A holder can impair the value of collateral given to secure payment of an instrument without affecting the liability of parties who would benefit from the collateral in the event of nonpayment.

Question

Quizplus · Accepted Answer

A holder impairing the value of collateral without the consent of the party who has an interest in the collateral can affect the liability of those parties. The impairment of collateral can reduce the security backing the instrument, potentially affecting the recourse available to parties in the event of nonpayment.

A Holder Can Impair the Value of Collateral Given to Secure