Parties to the instrument and their potential liablity

Question 1

A Maker has

Answer 1

Primarily liability, the maker must pay the instrument when it becomes due

Question 2

A Drawer has

Answer 2

Secondary liability. The drawer’s obligation ripens upon presentment and dishonor

Question 3

A drawee’s liability is not on the instrument itself but to the

Answer 3

Drawer who has funds deposited at a bank

Question 4

Properly Payable Rule

Answer 4

The Bank is obligated to honor a check that is properly payable

Question 5

If a check has an alteration, the bank may charge for the amount authorized,

Answer 5

not for the altered amount

Question 6

A bank may property pay a post dated check

Answer 6

Unless the customer gives timely notice of the post dated check

Question 7

Wrongful Dishonor

Answer 7

A customer can sue for damages that are proximately caused by a wrongful dishonor

A customer has a duty to inspect the bank statement and they must exercise reasonable care to discover unauthorized payments resulting for a forged signature

Question 8

Stop payment

Answer 8

An oral stop payment is valid for 14 days, written stop payment is valid for 6 months

Question 9

Indorsers liability

Answer 9

An indorsers liability ripens when
1) The note is dishonored; and
2) The indorser receives notice of the dishonor

(be aware of indorsements that state “without recourse” which disclaims the endorsers liability