Final answer:
Every party who signs a negotiable instrument is potentially liable for payment when it comes due.
Step-by-step explanation:
The statement is true. Every party who signs a negotiable instrument, such as a promissory note or a check, is potentially liable for payment of that instrument when it comes due.
This means that if the principal debtor, who is primarily responsible for payment, fails to pay the instrument, the other parties, such as endorsers and guarantors, may be held liable.
For example, let's say A signs a promissory note to borrow money from B. A is the principal debtor, and B is the payee.
If A fails to repay the loan, B can hold A liable for payment. Additionally, if C endorses the promissory note, C can also be held liable if A doesn't pay.
This principle of potential liability applies to various negotiable instruments and is an important aspect of commercial law.