Asked by SamanthaRey Colón on Jul 06, 2024
Verified
A holder can impair the value of collateral given to secure payment of an instrument without affecting the liability of parties who would benefit from the collateral in the event of nonpayment.
Collateral
Under Article 9 of the Uniform Commercial Code, the property subject to a security interest.
Impair
To weaken or damage something, especially a legal right, financial value, or physical condition.
- Determine the liability of parties involved in the issuance, transfer, and dishonor of negotiable instruments.
Verified Answer
NM
Nikki MullenJul 07, 2024
Final Answer :
False
Explanation :
A holder impairing the value of collateral without the consent of the party who has an interest in the collateral can affect the liability of those parties. The impairment of collateral can reduce the security backing the instrument, potentially affecting the recourse available to parties in the event of nonpayment.
Learning Objectives
- Determine the liability of parties involved in the issuance, transfer, and dishonor of negotiable instruments.