Exam 21: Holder in Due Course and Liability of Parties

Jenna signs a promissory note to pay $1,000 to Adam.Adam cleverly raises the note to $10,000 and negotiates the note to Ned.Ned indorses the note and negotiates it to Mark.When Mark presents the note to Jenna,how much does she need to pay? Can Mark collect any sum of the money from Ned? If yes,how much?

Harold borrows $20,000 from Alex and signs a note promising to pay Alex this amount plus interest in one year.Alex negotiates the note to Reese,an HDC.Before the note is due,Harold declares bankruptcy and the court finds it to be true.According to the discharge in bankruptcy defense,which of the following is true in this scenario?

Good faith refers to honesty in fact in the conduct or transaction concerned.

The good faith test applies to both the holder and the transferor of an instrument.

Transfer and presentment warranties shift the risk of loss to the party who was in the best position to prevent the loss.

Absolute liability to pay a negotiable instrument,subject to certain universal or real defenses is known as ________.

Lisa buys a used car from Kelly.She pays 10 percent down of the cost and signs a negotiable promissory note,promising to pay Kelly the remainder of the purchase price,with interest,in 12 equal monthly installments.At the time of sale,Kelly materially misrepresented the mileage of the automobile.Later,Kelly negotiates the note to Frances,who has no notice of the misrepresentation.Frances,an HDC,negotiates the note to Zoe,who is not an HDC.Which of the following is Zoe in regards to the indorsement?

A person who is in possession of a negotiable instrument that is drawn,issued,or indorsed to him or to his order,or to bearer,or in blank is referred to as a(n)________.

If an instrument arises out of an illegal transaction,it is unenforceable.

The ________ is a doctrine that says a holder who does not qualify as a holder in due course in his or her own right becomes a holder in due course if he or she acquires an instrument through a holder in due course.

In which of the following consumer credit transactions does the FTC HDC rule apply?

To which of the following placements of a negotiable instrument would transfer warranties be applicable?

A signature on a negotiable instrument identifies who is obligated to pay it.

Unless otherwise agreed,indorsers are liable to each other in the order in which they indorsed the instrument.

Discuss,with an example,the circumstances under which value is given to the holder.

Which of the following is a characteristic of a presentment warranty on an instrument presented for payment?

________ is a type of universal defense where force or violence is used to issue a negotiable instrument.

An accommodation party who signs an instrument guaranteeing payment is secondarily liable on the instrument.

A negotiable instrument is considered canceled if it is destroyed or mutilated by accident or by an unauthorized third party.

Personal defenses cannot be raised against HDCs to deny the payment of negotiable instruments.