What term denotes the absolute obligation to pay a negotiable instrument according to its terms?

• A. Secondary liability
• B. Bailment
• C. Primary liability
• D. Carrier

Answer: (C)

Primary liability is the unconditional obligation to pay the amount stated on a negotiable instrument. It attaches to the maker of a promissory note or the acceptor of a draft (or the drawee in the case of a check) and requires them to pay as the instrument directs, regardless of what others do. Secondary liability, on the other hand, comes into play only if the primary obligor fails to pay, typically affecting endorsers or drawers after dishonor. Bailment and carrier describe unrelated concepts in property and transportation. So the term that denotes the absolute obligation to pay according to the instrument’s terms is primary liability.