delivery Service to de?liver a load of computer chips to Laptop's plant.The chips are contami?nated during transit,and are useless to Laptop on delivery.If My-T-Fast presents the note for payment

To borrow the money to buy a car,Klaus signs a note "payable to the order of Lake City Auto Financing." Minnie cosigns the note to guarantee the repayment of the loan.Minnie's liability on this note is

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

Audio Science Company's agent Bailey is authorized to draw checks on Audio Science's account in Citizen Bank.The checks are preprinted with the company name.Bailey writes a check "pay to the order of Darlene [signed] Bailey." Darlene presents the check for payment.If Citizen Bank dishonors it,liability extends to

Derby Stables writes a check to Extendo Credit,Inc.,that is drawn on Derby's account at Farm & Ranch Bank.If the bank does not accept the check,liability for its amount is on

Dandy Lyin' Furniture Store borrows $100,000 at 6 percent interest from Easy Loan Company and signs a promissory note for that amount.Easy changes the amount of the note to $120,000 and increases the rate to 8 per?cent.Easy materially altered the note when it changed

Toby signs a note "payable to the order of United Credit Union." Unless Toby has a valid defense against payment,Toby's liability on this note is

An imposter's indorsement on an instrument can be effective against its drawer or maker.

Dirk is the maker of a note,on which Erv is secondarily liable.Friendly Credit Company is the current holder of the note.Erv will be obli?gated to pay the note if

Birdie,an accountant for Country Custom Furniture,Inc.,issues company checks payable to nonexistent persons drawn on Country's ac?count at Debit Bank.Birdie indorses the checks and deposits them in her account.Country discovers the theft and demands that Debit recredit its account.Debit's best defense is that

Nero signs a check "pay to the order of Olive" drawn on Nero's account in Peachtree Bank.Olive signs the back of the check.Secondary liability on this check extends to