Exam 24: Liability, Defenses, and Discharge

The payee of a cashier's check is also primarily liable on the instrument.

Calvin, a college student, wants to purchase an automobile on credit from IronTilt Motors. He does not have sufficient income or the credit history to justify the extension of credit to him alone. Calvin asks his father to co-sign a note to IronTilt Motors, which he does. What role does Calvin's father fulfill here so that Calvin can buy the car?

What are forged negotiable instruments?

A minor who does not misrepresent his or her age can disaffirm negotiable instruments.

A presentment is a demand for the acceptance of a dishonored instrument.

A holder in due course takes an instrument free from personal defenses but not universal defenses.

Martha draws a check payable to the order of Stella. Stella indorses the check to Karen. But Leslie steals the check from Karen, forges Karen's indorsement, and cashes the check at a liquor store. Who is liable on the check?

________ refers to a situation in which certain parties are discharged from liability on an instrument by the action of the holder.

Martha draws a check payable to the order of Stella. Stella indorses the check to Karen. But Leslie steals the check from Karen, forges Karen's indorsement, and cashes the check at a liquor store. When the forgery is exposed, whom can the liquor store legally recover from?

An imposter is someone who impersonates a payee and induces the maker or drawer to issue an instrument in the payee's name and give the instrument to the imposter.

Transfer warranties cannot be disclaimed if the indorsement states "without recourse."

An unqualified indorser has secondary liability on negotiable instruments.

Discharge of an instrument by payment can be raised against enforcement of a negotiable instrument by an ordinary holder.

A check is only accepted once it has been certified by the bank.

What is a transfer of an instrument?

A purported principal is liable for an unauthorized signature by a purported agent if the purported principal ratifies the unauthorized signature.

Susan purchases goods by telephone from Parker. Susan has never met Parker. Brenton goes to Susan and pretends to be Parker. Susan draws a check payable to the order of Parker and gives the check to Brenton, believing him to be Parker. Brenton forges Parker's indorsement and indorses the check to his brother, William, with the term "without recourse." William then cashes the check at a liquor store. Under the imposter rule, who is liable on the check?

A drawee is primarily liable on a draft when ________.

What is the defense of fraud in the inducement?

A qualified indorser is only liable for secondary liability.