Asked by Nicholas Lalla on Jun 07, 2024
Verified
Which of the following must occur for a drawer to become liable on a check?
A) The only requirement is that the holder of the instrument present the instrument to the drawer in a proper and timely fashion.
B) The only requirement is that the holder of the instrument present the instrument to the drawee in a proper and timely fashion.
C) The two requirements are that (1) the holder of the instrument present the instrument to the drawer in a proper and timely fashion and (2) the holder establish that the check was wrongfully dishonored.
D) The three requirements are that (1) the holder of the instrument present the instrument to the drawee in a proper and timely fashion, (2) the instrument be dishonored, and (3) notice of the dishonor be given to the drawer.
E) The four requirements are that (1) the holder of the instrument present the instrument to the drawee in a proper and timely fashion, (2) the instrument be dishonored, (3) notice of the dishonor be given to the drawer, and (4) proof provided by the holder that the check was wrongfully dishonored.
Drawer Liability
Drawer liability pertains to the legal responsibility of the person who writes or signs a check or draft to ensure the availability of sufficient funds in the account for the amount specified for payment.
Wrongfully Dishonored
Refers to a situation where a financial institution unjustifiably refuses to pay or accept a negotiable instrument when properly presented.
Proper Presentment
The formal presentation of a document in a way that follows legal requirements or norms.
- Comprehend the legal ramifications involved in the issuance, transfer, and dishonor of negotiable instruments.
Verified Answer
PK
Paige KitchensJun 13, 2024
Final Answer :
D
Explanation :
For a drawer to become liable on a check, the check must be presented to the drawee (typically the bank) in a proper and timely manner, the check must be dishonored (refused for payment), and notice of this dishonor must be given to the drawer. These steps ensure that the drawer is aware of the dishonor and has the opportunity to rectify the situation.
Learning Objectives
- Comprehend the legal ramifications involved in the issuance, transfer, and dishonor of negotiable instruments.