Question 1

Tony is fraudulently induced to issue a check to Rita. Tony has:

Accepted Answer

A)  a claim to ownership of the check. 
B)  a defense to Rita's demand for payment. 
C)  neither a claim nor a defense. 
D)  both a claim and a defense. 
A)  a claim to ownership of the check. 
B)  a defense to Rita's demand for payment. 
C)  neither a claim nor a defense. 
D)  both a claim and a defense.

Question 2

A payee may be a holder in due course under the Code.

Accepted Answer

A) True 
 B)False

Question 3

Joanne had a paycheck from Pizza Plaza for $54 made out to her. She indorsed it with her name and gave it to Larry, who in return agreed to paint her living room next Saturday. In this case:

Accepted Answer

A)  the check is not negotiable. 
B)  Larry is not a "holder." 
C)  Larry is not a "holder in due course." 
D)  Larry has given value for the check by his agreement. 
A)  the check is not negotiable. 
B)  Larry is not a "holder." 
C)  Larry is not a "holder in due course." 
D)  Larry has given value for the check by his agreement.

Question 4

A Federal Trade Commission rule limits the rights of a holder in due course of an instrument that evidences a debt arising out of a(n):

Accepted Answer

A)  consumer credit contract. 
B)  insurance contract. 
C)  consumer purchase paid for with a check. 
D)  construction contract. 
A)  consumer credit contract. 
B)  insurance contract. 
C)  consumer purchase paid for with a check. 
D)  construction contract.

Question 5

An executory promise is the giving of value to support holder in due course status.

Accepted Answer

A) True 
 B)False

Question 6

A negotiation obtained by duress, mistake, or fraud is ineffective to transfer the instrument.

Accepted Answer

A) True 
 B)False

Question 7

A mere holder or an assignee takes a negotiable instrument subject to all claims and defenses to it.

Accepted Answer

A) True 
 B)False

Question 8

Order paper is negotiated by:

Accepted Answer

A)  indorsement alone. 
B)  delivery alone. 
C)  either delivery or indorsement. 
D)  transfer of possession and indorsement. 
A)  indorsement alone. 
B)  delivery alone. 
C)  either delivery or indorsement. 
D)  transfer of possession and indorsement.

Question 9

The "impostor rule" is an exception to the general rule that negotiation of an order instrument requires a valid
indorsement by the person to whose order the instrument is payable.

Accepted Answer

A) True 
 B)False

Question 10

A person who takes a check stamped "NSF" may still be a holder in due course.

Accepted Answer

A) True 
 B)False

Question 11

Both negotiable instruments and nonnegotiable undertakings are transferable by assignment and can result in the
transferee's becoming a holder.

Accepted Answer

A) True 
 B)False

Question 12

Subsequent indorsers are always bound by an indorsement in trust.

Accepted Answer

A) True 
 B)False

Question 13

Ricardo is the holder of a check that contains the indorsement "Without Recourse, (signed) Mary Roberts." This indorsement:

Accepted Answer

A)  makes further indorsement impossible. 
B)  requires a special indorsement by the transferee. 
C)  limits the liability of Mary Roberts. 
D)  limits the liability of all subsequent holders including Ricardo. 
A)  makes further indorsement impossible. 
B)  requires a special indorsement by the transferee. 
C)  limits the liability of Mary Roberts. 
D)  limits the liability of all subsequent holders including Ricardo.

Exam 27: Transfer and Holder in Due Course

Tony is fraudulently induced to issue a check to Rita. Tony has:

A payee may be a holder in due course under the Code.

Joanne had a paycheck from Pizza Plaza for $54 made out to her. She indorsed it with her name and gave it to Larry, who in return agreed to paint her living room next Saturday. In this case:

A Federal Trade Commission rule limits the rights of a holder in due course of an instrument that evidences a debt arising out of a(n):

An executory promise is the giving of value to support holder in due course status.

A negotiation obtained by duress, mistake, or fraud is ineffective to transfer the instrument.

A mere holder or an assignee takes a negotiable instrument subject to all claims and defenses to it.

Order paper is negotiated by:

The "impostor rule" is an exception to the general rule that negotiation of an order instrument requires a valid indorsement by the person to whose order the instrument is payable.

A person who takes a check stamped "NSF" may still be a holder in due course.

Both negotiable instruments and nonnegotiable undertakings are transferable by assignment and can result in the transferee's becoming a holder.

Subsequent indorsers are always bound by an indorsement in trust.

Ricardo is the holder of a check that contains the indorsement "Without Recourse, (signed) Mary Roberts." This indorsement:

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

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Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

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Employment Law

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Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

the Legal Environment of Business

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Agency

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Negotiable Instruments

Unincorporated Business Associations

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Debtor and Creditor Relations

Regulation of Business

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