Asked by Mohammed Yasser on Jun 09, 2024
Verified
Which of the following is true regarding how an accommodation party may sign an instrument?
A) An accommodation party may sign an instrument only as a maker.
B) An accommodation party may sign an instrument only as a maker or a drawer.
C) An accommodation party may sign an instrument only as a maker or acceptor.
D) An accommodation party may sign an instrument only as an endorser or acceptor.
E) An accommodation party may sign an instrument as a maker, drawer, acceptor, or endorser.
Accommodation Party
An individual who signs a loan or credit application on behalf of another, promising to pay if the primary borrower fails to do so.
Maker
A person who promises to pay a set sum to the holder of a promissory note or certificate of deposit.
Drawer
The party in a transaction that issues or writes a check or draft, instructing their bank to pay a specified sum to a certain beneficiary.
- Comprehend the various responsibilities and obligations linked to negotiable instruments, including those of the maker, drawer, acceptor, and endorser.
- Comprehend the consequences of a party’s signature on a negotiable instrument, along with the impacts of endorsements and signatures.
Verified Answer
GG
Giselle GaynorJun 16, 2024
Final Answer :
E
Explanation :
An accommodation party can sign a negotiable instrument in any capacity to lend their credit to another party on the instrument. This includes signing as a maker, drawer, acceptor, or endorser.
Learning Objectives
- Comprehend the various responsibilities and obligations linked to negotiable instruments, including those of the maker, drawer, acceptor, and endorser.
- Comprehend the consequences of a party’s signature on a negotiable instrument, along with the impacts of endorsements and signatures.