Business Law-Chapter 24

Question 1

Signature Liability

Answer 1

Liability in which a person cannot be held contractually liable on a negotiable instrument unless her signature appears on the instrument

Question 2

Signer

Answer 2

A person signing an instrument who acts in the capacity of a maker of notes or certificates of deposit, a drawer of drafts or checks, a drawee who certifies or accepts checks or drafts, an indorser who indorses an instrument, an agent who signs on behalf of others, or an accommodation party.

Question 3

Signature

Answer 3

Any name, word, or mark used in lieu of a written signature; any simbol that is handwritten, typed, printed, stamped or made in almost any other manner and executed or adopted by a party to authenticate a writing.

Question 4

Primary Liability

Answer 4

Absolute liability to pay a negotiable instrument, subject to certain universal (real) defenses.

Question 5

Secondary Liability

Answer 5

Liability on a negotiable instrument that is imposed on a party primarily liable on the instrument defaults and fails to pay the instrument when due.

Question 6

Unqualified Indorses

Answer 6

Those who are secondarily liable on negotiable instruments they endorse.

Question 7

Qualified Indorsers

Answer 7

Those who disclaim liability and are not secondarily liable on instruments they endorse.

Question 8

Presentment

Answer 8

A demand for acceptance or payment of an instrument made upon the maker, acceptor, drawee or other payer by or on behalf of the holder.

Question 9

Notice of Dishonor

Answer 9

The formal act of letting the party with secondary liability to pay a negotiable instrument know that the instrument has been dishonored.

Question 10

Accommodation Party

Answer 10

A party who signs an instrument and lends her name (and credit) to another party to the instrument.

Question 11

Guarantee of Payment

Answer 11

A form of accommodation in which the accommodation party guarantees payment of a negotiable instrument; the accommodation party is primarily liable on the instrument.

Question 12

Guarantee of Collection

Answer 12

A form of accommodation in which the accommodation part guarantees collection of a negotiable instrument; the accommodation party is secondarily liable on the instrument.

Question 13

Agent

Answer 13

A person who has been authorized to sign a negotiable instrument on behalf of another person.

Question 14

Principal

Answer 14

A person who authorizes an agent to sign a negotiable instrument on her behalf.

Question 15

Unauthorized Signature

Answer 15

A signature made by a purported agent without authority from the purported principal.

Question 16

Forged Indorsement

Answer 16

The forged signature of a payee or holder on a negotiable instrument

Question 17

Implied Warranties

Answer 17

Certian warranties that the law implies on transferors of negotiable instruments. There are two types of implied warranties: transfer and presentment warranties.

Question 18

Transfer

Answer 18

Any passage of an instrument other than its issuance and presentment for payment.

Question 19

Transfer Warranties

Answer 19

Any of the following five implied warranties: the trasferor has good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who does have good title; all signatures are genuine or authorized; the instrument has not been materially altered; no defenses of any party are good against the transferor; and the transferor has no knowldge of any insolvency proceeding against the maker, the acceptor, or the drawer of an unaccepted instrument.

Question 20

Presentment Warranties

Answer 20

Three warranties that a person who presents a draft or check for payment or acceptance makes to a drawee or an acceptor who pays or accepts the instrument in good faith: The presenter has good title to the instrument or is authorized to obtain payment or acceptance of the person who has good title; the instrument has not been materially altered; and the presenter has no knowledge that the signature of the maker or drawer is unauthorized.

Question 21

Universal Defense

Answer 21

A defense that can be raised against both holders and HDCs

Question 22

Personal Defense

Answer 22

A defense that can be raised against enforcement of a negotiable instrument by an ordinary holder but not against a HDC

Question 23

Discharge

Answer 23

Actions or events that relieve certain parties from liability on negotiable instruments. There are three methods of discharge: payment of the instrument; cancellation; and impairment of the right of recourse

Question 24

Impairment of Right of Recourse

Answer 24

A situation in which certain parties are discharged from liability on an instrument if the holder releases an obligor from liability or surrenders collateral without the consent of the parties who would benefit by it.