Negotiable Instruments Liability Quiz

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Questions and Answers

Who is considered primarily liable for a promissory note?

The acceptor
The indorser
The maker (correct)
The drawer

Who is classified as secondarily liable for a bill of exchange?

The maker
The acceptor
The drawer (correct)
The certifier

When does a drawee become an acceptor?

When he indorses the note
When he signs the instrument
When he accepts the instrument (correct)
When he certifies the check

What distinguishes a primarily liable party from a secondarily liable party?

<p>The primarily liable party is unconditionally bound, while the secondarily liable party is conditionally bound (B)</p> Signup and view all the answers

According to the general rule, when is a person liable on an instrument?

<p>When his signature appears on the instrument (C)</p> Signup and view all the answers

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Study Notes

Liability on Instruments

The maker of a promissory note is considered primarily liable.
The indorser of a bill of exchange is classified as secondarily liable.
A drawee becomes an acceptor when they sign their acceptance of the bill of exchange.
A primarily liable party is responsible for the payment of the instrument, whereas a secondarily liable party is responsible only if the primary party defaults.
According to the general rule, a person is liable on an instrument when they sign it as a maker, drawer, or indorser.