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Flashcards in Contract Liability Deck (5):
1

Contract Liability

Maker of the Note

1) Prim liability: No condition Precedent
* Maker must pay instrument when it is due according to its terms at the time it was issued

2) Liable to holder or indorser who paid instrument

3) Defense:
* Make may raise defense effective depends on state of holder.

2

Contract Liability

Drawer of Draft

Disclaim Liability:
* May not disclaim on a check, but may on other drafts

Secondary Liability:
* Drawer liable after two conditions:
1) Presentment (within 30 days)
2) Dishonor

3

Contract Liability

Indorser

by his endorsement undertakes responsible to the holder for the amount of the bill or note.

4

Contract Liability

Indorser of Note or Draft

1) Liability Disclaimed is allowed

2) Indorser are liable to eachother in order of signature

3) Secondary Liability
* indorser only liable after 3 conditions
1) Presentment (within 30 days)
2) Dishonor
3) Notice of dishonor

* A holder may sure the indorser for the amount left on the check under contract they based on indosrement alone, unless it was signed without recourse.

5

Contract Liability

Drawee

General Rule:
* A drawee make no Negotiable instrument contract.

Accept ad Certification:
* however, may agree by signing draft

Paying on Forged Indorsement
* Is liable to payee for CONVERSION