A draft may require the payor of the draft to do all of the following, except: P
ID: 391325 • Letter: A
Question
A draft may require the payor of the draft to do all of the following, except:
Pay the holder of the draft a definite amount of money.
Pay the holder of the draft money on demand.
Pay the holder of the draft on a fixed date in the future.
Pay the holder of the draft a higher rate of interest if a future event occurs.
If a substantial amount of time has elapsed from the date the check was made out to the date it is presented to the bank for payment, the check is said to be
Lapsed
Stale
Overdue
Post-dated
Al wrote a check to Megan which she endorsed and deposited in her account. Which of the following events must occur before Megan will be liable on the check?
Presentment of the check
Dishonor by the drawee bank
Notice of the dishonor to Megan
All of the above are required
The conditional liability of indorsers may be disclaimed if they indorse a negotiable instrument with the words __________.
Without recourse.
Payment in full.
For deposit only.
Payment upon demand.
A.)Pay the holder of the draft a definite amount of money.
B.)Pay the holder of the draft money on demand.
C.)Pay the holder of the draft on a fixed date in the future.
D.)Pay the holder of the draft a higher rate of interest if a future event occurs.
Explanation / Answer
1) D) Pay the holder of the draft a higher rate of interest if a future event occurs.
The payor of draft does not pay any interest.
2) B) Stale
3) D) All of the above are required
4) A) Without recourse
"Without recourse" absolves the endorser of any liability to the subsequent holder of a negotiable instrument. For example, Adding the words "Without recourse" after the signature, means that the endorser has no responsibility, in case the cheque is bounced.
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