BANKING AFFAIRS

Detailed explanation-1: -Who is primarily liable on a promissory note. It is the maker who is primarily liable on a promissory note. The issuer of a note or the maker is one of the parties who, by means of a written promise, pay another party (the note’s payee) a definite sum of money, either on-demand or at a specified future date.

Detailed explanation-2: -Only makers and acceptors (drawees that promise to pay when the instrument is presented) are subject to primary liability. The maker of a promissory note promises to pay the note. An acceptor is a drawee that promises to pay an instrument when it is presented later for payment.

Detailed explanation-3: -There are primarily two parties involved in a promissory note. They are: The Maker or Drawer – the person who makes the note and promises to pay the amount stated therein. In the above specimen, you are the maker or drawer.

Detailed explanation-4: -The person “primarily” liable on an instrument is the person who by the terms of the instrument is absolutely required to pay same. All other parties are “secondarily” liable.

Detailed explanation-5: -There are two main types of liability on a negotiable instrument-primary and secondary liability. The maker of a note and drawee of a draft are primarily liable to pay the instrument. Parties who later sign, transfer, or present an instrument may be secondarily liable to pay the instrument.