Asked by Yocabed Efrem on May 07, 2024
Verified
The customary manner of disclaiming the indorser's contractual liability is to add which of the following sets of words before or after his signature?
A) For collection only.
B) Without recourse.
C) Pay to the order of.
D) For deposit only.
Contractual Liability
The responsibility and obligations that a party is subject to under the terms of a contract.
Without Recourse
A phrase indicating that the holder of a financial instrument cannot demand payment from the originator if the instrument fails to pay.
Indorser
A person or entity that signs the back of a negotiable instrument, thereby transferring ownership or guaranteeing payment to another party.
- Acquire knowledge about the significance and effects of indorsements, encompassing special, blank, and restrictive categories.
- Perceive the nuances distinguishing various endorsements and their legal outcomes.
Verified Answer
YN
Yinhla NgoveniMay 11, 2024
Final Answer :
B
Explanation :
"Without recourse" is the customary phrase used to disclaim the indorser's contractual liability. It means that the indorser is not responsible for payment if the instrument is dishonored. The other choices are not appropriate for disclaiming liability. "For collection only" limits the authority of the holder to collect the funds on behalf of the indorser. "Pay to the order of" is part of the indorsement to transfer ownership of the instrument. "For deposit only" restricts the negotiability of the instrument to deposit it in a specific account.
Learning Objectives
- Acquire knowledge about the significance and effects of indorsements, encompassing special, blank, and restrictive categories.
- Perceive the nuances distinguishing various endorsements and their legal outcomes.