Question

If the instrument is payable to the order of a third person

A. He is liable to all parties subsequent to the payee
B. He is not liable to any party
C. He is liable to the payee and to all subsequent parties
D. He is liable to all parties saubsequent to the maker or drawer

Answer 1

If the instrument is payable to the order of a third person, they are liable to the payee and all subsequent parties.

Step-by-step explanation:

If the instrument is payable to the order of a third person, the correct option would be C - He is liable to the payee and to all subsequent parties.

This means that the third person mentioned in the question, who is not the payee, is still liable to the payee and anyone else who receives the instrument after the payee. This is because the instrument is still payable to the third person.

For example, if a check is made payable to John, and John endorses it to Peter (a third person), Peter is liable to John (the payee) and anyone else who receives the check after Peter.