With Respect to the Secure Position of a Holder in Due

question 21

Multiple Choice

With respect to the secure position of a holder in due course,which of the following would most strongly support the reluctance of banks to honour cheques without verification of the various endorsements appearing on a cheque?

• A) ability to report discrepancies within a reasonable time
• B) the absence of a verification agreement
• C) inability to recover advanced funds on an invalid cheque
• D) banker's responsibility to know his customer's signature

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Definitions:

Debt

An obligation owed by one party, the borrower, to a second party, the lender; typically involving borrowed money that is expected to be paid back with interest.

Exchange Of Consideration

The act in a contract where something of value is traded between parties, forming the basis for mutual obligation.

Contract

A legally binding agreement between two or more parties that outlines obligations and provisions for the parties involved.

Postbox Rule

A legal doctrine that states that an acceptance of an offer becomes effective when it is posted, not when it is received by the offeror.