Multiply Choice
1. A check has the following indorsements on the back:
Paul Frank
Without recourse
George Hopkins
payment guaranteed
Ann Quarry
Collection guaranteed
Rachel Ott
Which of the following conditions occurring subsequent to the indorsements would discharge all of the indorsers?
(a) Lack of notice of dishonor
(b) Late presentment
(c) Insolvency of the maker
(d) Certification of the check

2. Which of the following actions does not discharge a prior party to a commercial instrument?
(a) Good-faith payment or satisfaction of the instrument
(b) Cancellation of that prior party’s indorsement
(c) The holder’s oral renunciation of that prior party’s liability
(d) The holder’s intentional destruction of the instrument

3. What is the difference between a co-maker and an accommodation party?
(a) A co-maker is liable both to the holder and the other co-maker, while an accommodation party is liable only to the holder.
(b) A co-maker is liable to subsequent indorsers, while an accommodation party is not.
(c) A co-maker is liable only to the other co-maker, while the accommodation party is liable to the holder.
(d) A co-maker is not liable once a bank certifies a check, while an accommodation party is still liable even after certification.

4. Karim writes a check to Lew but Karim’s bank accidently refuses to pay the check, despite the fact that Karim’s account has sufficient funds. As a result, Lew bounces many checks from his own account and has to pay substantial fees to his bank. Which of the following statements is true?
(a) Lew can recover damages from both Karim and Karim’s bank.
(b) Lew can recover damages only from Karim.
(c) Lew can recover damages only from Karim’s bank.
(d) Lew cannot recover any damages.

5. Nan forges Mina’s name on a check to buy a television set from Costmart. The store deposits that check into its account at Bank, but Bank does not credit Costmart’s account for the amount of the check. From whom can Costmart recover?
(a) Nan
(b) Mina
(c) The bank
(d) All of the above