Who is discharged if a holder strikes out a prior indorsement on a negotiable instrument?
A) only the party whose name was stricken
B) the party whose name was stricken, and all prior indorsers
C) the party whose name was stricken, and all subsequent indorsers
D) all indorsers
E) no indorser is discharged

Question

Quizplus · Accepted Answer

When a holder strikes out a prior indorsement on a negotiable instrument, the party whose name was stricken and all subsequent indorsers are discharged. This is because the holder is essentially rejecting the prior indorsement and signaling that they do not want to rely on it. As a result, anyone who indorsed the instrument after the stricken party is also discharged from liability.

Who Is Discharged If a Holder Strikes Out a Prior