Question 1

Which of the following is true?

Accepted Answer

A)  Where an instrument is payable to bearer. 
B)  Where an instrument is payable to bearer, it must be negotiated by endorsement and delivery. 
C)  Where an instrument is payable to bearer, it cannot be negotiated. 
D)  Where an instrument is payable to bearer, it cannot be endorsed. 
E)  Where an instrument is payable to bearer, it may be negotiated by endorsement and delivery. 
A)  Where an instrument is payable to bearer. 
B)  Where an instrument is payable to bearer, it must be negotiated by endorsement and delivery. 
C)  Where an instrument is payable to bearer, it cannot be negotiated. 
D)  Where an instrument is payable to bearer, it cannot be endorsed. 
E)  Where an instrument is payable to bearer, it may be negotiated by endorsement and delivery.

Question 2

Explain the purposes of endorsement.

Accepted Answer

An endorsement is a means to carrying ou

Question 3

Delivery of a bill may be actual or constructive.

Accepted Answer

A) True 
 B)False

Question 4

Liability of the drawee on a bill of exchange is dependent on the acceptance and delivery of the bill.

Accepted Answer

A) True 
 B)False

Question 5

What is a sight draft?

Accepted Answer

A bill of exchange that is pay

Question 6

A demand draft is

Accepted Answer

A)  a bill of exchange that is payable within a stipulated period, after presentation. 
B)  a bill of exchange that is payable within a stipulated period, after the date stated on the instrument. 
C)  a bill of exchange that is payable at sight. 
D)  a bill of exchange that is payable immediately upon presentation without any days of grace. 
E)  a bill of exchange on which the expression demand draft is written. 
A)  a bill of exchange that is payable within a stipulated period, after presentation. 
B)  a bill of exchange that is payable within a stipulated period, after the date stated on the instrument. 
C)  a bill of exchange that is payable at sight. 
D)  a bill of exchange that is payable immediately upon presentation without any days of grace. 
E)  a bill of exchange on which the expression demand draft is written.

Question 7

Who is a drawee?

Accepted Answer

The party who is req

Question 8

A payee is

Accepted Answer

A)  the party who is named to receive payment on the bill of exchange. 
B)  the party who signs the document. 
C)  the party who draws up the bill of exchange. 
D)  the entity that consents to accept the bill of exchange by indicating accepted on the face of the instrument. 
E)  the party who is required to make payment on the bill of exchange. 
A)  the party who is named to receive payment on the bill of exchange. 
B)  the party who signs the document. 
C)  the party who draws up the bill of exchange. 
D)  the entity that consents to accept the bill of exchange by indicating accepted on the face of the instrument. 
E)  the party who is required to make payment on the bill of exchange.

Question 9

Which of the following is not a real defence to an action on a bill?

Accepted Answer

A)  misrepresentation 
B)  incapacity fo contract because of infancy 
C)  alteration of the instrument 
D)  cancellation of the instrument 
E)  absence of delivery when the instrument is incomplete when taken 
A)  misrepresentation 
B)  incapacity fo contract because of infancy 
C)  alteration of the instrument 
D)  cancellation of the instrument 
E)  absence of delivery when the instrument is incomplete when taken

Question 10

Jack provides James with cheque in payment for the delivery of goods. Later when Jack checks the goods, he realizes that James has delivered the wrong goods. Jack wishes to cancel the cheque. Jack may go to the bank and request a

Accepted Answer

A)  stop payment order. 
B)  stop payee document. 
C)  de- certification order 
D)  cancel document. 
E)  negotiable instrument. 
A)  stop payment order. 
B)  stop payee document. 
C)  de- certification order 
D)  cancel document. 
E)  negotiable instrument.

Question 11

Explain the difference between a bearer instrument and an order instrument.

Accepted Answer

A bearer instrument is one that is payab

Question 12

Explain the effect of certification of a cheque.

Accepted Answer

Certification is an undertakin

Question 13

Which of the following is not a kind of endorsement?

