Question

19. Salmond signs a note for the purpose of lending credit to John. Salmond also makes his father Richard sign the note because of his shaky financial condition. This indicates that Richard has signed the note in the capacity of a(n):

A. drawee.

B. accommodation maker.

C. drawee.

D. indorser.

20. Jack received a check as payment for the work he did. He indorsed the check "without recourse." This has what legal effect?

A. The drawer of the check is discharged from primary liability on the check.

B. Jack is discharged from secondary liability on the check.

C. The drawer of the check is discharged from secondary liability on the check.

D. Jack is discharged from primary liability on the check.

21. Flanigan is the Treasurer of ABC Corp. As such, he is authorized to sign checks for the

corporation. A supplier bills ABC for a legitimate obligation. Flanigan made out a check to the supplier and signed it "ABC Corp., by Flanigan, Treasurer". Who is liable on this check?

A. ABC only.

B. Flanigan only.

C. ABC and Flanigan.

D. Neither ABC nor Flanigan.

Answer 1

Since, multiple questions have been posted, I have answered the first one.

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Question 19:

Accommodation Maker. (which is Option B)

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Explanation:

Accommodation maker is a person who signs the note in the capacity of surety for the other party (also known as accommodated party). The accomodation maker receives no compensation or any other form of benefit (direct and indirect) in return for signing the note. In case of any failure to make the payment on the instrument by the accommodated party, the accomodation maker will be liable to discharge the obligation and will have the right to sue the accommodated party in order to recover the amount so paid. With the use of accommodation maker, the accommodated party may be able to obtain loan or extend credit (in case his/her own creditworthiness is not appropriate to get loan or provide credit to another party). In the given case, Salmond will be considered as accommodated party and Richard will be treated as accommodation maker.