Which of the following statements is true of a qualified indorsement?
A) It does not change the negotiable nature of the instrument.
B) It specifies the purpose of the indorsement or specifies the use to be made of the instrument.
C) It contains the signature of the indorser along with the words indicating to whom, or to whose order, the instrument is payable.
D) It does not eliminate the contractual liability of the indorser.

Question

Quizplus · Accepted Answer

A qualified indorsement is one by which the indorser disclaims her liability to make the instrument good if the maker or drawer defaults on it. They can be used with either a blank indorsement or a special indorsement. The use of a qualified indorsement does not change the negotiable nature of the instrument. Its effect is to eliminate the contractual liability of the indorser.

Which of the Following Statements Is True of a Qualified