Asked by Saadak Ahmed Mohamud on May 20, 2024
Verified
Which of the following is true regarding liability on negotiable instruments?
A) Issuers and acceptors are primarily liable for a negotiable instrument, while drawers and endorsers are secondarily liable.
B) Drawers and endorsers are primarily liable, while issuers and acceptors are secondarily liable.
C) Issuers and drawers are primarily liable, while acceptors and endorsers are secondarily liable.
D) Acceptors and endorsers are primarily liable, while issuers and drawers are secondarily liable.
E) Drawers are primarily liable, while issuers, acceptors, and endorsers are secondarily liable.
Negotiable Instruments Liability
Legal accountability related to documents that promise payment to the bearer or named party, such as checks or promissory notes.
Primarily Liable
Refers to the main party responsible or legally obligated to fulfill a duty or pay a debt.
Secondarily Liable
Refers to a party's indirect responsibility to fulfill an obligation if the primary party fails to do so.
- Gain an understanding of the distinct duties and legal liabilities pertaining to negotiable instruments like the maker, drawer, acceptor, and endorser.
Verified Answer
EA
Edward AdamsMay 22, 2024
Final Answer :
A
Explanation :
Issuers of notes and acceptors of drafts (including checks) are primarily liable, meaning they promise to pay the instrument when it's due. Drawers and endorsers are secondarily liable; they promise to pay if the primary party defaults, provided proper notice of default is given.
Learning Objectives
- Gain an understanding of the distinct duties and legal liabilities pertaining to negotiable instruments like the maker, drawer, acceptor, and endorser.