To determine who is liable on a negotiable instrument and to whom, we must first understand the obligations one incurs by becoming a party to a negotiable instrument.

I. Obligations of a Maker

Imagine a law student borrowed money from a lender and executed a promissory note payable to the lender. If the lender later negotiated the note to a third-party financial institution, what was the law student’s liability on the note?

Subject to some nuance, the maker of a note must pay the note according...