An unqualified indorser has secondary liability on negotiable instruments.

Question

Quizplus · Accepted Answer

An unqualified indorser of a negotiable instrument, such as a check, is liable for payment if the primary obligor fails to pay. This is known as secondary liability, and it arises because the indorser is deemed to have guaranteed payment of the instrument by signing the back of it. However, the indorser's liability may be limited or discharged if certain conditions are met, such as notice of dishonor, presentment, and diligent collection efforts by the holder of the instrument.

An Unqualified Indorser Has Secondary Liability on Negotiable Instruments