Duke signs a note "payable to the order of Equity Bank." Unless Duke has a valid defense against payment, his liability on this note is
A) impaired.
B) primary.
C) secondary.
D) qualified.

Question

Duke signs a note "payable to the order of Equity Bank." Unless Duke has a valid defense against payment, his liability on this note is​
A) ​impaired.
B) ​primary.
C) ​secondary.
D) ​qualified.

Quizplus · Accepted Answer

By signing a note payable to the order of Equity Bank, Duke becomes the primary obligor or maker of the note. This means that Duke is primarily liable for payment of the note, and is obligated to pay the full amount of the note unless he has a valid defense against payment. Therefore, choice B is the correct answer.

Duke Signs a Note "Payable to the Order of Equity