Themis Essay 814

Question 1

Whether a principal is liable on an instrument signed by an agent turns in part on

Answer 1

whether the agent had authority, either actual or apparent.

Question 2

If the agent is authorized, the principal is

Answer 2

liable whether the agent signed the principal’s name, the agent’s own name, or both.

Question 3

If the agent is not authorized,

Answer 3

the principal generally will not be liable.

Question 4

Even if an agent acts with no power to bind the principal, the principal can

Answer 4

ratify an act performed by another person, whether or not the person is an actual agent of the principal.

Question 5

Ratification occurs when a principal

Answer 5

affirms a prior act that was done or purported to be done on the principal’s behalf.

Question 6

The principal’s affirmation may be either

Answer 6

express or implied (such as through conduct), and consideration is not required.

Question 7

An accommodation party is

Answer 7

a surety, or one who guarantees the debt of another.

Question 8

In order to be an accommodation party,

Answer 8

a person cannot have received a direct benefit from the instrument.

Question 9

An accommodation party is liable

Answer 9

on the instrument in whatever capacity he has signed.

Question 10

Under the UCC, if a party’s obligation to pay an interest is secured by an interest in collateral and the person entitled to enforce the instrument impairs the value of the interest in the collateral,

Answer 10

the obligations of an accommodation party are discharged to the extent of the impairment.

Question 11

The burden of proving the impairment in the value of an interest in collateral

Answer 11

is on the party asserting the discharge.

Question 12

Impairing the value of an interest in collateral includes:

Answer 12

(i) failure to obtain or maintain perfection or recordation of the interest in collateral;
(ii) release of collateral without substitution of collateral of equal value;
(iii) failure to perform a duty to preserve the value of collateral owed to a debtor or surety or other person secondarily liable; or
(iv) failure to comply with applicable law in disposing collateral.

Question 13

An accommodation party is liable on the instrument only if:

Answer 13

(i) the person entitled to enforce the instrument has reduced his claim to judgment against the other party and execution is returned unsatisfied;
(ii) the other party has become insolvent;
(iii) the other party cannot be served with process; or
(iv) it appears useless to proceed against the other party.