Asked by Riley Runnells on Jul 15, 2024
Verified
Which of the following is true regarding a drawee's liability on a check or a draft?
A) The drawee is primarily liable in all cases.
B) The drawee is secondarily liable because the holder must first proceed against the drawer.
C) The drawee is primarily liable if it accepts (certifies) a check.
D) The drawee is secondarily liable only in doubtful cases.
Drawee's Liability
The responsibility of the drawee (typically a bank) to pay the amount specified on a draft or check when properly presented for payment.
Certifies
The act of officially recognizing something as true, accurate, or in compliance with a particular standard.
Draft
A preliminary version of a document, plan, or strategy, subject to revision and refinement.
- Grasp the concept of primary and secondary liability in negotiable instruments.
Verified Answer
PA
Paulina AlarconJul 17, 2024
Final Answer :
C
Explanation :
If the drawee bank certifies the check,it becomes primarily,or absolutely,liable for paying the check as it reads at the time of its acceptance,and its acceptance discharges the drawer and indorsers who indorsed before the acceptance.
Learning Objectives
- Grasp the concept of primary and secondary liability in negotiable instruments.