Question 1

Which of the following is not one of the four general types of negotiable instruments?

Accepted Answer

A)  notes 
B)  drafts 
C)  certificates of deposit 
D)  money orders 
A)  notes 
B)  drafts 
C)  certificates of deposit 
D)  money orders

Question 2

A drawee is not liable on a draft until the drawee has accepted it.

Accepted Answer

A) True 
 B)False

Question 3

In order to meet the writing requirement of a negotiable instrument,the writing must:

Accepted Answer

A)  be written in clear English 
B)  be permanent and portable 
C)  be prepared in duplicate 
D)  be typewritten rather than handwritten 
A)  be written in clear English 
B)  be permanent and portable 
C)  be prepared in duplicate 
D)  be typewritten rather than handwritten

Question 4

An I.O.U.or stating I owe you $100,is another form of note that is considered to be a promise to pay.

Accepted Answer

A) True 
 B)False

Question 5

A negotiable instrument must be typewritten.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would NOT create an express promise to pay?

Accepted Answer

A)  "I owe you $100." 
B)  "I promise to pay you $100." 
C)  "The undersigned agrees to pay you $100." 
D)  "The signor agrees to pay you $100." 
A)  "I owe you $100." 
B)  "I promise to pay you $100." 
C)  "The undersigned agrees to pay you $100." 
D)  "The signor agrees to pay you $100."

Question 7

The law of negotiable instruments was designed to create a substitute for cash and to facilitate commerce.Has the importance of negotiable instruments in commerce increased or decreased in recent years? How will increased online commerce affect the importance of negotiable instruments?

Accepted Answer

Drafts and checks have been replaced in

Question 8

The Revised Article 3 of the Uniform Commercial Code is called "Negotiable Instruments" rather than "Commercial Paper."

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a requirement of negotiability?

Accepted Answer

A)  The instrument must be in writing. 
B)  The instrument must be signed by the maker or drawer. 
C)  The instrument must state a fixed amount of money. 
D)  The instrument must contain an indorsement. 
A)  The instrument must be in writing. 
B)  The instrument must be signed by the maker or drawer. 
C)  The instrument must state a fixed amount of money. 
D)  The instrument must contain an indorsement.

Question 10

Where must the signature appear on a negotiable instrument in order to meet the signature requirement?

Accepted Answer

A)  anywhere on the face of the instrument 
B)  anywhere on the face of the instrument or anywhere on the back of the instrument 
C)  on the face only,and only at the end of the instrument 
D)  at the end of the instrument on the face next to the maker or drawer's full name. 
A)  anywhere on the face of the instrument 
B)  anywhere on the face of the instrument or anywhere on the back of the instrument 
C)  on the face only,and only at the end of the instrument 
D)  at the end of the instrument on the face next to the maker or drawer's full name.

Question 11

Which of the following is true about the law governing negotiable instruments?

Accepted Answer

A)  Somewhat fewer than half the states adopted the original version of Article 3 of the UCC. 
B)  Most negotiable instruments law is contained in federal statutes. 
C)  The most recent version of Article 3 of the UCC was released in 1990. 
D)  Negotiable instruments law comes primarily from common law. 
A)  Somewhat fewer than half the states adopted the original version of Article 3 of the UCC. 
B)  Most negotiable instruments law is contained in federal statutes. 
C)  The most recent version of Article 3 of the UCC was released in 1990. 
D)  Negotiable instruments law comes primarily from common law.

Question 12

In negotiable instruments,negotiation refers to the process of reaching agreement on the terms of a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 13

Under Article 3 of the UCC,what is the effect of a note not stating a time for payment?

Accepted Answer

A)  The note is void and unenforceable due to vagueness. 
B)  The note is considered nonnegotiable,but might nonetheless be enforceable. 
C)  The note is considered a time instrument with payment due at a reasonable time. 
D)  The note is considered a demand instrument with payment due on demand. 
A)  The note is void and unenforceable due to vagueness. 
B)  The note is considered nonnegotiable,but might nonetheless be enforceable. 
C)  The note is considered a time instrument with payment due at a reasonable time. 
D)  The note is considered a demand instrument with payment due on demand.

Question 14

Which of the following would qualify as a negotiable instrument?

Accepted Answer

A)  an instrument paid in gold 
B)  an instrument paid in diamonds 
C)  an instrument paid in Japanese currency 
D)  an instrument paid in stocks 
A)  an instrument paid in gold 
B)  an instrument paid in diamonds 
C)  an instrument paid in Japanese currency 
D)  an instrument paid in stocks

Question 15

A nonnegotiable contract is unenforceable.

Accepted Answer

A) True 
 B)False

Exam 22: Creation of Negotiable Instruments

Which of the following is not one of the four general types of negotiable instruments?

A drawee is not liable on a draft until the drawee has accepted it.

In order to meet the writing requirement of a negotiable instrument,the writing must:

An I.O.U.or stating I owe you $100,is another form of note that is considered to be a promise to pay.

A negotiable instrument must be typewritten.

Which of the following would NOT create an express promise to pay?

The law of negotiable instruments was designed to create a substitute for cash and to facilitate commerce.Has the importance of negotiable instruments in commerce increased or decreased in recent years? How will increased online commerce affect the importance of negotiable instruments?

The Revised Article 3 of the Uniform Commercial Code is called "Negotiable Instruments" rather than "Commercial Paper."

Which of the following is not a requirement of negotiability?

Where must the signature appear on a negotiable instrument in order to meet the signature requirement?

Which of the following is true about the law governing negotiable instruments?

In negotiable instruments,negotiation refers to the process of reaching agreement on the terms of a negotiable instrument.

Under Article 3 of the UCC,what is the effect of a note not stating a time for payment?

Which of the following would qualify as a negotiable instrument?

A nonnegotiable contract is unenforceable.

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