liability of parties Flashcards
when are you liable
when you sign
what liability for a maker
primary
what liability for a drawer
secondary
liable after presentment and dishonor
when is drawee liable?
generally not liable
you’d go after drawer if check bounces, not the bank
properly payable rule
bank obligated to honor properly payable check
sufficient funds + authorized pmt
what limits a customer’s ability to sue bank for wrongful dishonor
customer duty to inspect bank statement and exercise reasonable case to discover unauthorized pmts from forged sigs
who is an acceptor
draww bank who agrees to pay draft as accepted
primary liability
indorser liability
secondary
limit by “without recourse”
stop payment general rules
customer generally may order bank to stop pmt
bank usually required to stop pmt
what is not a defense for a bank to not honor a stop payment?
mistake
inadvertance
burden for stop payment
on customer
prove loss in event of pmt by bank despite valid stop pmt order
when does a bank not violate anything even if valid stop pmt order
payment to a HIDC
why does paying check to HIDC not violate a stop pmt order?
customer cant prove loss
HIDC could have enforced check against customer anyways
what if a check is dishonored to a HIDC?
drawer has secondary liability
only real defenses will protect drawer
general properly payable rules
bank can charge customer acct if properly payable
