Pick phrase that fills in the blank
Abigail is in the business of selling fine antiques. Abigail purchased an antique desk for $5,000 from Jackson, and gave a promissory note for payment. Concerned that Jackson might not accept the note, Abigail had her friend Catalina sign the promissory note as well. Jackson accepted the note as payment. Two weeks later, Jackson sought payment on the note. Abigail told Jackson that she is not responsible for the promissory note because Catalina signed the note too, and Jackson had to seek payment from Catalina first.
Abigail also spotted a beautiful set of vintage chairs owned by Max that would be perfect for her store. Abigail wrote a $10,000 check, also signed by her business associate Orville as an accommodation party, to Max to pay for the chairs. Max presented the check to Westville Savings, the bank where Abigail has a checking account, for payment. Westville Savings dishonored the check claiming Abigail had insufficient funds. Who is liable for these negotiable instruments?
Pick phrase that fills in the blank
A (promissory note, check) is an example of commercial paper that is a loan of money to be payable at a future date. A (draft, promissory note) is an example of commercial paper that oders someone else to pay money on their behalf. An (invoice, check) is a common type of draft. When a draft is in the form of a check, a(n) (individual, bank, creditor) is typcially the entity that pays the money on the check writer's behalf. The person that writes the check is also known as the (drawee, maker, drawer) of the draft. A person who has (secondary, primary) liability on an instrument is liable unconditionally. A person who has (primary, secondary) liability on an instrument has conditional liability.
Abigal is the (drawer, maker) of the note to Jackson. Catalina is the (drawee, co-maker, drawer) of the note to Jackson. When Abigail and Catalina signed the note, they are (individually and separately, jointly and severally) liable to Jackson.
If Jackson chooses, he can demand full payment from Catalina (after, before, before or after) demanding full payment from Abigail. If Catalina pays the $5000 owed to Jackson on the note, Catalina can demand (no reimbursement, partial reimbursement, full reimbursement) from Abigail. However, if Abigail does not pay Catalina, Jackson is (not liable, liable) to Catalina to return the money.
When Abigail wrote a $1000 check to Max, she was the (drawee, maker, drawer) of the check. As an accomdation party, Orville has (no liability, greater liability, the same liability) as Abigail does on the check. Max can make a claim on the check (secondarily, indirectly, directly) against Orville for payment (without with) asking for payment from Abigail first.
What if the facts were different?
What if Abigail gave Max a certified check from Abigail's bank when she purchased the $10,000 vintage chairs? A certified check is a check that the (acceptor, bank, indorser) has signed, which indicates that the bank has (accepted, rejected) the check. A certified check is a promise that the (acceptor, bank, indorser) will pay from (the bank's, the maker's) funds to satisfy the demand for payment. When Abigail gave Max a certified check from Westville Bank, the bank became (not, primarily, secondarily) responsible for the check. Thus, Westville Bank (would, would not) be held liable to pay for the certified check even if Abigail were unable to pay.
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