[Anonymous]

In the CPAexcel lesson covered, for checks and drafts, the three parties are a drawer, drawee, and payee. For Notes and CDs, the two parties are a drawer and a payee.

So why the heck does it have a following question where it compares a maker with a drawer? By the very lesson it gave, either you have a drawer, drawee, and payee OR a maker and payee, but not both a maker and drawer.

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Under the Negotiable Instruments Article of the UCC, which of the following parties has secondary liability on an instrument?

A. Acceptor of a note.

B. An issuer of a cashier’s check.

C. A drawer of a draft.

D. A maker of a note.

Answer: C

[barelystayingsane]

If I remember correctly, the drawer of a draft has secondary liability and the drawee has primary liability, whereas the maker of a note has primary liability. Someone please correct me if I'm wrong, since I took REG six months ago and can't remember clearly off the top of my head. I do remember Becker covering this, and I would be very surprised if CPAExcel didn't cover this. You may want to go back through the chapter to see if they did.

[barelystayingsane]

If I remember correctly, the drawer of a draft has secondary liability and the drawee has primary liability, whereas the maker of a note has primary liability. Someone please correct me if I'm wrong, since I took REG six months ago and can't remember clearly off the top of my head. I do remember Becker covering this, and I would be very surprised if CPAExcel didn't cover this. You may want to go back through the chapter to see if they did.

[Anonymous]

Yup, what you said is right. After some digging I find out the appropriate section:

Contract Liability of Parties

Contract liability of parties under an instrument depends on the role that they play with regard to the instrument. Article 3 outlines their payment responsibility and order of payment according to the role that they play under the instrument.

A. Primary party liability — As discussed in the Presentment, Payment, and Dishonor lesson, there are certain parties who have primary liability.

1. Makers of CDs and notes;

2. Drawees of drafts or checks — UCC 3-409. Remember: A drawee of a draft cannot be held liable on that instrument until he or she “accepts” (i.e., signs, that instrument).

B. Secondary party liability —

1. Drawers of an ordinary check or draft.

2. Indorsers (unqualified).

[Anonymous]

Yup, what you said is right. After some digging I find out the appropriate section:

Contract Liability of Parties

Contract liability of parties under an instrument depends on the role that they play with regard to the instrument. Article 3 outlines their payment responsibility and order of payment according to the role that they play under the instrument.

A. Primary party liability — As discussed in the Presentment, Payment, and Dishonor lesson, there are certain parties who have primary liability.

1. Makers of CDs and notes;

2. Drawees of drafts or checks — UCC 3-409. Remember: A drawee of a draft cannot be held liable on that instrument until he or she “accepts” (i.e., signs, that instrument).

B. Secondary party liability —

1. Drawers of an ordinary check or draft.

2. Indorsers (unqualified).

[NYCaccountant]

The maker and the drawer are essentially the same. Just different terms depending on whether the instrument is a draft, or note.

Note = Maker (Primary liable on instrument)

Draft, check = Drawer (secondary liable on instrument) The drawee (Bank if check) would have primary liability, only if they accept.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[NYCaccountant]

The maker and the drawer are essentially the same. Just different terms depending on whether the instrument is a draft, or note.

Note = Maker (Primary liable on instrument)

Draft, check = Drawer (secondary liable on instrument) The drawee (Bank if check) would have primary liability, only if they accept.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Author]

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