Asked by Anupama Balaji on Apr 29, 2024
Verified
Which of the following is true regarding the liability of an accommodation party?
A) As a maker,an accommodation party has primary liability,but as an endorser,the accommodation party has secondary liability.
B) An accommodation party has primary liability both as a maker and as an endorser.
C) An accommodation party has secondary liability both as a maker and as an endorser.
D) An accommodation party has primary liability as either a maker or endorser,but only if all other parties to the instrument have filed for and received bankruptcy protection.
E) An accommodation party has primary liability as a maker only if all other parties to the instrument have filed for and received bankruptcy protection,and secondary liability in any other case regardless of whether the accommodation party is a maker or an endorser.
Accommodation Party
A person who signs a negotiable instrument on behalf of another, guaranteeing payment without receiving any personal benefit.
Primary Liability
The main or direct obligation to repay a debt or fulfill a contractual duty, without relying on secondary sources for payment.
Maker
In legal and financial contexts, it refers to the person who creates or signs a promissory note, thus agreeing to pay the note's value.
- Understanding the legal responsibilities of parties involved with negotiable instruments.
- Differentiating among distinct categories of parties like makers, drawers, endorsers, and accommodation parties within the framework of negotiable instruments.
Verified Answer
EO
Elora O'NeilMay 01, 2024
Final Answer :
A
Explanation :
As a maker,an accommodation party has primary liability,but as an endorser,the accommodation party has secondary liability.
Learning Objectives
- Understanding the legal responsibilities of parties involved with negotiable instruments.
- Differentiating among distinct categories of parties like makers, drawers, endorsers, and accommodation parties within the framework of negotiable instruments.