Asked by Adriana Vander Heyden on Jun 14, 2024
Verified
A(n) ___________ signs an instrument to lend his credit to an instrument, and his liability is determined by the capacity in which he signs.
A) indorser
B) accommodation party
C) authorized agent
D) maker
Accommodation Party
An Accommodation Party is an individual or entity that signs a negotiable instrument on behalf of another, guaranteeing payment without receiving a direct benefit.
Indorser
The person who signs the back of a negotiable instrument, such as a check, thereby transferring ownership or guaranteeing payment to another party.
Liability
Refers to the legal responsibilities and obligations that arise from actions or omissions that could result in harm or loss to another party.
- Ascertain the governing principles behind the liability associated with accommodation parties.
Verified Answer
BR
Brooke RomeroJun 17, 2024
Final Answer :
B
Explanation :
An accommodation party signs an instrument to lend his credit to an instrument and his liability is determined by the capacity in which he signs. An indorser signs an instrument to transfer title to the instrument, an authorized agent signs as the representative of the principal, and a maker signs to create a negotiable instrument.
Learning Objectives
- Ascertain the governing principles behind the liability associated with accommodation parties.