Presentment, Payment and Dishonor of Negotiable Instruments Flashcards
Horton wrote a check for $50,000 to Wallace who in turn endorsed it to Halbert. When Halbert presented the check to the bank it was dishonored because of insufficient funds. Which of the following statements is correct?
A. Halbert is not entitled to payment because of dishonor.
B. Halbert must present the dishonored check to Horton for payment.
C. Wallace is discharged from liability.
Transferors are not discharged just because they have transferred the instrument. They still have liability as a secondary party if the primary party refuses payment.
D. Halbert has 30 days to notify Wallace of the dishonor.
Non-bank parties have this amount of time to turn to secondary parties after primary party refuses to pay.
D. Halbert has 30 days to notify Wallace of the dishonor.
Non-bank parties have this amount of time to turn to secondary parties after primary party refuses to pay.
Janice owes Jake $120,000. Jake cashes the check 45 days after receiving it. Janice’s bank fails. The FDIC will cover $100,000. Janice
A. Must pay the $20,000 difference.
If presentment is not made within 30 days and there is a bank failure, the drawer is off the hook for whatever amount is not federally guaranteed.
B. Is not liable for the $20,000 difference.
If the holder/HDC does not present the check within 30 days and there is a bank failure, the drawer is discharged from liability for the difference.
C. Is liable for the $20,000 difference but can recover it from the FDIC.
D. Must split the difference with Jake and pay $10,000 if he is an HDC.
B. Is not liable for the $20,000 difference.
If the holder/HDC does not present the check within 30 days and there is a bank failure, the drawer is discharged from liability for the difference.
