Len signs a note "payable to the order of Account Collection Agency." Unless Len has a valid defense against payment, his liability on this note is
A) immediate.
B) imposed only after payment is demanded.
C) postponed until the note is dishonored by the payee.
D) suspended until payment is due.

Question

Len signs a note "payable to the order of Account Collection Agency." Unless Len has a valid defense against payment, his liability on this note is​
A) ​immediate.
B) ​imposed only after payment is demanded.
C) ​postponed until the note is dishonored by the payee.
D) ​suspended until payment is due.

Quizplus · Accepted Answer

When Len signs a note “payable to the order of Account Collection Agency,” he is creating a negotiable instrument, which means that if the instrument is properly negotiated (i.e., transferred to a third party) and Len does not have a valid defense against payment, his liability on the note is immediate. This means that Len is immediately responsible for paying the amount indicated on the note to the Account Collection Agency or any subsequent holder of the note who properly negotiates it.

Len Signs a Note "Payable to the Order of Account