Liability to Pay Negotiable Instrument

The video tutorial explains the roles of primary payors in financial instruments, such as the designated payee, maker, or drawee. It discusses the process when a draft is dishonored and the responsibilities under warranty theories. The concept of endorser liability is introduced, where the holder can seek payment from previous signers. Transfer warranty is also covered, detailing the liabilities of the transferor to ensure the instrument's payability.

Who is primarily responsible for paying an instrument?

• The transferor

• The endorser

• The designated payee

• The holder

What can a presenting party do if a draft is dishonored?

• Seek payment from the drawee

• Look towards other parties for payment

• Return the instrument to the maker

• Ignore the dishonor

What does endorser liability ensure?

• The instrument is void

• The instrument is dishonored

• The instrument is payable

• The instrument is non-negotiable

Who can the holder of an instrument seek payment from under endorser liability?

• The drawee only

• The current holder

• Any previous endorser

• The original maker only

What does a transferor warrant in a transfer warranty?

• The instrument is void

• The instrument is payable

• The instrument is non-negotiable

• The instrument is dishonored