What form of liability exists when a party is only responsible to pay on a negotiable instrument in case of default of the party who shoulders the obligation of liability for the instrument?

A) Primary Liability
B) Secondary Liability
C) Accidental Liability
D) International Liability

Secondary Liability

Secondary liability refers to a legal obligation that arises not from direct involvement in a wrongful act, but from a failure to properly oversee or control the primary party responsible, or from benefiting from the act.

Negotiable Instrument

An official paper that assures the delivery of a particular monetary amount, which can be demanded at any moment or at an agreed-upon time, identifying the person who will make the payment.

Default

The failure to fulfill an obligation, especially the failure to make payments on a loan.