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Flashcards in Contract Liability Deck (5):

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.


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


Contract Liability


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


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.


Contract Liability


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