Stanley, who owes Milton money, indorses a draft to him with the term "without recourse." The instrument later is dishonored.What liability does Stanley have on the instrument?
A)He has no liabilities on the instrument.
B)He has to pay Milton in case the instrument defaults.
C)He has primary liabilities.
D)He has secondary liabilities.

Question

Quizplus · Accepted Answer

By indorsing the draft with the term "without recourse," Stanley is essentially stating that he will not be held liable for any payment failures or dishonor of the instrument. Therefore, he has no liabilities on the instrument.

Stanley, Who Owes Milton Money, Indorses a Draft to Him