Accepted Answer

A)  Restrictive endorsement 
B)  Conditional endorsement 
C)  Endorsement in blank 
D)  Accommodation endorsement 
E)  Special endorsement 
A)  Restrictive endorsement 
B)  Conditional endorsement 
C)  Endorsement in blank 
D)  Accommodation endorsement 
E)  Special endorsement

Question 14

A drawer is

Accepted Answer

A)  the party who is required to make payment. 
B)  the entity that consents to accept the bill of exchange by indicating accepted on the face of the instrument. 
C)  the party who signs the document. 
D)  the party who draws up the bill of exchange. 
E)  the party who is named to receive payment. 
A)  the party who is required to make payment. 
B)  the entity that consents to accept the bill of exchange by indicating accepted on the face of the instrument. 
C)  the party who signs the document. 
D)  the party who draws up the bill of exchange. 
E)  the party who is named to receive payment.

Question 15

Which of the following is not a defect of title on a bill of exchange?

Accepted Answer

A)  incapacity to contract because of insanity 
B)  misrepresentation 
C)  fraud, duress, undue influence, and illegality 
D)  want of authority in an agent to complete the instrument on behalf of the party primarily liable 
E)  discharge of the instrument by payment 
A)  incapacity to contract because of insanity 
B)  misrepresentation 
C)  fraud, duress, undue influence, and illegality 
D)  want of authority in an agent to complete the instrument on behalf of the party primarily liable 
E)  discharge of the instrument by payment

Question 16

Negotiable instruments began as a form of bill of exchange.

Accepted Answer

A) True 
 B)False

Question 17

A promissory note is a bill of exchange.

Accepted Answer

A) True 
 B)False

Question 18

Describe the difference between a bearer instrument and an order instrument.

Accepted Answer

A bearer instrument is one that is payab

Question 19

Liability of the drawer, acceptor, or maker on a bill of exchange is dependent on

Accepted Answer

A)  the negotiation of the bill. 
B)  the delivery of the bill. 
C)  the signing of the bill. 
D)  the presentment of the bill. 
E)  the signing and delivery of the bill. 
A)  the negotiation of the bill. 
B)  the delivery of the bill. 
C)  the signing of the bill. 
D)  the presentment of the bill. 
E)  the signing and delivery of the bill.

Question 20

A sight draft is

Accepted Answer

A)  a bill of exchange in which the drawee is ordered to pay "at sight". 
B)  a bill of exchange in which the drawer is ordered to pay "at sight". 
C)  a bill of exchange in which the payee is ordered to pay "at sight". 
D)  a bill of exchange in which the acceptor is ordered to pay "at sight". 
E)  a bill of exchange in which the acceptor and and drawer are ordered to pay "at sight". 
A)  a bill of exchange in which the drawee is ordered to pay "at sight". 
B)  a bill of exchange in which the drawer is ordered to pay "at sight". 
C)  a bill of exchange in which the payee is ordered to pay "at sight". 
D)  a bill of exchange in which the acceptor is ordered to pay "at sight". 
E)  a bill of exchange in which the acceptor and and drawer are ordered to pay "at sight".

Exam 21: Negotiable Instruments

Which of the following is true?

Explain the purposes of endorsement.

Delivery of a bill may be actual or constructive.

Liability of the drawee on a bill of exchange is dependent on the acceptance and delivery of the bill.

What is a sight draft?

A demand draft is

Who is a drawee?

A payee is

Which of the following is not a real defence to an action on a bill?

Jack provides James with cheque in payment for the delivery of goods. Later when Jack checks the goods, he realizes that James has delivered the wrong goods. Jack wishes to cancel the cheque. Jack may go to the bank and request a

Explain the difference between a bearer instrument and an order instrument.

Explain the effect of certification of a cheque.

Which of the following is not a kind of endorsement?

A drawer is

Which of the following is not a defect of title on a bill of exchange?

Negotiable instruments began as a form of bill of exchange.

A promissory note is a bill of exchange.

Describe the difference between a bearer instrument and an order instrument.

Liability of the drawer, acceptor, or maker on a bill of exchange is dependent on

A sight draft is

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