Other Types of Liability

Question 1

Indorser Liability requires?

Answer 1

1) presentment (checks = 30 day limit)
2) dishonor: bouncing of check, or refusing to pay
3) notice of dishonor
4) actually indorsing: triggers liability

Question 2

Liability effect of qualified indorsement

Answer 2

1) disclaims liability
2) “without recourse”
3) indorsement merely effective to pass title

Question 3

Effect of Final Payment

Answer 3

1) contract actions (indorser’s contracts) may no longer be pursued
2) drawee bank may not recover on the check from the persons it unless there is a breach of a presentment warranty

Question 4

Final Payment: definition

Answer 4

Drawee bank

1) pays the item in cash
2) does not revoke a provisional settlement by midnight of the next banking day after the banking day of receipt

Question 5

Transfer warranty liability: generally

Answer 5

1) implied warranties
2) arise by transfer or operation of law
3) possession of the instrument is not needed
4) survives the final payment of an instrument

Question 6

Transfer warranty liability: elements

Answer 6

1) five transfer promises

2) no knowledge of insolvency proceedings

Question 7

Five Transfer promises: Transfer warranty liability

Answer 7

1) good title
2) genuine signatures: authentic and authorized
3) no material alteration
4) no defenses including real defenses