Exam 26: B: Liability,defenses,and Discharge

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

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

Opalina asks Paolo,who does not understand English,to sign what Opalina says is an application to open a bank account.In fact,the "application" is a note.If sued on the note by an HDC

Ethel signs a note "payable to the order of Fidelity Bank." Fidelity indorses the note in blank and negotiates it to Ghani,who sells it to Huck.Liability associated with the transfer of the note from Ghani to Huck is

Warranty liability is subject to the conditions of proper presentment,dishonor,and notice of dishonor.

Ian transfers a note,for consideration,to Jock by blank indorsement and delivery.Jock transfers the note to Kelly,who takes it in good faith.What does Ian warrant to Kelly?

An unauthorized signature binds the person whose name is signed.

A person whose name is forged on an instrument is liable to pay only a holder in due course the value of the forged 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

A signature can be made by use of any device or machine.

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

Discharge in bankruptcy is no defense on any instrument regardless of the status of the holder.

Fact Pattern 26-1A Seymour writes a check on his account at Platinum Bank to Teri to pay a debt.Teri negotiates the check by indorsement to Rosanna,who presents it for payment to Onyx Bank. -Refer to Fact Pattern 26-1A.If Onyx Bank dishonors the check,Rosanna can obtain payment from Teri

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

Personal defenses are used to avoid payment to an ordinary holder of a negotiable instrument,but not to an HDC or a holder through an HDC.

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

Dale issues a check for $4,000,dated June 1,to Evelyn.The check is drawn on First Federal Bank.Evelyn indorses the check and transfers it to Gene.What will trigger the liability of Dale and Evelyn on the check?

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

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

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