With respect to a qualified indorser, which liabilities are eliminated as a result of the qualified indorsement?
a/primary signature and secondary signature liability only.
b/ secondary signature liability only.
c/primary signature liability only
d/ primary signature liability and warranty liability
e/Primary and secondary signature liability, and warranty liability.
I chose #c.
To determine the correct answer, let's break down the options and understand what each liability means in the context of a qualified indorser:
a) Primary signature liability: This refers to the legal responsibility of the indorser to pay the value of the instrument in case the primary obligor (the person primarily responsible for payment) defaults on payment.
b) Secondary signature liability: This refers to the legal responsibility of the indorser to pay the value of the instrument if the secondary obligor (the person secondarily responsible for payment) defaults on payment, after the primary obligor.
c) Primary signature liability only: This option suggests that only the primary signature liability is eliminated. This means that the qualified indorser would be relieved of the responsibility to pay if the primary obligor defaults, but they would still be liable if the secondary obligor defaults.
d) Primary signature liability and warranty liability: Warranty liability refers to the guarantee made by the indorser that certain statements regarding the instrument are true. This option suggests that both the primary signature liability and the warranty liability are eliminated.
e) Primary and secondary signature liability, and warranty liability: This option suggests that all three liabilities (primary signature, secondary signature, and warranty) are eliminated as a result of the qualified indorsement.
From the given options, you selected option c, which suggests that only the primary signature liability is eliminated. However, the correct answer is option e – primary and secondary signature liability, and warranty liability are eliminated as a result of a qualified indorser.
So, the correct answer is e.