Which of the following is true under the UCC regarding liability of a principal if the agent enters into a contract that is a negotiable instrument?
A) The principal is liable to the same extent as if no negotiable instrument were involved because the negotiable instrument has no effect on the principal's liability.
B) The principal cannot be held liable unless the principal's name is on the instrument.
C) The principal cannot be held liable unless the agent's signature indicates that it was made in a representative capacity.
D) The principal cannot be held liable unless the principal's name is on the instrument or the agent's signature indicates that it was made in a representative capacity.
E) The principal cannot be held liable unless the principal's name is on the instrument or the agent's signature indicates that it was made in a representative capacity, or the agent has been ruled insolvent.

Question

Quizplus · Accepted Answer

In certain situations the agent is the only party liable for the contract. The Uniform Commercial Code (UCC) governs negotiable instruments and states that other parties, that is, principals, cannot be liable for them if their name is not on the instrument or if the agent's signature does not indicate that it was made in a representative capacity.

Which of the Following Is True Under the UCC Regarding