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58

Klaus forges Lots name as the maker of a note payable to Klaus. Klaus indorses the note in blank, sells it to Mort, and disappears. Without indorsement, Mort sells the note to Nora, who, also without indorsement, sells the note to Obie. On discovery of the forgery, most likely liable to Obie is

a. Lot.

b. Mort.

c. Nora.

d. none of the choices

59 Baer writes a check for $500 payable to Cary drawn on Baers account at Debit Bank. Cary indorses and sells the check to Esau, who deposits the check in his account at Fidelity Bank. Fidelity dishonors the check. Baer or Cary may be liable for payment of the check if

a. timely notice of dishonor is given.

b. more than thirty days have elapsed since the check was written.

c. the check was not properly presented for payment.

d. the drawer of the check does not repudiate the dishonor.

62 Bravo co-signs a $15,000 note payable to College Loan Company enabling Dios to obtain a student loan. The terms of the note stated that Bravo signed on behalf of Dios. If Dios stops making payments on the debt, Bravo is

a. primarily liable.

b. not liable because Bravo signed on behalf of Dios.

c. discharged from any obligation.

d. secondarily liable.

63 Rau obtains a loan from Security Funds and signs a note for the amount payable to the lender. Security Funds indorses the note and sells it to Tomas. With the intent to cancel Raus obligation on the note, Tomas writes Paid across its face. This discharges the liability of

a. no one.

b. Rau only.

c. Security Funds only.

d. Rau and Security Funds.

71 Colin signs a note payable to the order of Debit Bank. The bank indorses the note in blank and negotiates it to Equity Funds, which sells it to Financial Investments. The transfer of the note from Equity to Financial gives rise to

a. signature liability

. b. warranty liability.

c. none of the choices.

d. contractual liability