CHAPTER 24—LIABILITIES OF PARTIES AND HOLDERS IN
DUE COURSE Key
1. Which of the following is true of primary liability?
2. _____ is the demand for acceptance or payment made on the maker, acceptor, drawee, or other payor of
commercial paper.
3. Which of the following is an example of a dishonor?
4. Which of the following best describes protest?
5. A holder for value and in good faith with no knowledge of dishonor, defenses, or claims, or that paper is
overdue is known as a _____.
6. A(n) _____ refers to a person in a relationship of trust and confidence, such as a trustee.
7. Which of the following best describes the shelter principle?
8. A(n) _____ is a claim a party being sued makes against the party suing.
9. Parties whose signatures do not appear on negotiable instruments are liable for their payment.
10. A maker of a note is primarily liable and may be called on for payment.
11. Indorsers and drawers are the parties whose liability on negotiable instruments is ordinarily primary.
12. The UCC specifies that for drawers on uncertified checks, a presentment within thirty days after the date of
the check is presumed to be reasonable.
13. Return of a check lacking a proper indorsement constitutes dishonor.
14. A check is considered dishonored if it is returned to the holder stamped “insufficient funds.”
15. A check that is deposited into a bank account can only be from that particular bank.
16. Normally, an unauthorized signature binds the person whose name is used.
17. An agent who signs an instrument indicating a representative capacity will not have personal liability on the
instrument.
18. In order to attain the specially favored status of being a holder in due course, the holder need not give value
for the paper.
19. Generally, the rights of the holder of consumer paper are subject to all claims, defenses, and setoffs of the
original purchaser arising from the consumer transaction.
20. Explain presentment in detail.