Liability of Parties

Question 1

The maker of a note

Answer 1

has primary liability on that note

Question 2

No one has primary liability on a draft or check

Answer 2

unless the drawee accepts it

Question 3

When there are multiple endorsers on a negotiable instrument

Answer 3

each is liable to subsequent endorsers

Question 4

Renunciation

Answer 4

must be in writing to discharge liability

oral renunciation does not discharge

Question 5

What other actions discharges endorsers from liability

Answer 5

Primary party pays (all are discharged)
Cancellation of prior party endorsement
Holder intentionally destroys instrument (prior endorsers are discharged)

Question 6

When an negotiable instrument is endorsed and a specific person is indicated

Answer 6

The instrument is order paper
That person can further negotiate
Payment is guaranteed

Question 7

Striking out the endorsement of a person

Answer 7

discharges that person’s secondary liability
discharges subsequent endorsers who have endorsed
DOES NOT discharge any prior endorsers

Question 8

What acts can discharge prior holders of an instrument

Answer 8

Unexcused delay in presenting instrument
Cancellation or Renunciation
Fraudulent or materially alteration
certification of check

Question 9

Notice of Dishonor

Answer 9

should be given by midnight of the 3rd business day after dishonor (or notice)

Question 10

Banks must be given notice of dishonor

Answer 10

by midnight of the next banking day