A is corrent. The instrument is a negotiable draft payable on demand and Ensign is a holder. Although Mason and Adams are the only parties to this instrument it qualifies as a draft (a three-party instrument) because Mason is both the drawer and the payee. The drawee on the instrument is Adams Wholesalers, who is primarily liable on the draft after accepting the instrument. Before acceptance, Adams had no liability on the draft. Mason, the payee and indorser, is secondarily liable on the instrument. No party would have primary liability until acceptance by the drawee.
B is incorrect. The instrument is a negotiable draft payable on demand and Ensign is a holder.
C is incorrect. The instrument is a negotiable draft payable on demand and Ensign is a holder. Although Mason and Adams are the only parties to this instrument it qualifies as a draft (a three-party instrument) because Mason is both the drawer and the payee. The drawee on the instrument is Adams Wholesalers, who is primarily liable on the draft after accepting the instrument. Before acceptance, Adams had no liability on the draft. Mason, the payee and indorser, is secondarily liable on the instrument. No party would have primary liability until acceptance by the drawee.
D is incorrect. No party would have primary liability until acceptance by the drawee.
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