Liability for Warranties of Negotiable Instrument

The video tutorial explains liability under warranty theory on negotiable instruments, focusing on primary and secondary liabilities. Primary liability involves the maker or drawee's responsibility to pay, while secondary liability includes transfer, endorser, and presentment warranties. Transfer warranty involves the transferor's assurances to the transferee, endorser liability concerns the signatory's additional warranties, and presentment warranty relates to the presenter's entitlement to payment. Each type of liability is discussed in detail, highlighting the conditions under which they arise and their implications.

What is the primary liability in the context of negotiable instruments?

• The liability of the presenter to the payor

• The liability of the endorser to subsequent holders

• The liability of the maker or drawee to pay the note or draft

• The liability of the transferor to the transferee

When does secondary liability under warranty theory typically arise?

• When the instrument is wrongfully dishonored or paid

• When the instrument is presented for payment

• When the instrument is transferred without endorsement

• When the instrument is correctly honored

What is transfer warranty in the context of negotiable instruments?

• A warranty given by the payor to the presenter

• A warranty given by the transferor to the transferee

• A warranty given by the drawee to the maker

• A warranty given by the endorser to the drawee

What additional liability does an endorser have on a negotiable instrument?

• Higher liability due to additional warranties

• Liability to the drawee only

• Liability to the maker only

• No additional liability

What does a presenter warrant when presenting an instrument for payment?

• The validity of the transferor's signature

• Their entitlement to receive payment

• The accuracy of the payor's account balance

• The authenticity of the drawee's endorsement