Liability and Negotiable Instruments - Module 2 of 6
An agent that signs a negotiable instrument
With respect to checks, a bank
Leo buys a used car from Violet by giving her a cashier’s check he obtained from First Bank. Using the terminology of the Code, which of the following is TRUE?
Ethan hires Lily to do electrical work in his home for $200 but he later discovers that, because of a misunderstanding, Lily only rewired Ethan’s fuse box without rewiring the outlets. Lily agrees to accept $75 in payment and Ethan writes Lily a $75 check with the words “paid in full” on the memo line. Is the check valid as a negotiable instrument?
Caleb buys a used car from Mercury Motors with financing from a note issued by First Finance. Several months later First Finance sells the note to National Bank but does not notify Caleb, who keeps making his payments to First Finance. National Bank demands from Caleb back payment of all of the payments Caleb made to First Finance after the transfer of the note. What should the result be?
Caleb buys a used car from Mercury Motors with financing from a note issued by First Finance. Several months later First Finance sells the note to National Bank and National Bank sends to Caleb a demand that he sends all future payments to National Bank. Caleb contacts First Finance and it denies there was any transfer of the note to National Bank. What can Caleb do?
Maddox writes a check for $300 to Rachel for some landscaping work Rachel did on Maddox’s home. The next day Rachel indorses the check as payment to Tabitha for some landscaping equipment. Six months later Tabitha indorses the check to Brandon who indorsers it as well, and then takes the check to First Bank where the bank dishonors the check (refuses payment). The bank notifies no one of the dishonor. Which of the following is FALSE?
Which of the following is NOT a major source of potential liability under the Code?
Ian takes out a loan from First Bank as a borrower and Horatio signs the promissory note as an indorser. Horatio writes next to his signature “as guarantor,” which makes him
Wendell is a secondary obligor on a note and he could conceivably be released from obligation on the note for all but WHICH of the following reasons?