Exam 21: Holder in Due Course and Liability of Parties

Stan Johnson is the secretary of Balzene's,Inc.a small corporation.Before an important meeting with some potential clients,Stan purchases some supplies from a local office supply store.Stan takes one of the company's checks that are imprinted with the company's name to pay for this merchandise.In his rush before the meeting,Stan simply signs the check "Stan Johnson." Which of the following is true in this situation?

To qualify as a holder in due course under the shelter principle,the holder must qualify as a holder in due course in his or her own right.

When does a forgery prevent a holder from qualifying as a holder in due course?

Which of the following is true about primary liability on a check?

A holder qualifies as a holder in due course even if at the time the instrument was issued or negotiated to the holder,the instrument bore apparent evidence of forgery or alteration or was otherwise so irregular or incomplete as to call into question its authenticity.

Transfer warranties cannot be disclaimed with respect to checks,but they can be disclaimed with respect to other instruments.

Howard is shopping at an expensive men's clothing store and overhears a conversation between an irate customer and one of the salespersons.The customer is upset about some clothing that he had purchased the prior week.The salesperson agrees to refund $300 to the customer,but tells the customer that he must come in the following day to pick up a check for the refund amount.Howard pays close attention to the customer's complaints and learns of the exact clothing items that the customer is returning.Howard then passes this information on to his brother so that his brother goes to the store,impersonates the irate customer,receives the $300 check,and then cashes it after forging the irate customer's signature.Assuming that Howard's brother cannot be located,who will bear the loss in this situation and why?

What is the significance of a defense being a real defense rather than a personal defense?

Lisa purchases a home theater system from Homeplace Cinema.Lisa signs a $10,000 negotiable promissory note in connection with this purchase.This note requires monthly payments for five years.After the system is installed,Lisa begins to have trouble with it.It turns out that there are defective components in both the video and audio aspects of the system.Meanwhile,Homeplace Cinema has sold Lisa's promissory note to Amalgamated Finance,who meets all the requirements of a holder in due course.Lisa refuses to make any further payments on the notes due to the breach of contract by Homeplace Cinema.Which of the following is true?

An accommodation party can sign:

Under the Uniform Commercial Code's indorsers' liability rules,drawers of checks and drafts and unqualified indorsers of negotiable instruments have ________ liability on the instruments.

What are the two general kinds of implied warranties for which warranty liability can be imposed in connection with a negotiable instrument?

Commercial paper held by a holder in due course is virtually as good as money.

A holder in due course is a holder who takes an instrument for value,in good faith,and without notice that it is defective or overdue.

The signature of the drawee named in a draft on the face of the draft or another location on the draft indicates that the signer is an acceptor of the draft.

Duress could be a personal or a real defense depending on the type or level of duress.

In order to become a holder in due course,one must take a negotiable instrument without notice of the following except:

The advantage of a holder in due course over a simple holder of an instrument is that the holder in due course can:

The signature on a negotiable instrument can be any name,word,or mark used in lieu of a written signature.

One cannot become a holder in due course of an instrument if there is apparent evidence of an irregularity in the instrument.