ch26

West's Business Law with Online Research Guide, 9th Edition

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SIGNATURE LIABILITY: PRIMARY Primary Liability: An absolute requirement, subject to one or more valid defenses, to pay a negotiable instrument upon presentment. Only makers and acceptors (drawees that promise to pay when the instrument is presented) are subject to primary liability. Failure by either a maker or acceptor to pay on presentment constitutes dishonor of the instrument. Mere delay in payment does not constitute dishonor, nor does refusal to pay unless the party presenting the instrument provides identification or signs the instrument or a receipt for it. Likewise, returning an instrument because it lacks a proper indorsement does not constitute dishonor. In order to hold a maker or acceptor liable for dishonor, they must receive proper notice of dishonor , which may be given in any reasonable manner, including written, oral, or electronic notice, as well as notice on the instrument itself. Ch. 26: Negotiable Instruments: Liability, Defenses, and Discharge - No. 1 West’s Business Law (9th ed.)
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SIGNATURE LIABILITY: SECONDARY Secondary Liability: A contingent requirement to pay a negotiable instrument upon dishonor or the failure to pay or accept by the party primarily liable for the instrument. Only drawers and indorsers are subject to secondary liability; and then, only if: (1) the instrument is properly and timely presented ; (2) the instrument is dishonored or rejected ; and (3) the secondarily liable party is given timely notice of dishonor or rejection. Ch. 26: Negotiable Instruments: Liability, Defenses, and Discharge - No. 2 West’s Business Law (9th ed.)
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SECONDARY LIABILITY: PRESENTMENT Proper Party: The party to whom presentment must be made depends on the type of instrument involved: (1) a note or CD must be presented to the maker; whereas (2) a draft or check must be presented to the drawee. Method: An instrument may be properly presented (1) by any commercially reasonable means , (2) through a clearinghouse used by banks, or (3) at the place specified in the instrument. Timeliness: (1) A time instrument must be presented for acceptance on or before its due date and for payment on its due date; (2) A demand instrument must be presented for acceptance or payment within a reasonable time after its issue; and Ch. 26: Negotiable Instruments: Liability, Defenses, and Discharge - No. 3 West’s Business Law (9th ed.)
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(3) A check must be presented for payment within 30 days of its date or the date it was indorsed. Ch. 26: Negotiable Instruments: Liability, Defenses, and Discharge - No. 4 West’s Business Law (9th ed.)
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SECONDARY LIABILITY: DISHONOR AND NOTICE Dishonor: An instrument is dishonored when the required acceptance or payment is refused by or cannot be obtained from the primarily liable party within the prescribed time. Proper Notice:
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ch26 - SIGNATURE LIABILITY: PRIMARY Primary Liability: An...

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