Question 1

An indorsement "Pay Alice Adams" is an assignment rather than a negotiation since it lacks words of negotiability.

Accepted Answer

A) True 
 B)False

Question 2

In a nonconsumer transaction, a holder in due course takes the instrument free from:

Accepted Answer

A)  all defenses of any party with whom he has not dealt, except for a limited number of defenses that are available against anyone, including a holder in due course. 
B)  the defense of incapacity, duress, or illegality that renders the obligation void. 
C)  no claims. 
D)  only personal claims. 
A)  all defenses of any party with whom he has not dealt, except for a limited number of defenses that are available against anyone, including a holder in due course. 
B)  the defense of incapacity, duress, or illegality that renders the obligation void. 
C)  no claims. 
D)  only personal claims.

Question 3

Opal had a check for $294 made out to her.She indorsed it with her name and gave it to Daryl who, in return, agreed to paint her living room the next Saturday.In this case:

Accepted Answer

A)  Daryl is not a holder. 
B)  Daryl is not a holder in due course. 
C)  Daryl has given value for the check. 
D)  the check is not negotiable. 
A)  Daryl is not a holder. 
B)  Daryl is not a holder in due course. 
C)  Daryl has given value for the check. 
D)  the check is not negotiable.

Question 4

"Pay to the order of Jose Dejesus" is a special indorsement.

Accepted Answer

A) True 
 B)False

Question 5

Real defenses include all but:

Accepted Answer

A)  minority of the maker. 
B)  fraudulent alteration. 
C)  forgery of the instrument. 
D)  theft of a bearer instrument. 
A)  minority of the maker. 
B)  fraudulent alteration. 
C)  forgery of the instrument. 
D)  theft of a bearer instrument.

Question 6

An indorsement "for deposit" is a collection indorsement.

Accepted Answer

A) True 
 B)False

Question 7

Time paper that states it is due on July 1, which is a Sunday, is overdue on:

Accepted Answer

A)  July 1. 
B)  July 2. 
C)  July 3. 
D)  It depends on when the instrument is presented for payment. 
A)  July 1. 
B)  July 2. 
C)  July 3. 
D)  It depends on when the instrument is presented for payment.

Question 8

Horst, a holder in due course, buys a note made out by Arthur to Superior Motors.Even though Arthur's debt was discharged through bankruptcy, Horst can collect on the note.

Accepted Answer

A) True 
 B)False

Question 9

What is negotiation? How does one become a "holder" of an instrument?

Accepted Answer

Negotiation is an instrument's voluntary

Question 10

An indorsement must be written on the instrument itself.

Accepted Answer

A) True 
 B)False

Question 11

An executory promise, which is valid consideration to support a contract, is also the giving of value to support holder in due course status.

Accepted Answer

A) True 
 B)False

Question 12

The two types of indorsements are blanket or partial.

Accepted Answer

A) True 
 B)False

Question 13

If the issuer and the person paying an instrument subject to the impostor rule are both negligent, comparative negligence would apply.

Accepted Answer

A) True 
 B)False

Question 14

The FTC upholds the preferential position enjoyed by a holder in due course of instruments concerning debts arising out of consumer credit contracts.

Accepted Answer

A) True 
 B)False

Question 15

Federal Reserve Board guidelines for checks:

Accepted Answer

A)  require indorsements to be in blue or black ink. 
B)  must be followed or the check will not go through the banking system. 
C)  require bank indorsements to be made within 2 inches of the left edge of the back of the check. 
D)  Require indorsements to be in blue or black ink and that  bank indorsements to be made within 2 inches of the left edge of the back of the check. 
A)  require indorsements to be in blue or black ink. 
B)  must be followed or the check will not go through the banking system. 
C)  require bank indorsements to be made within 2 inches of the left edge of the back of the check. 
D)  Require indorsements to be in blue or black ink and that  bank indorsements to be made within 2 inches of the left edge of the back of the check.

Question 16

Delivery alone is insufficient to negotiate an instrument when it is payable to:

Accepted Answer

A)  cash and signed by the drawer. 
B)  the order of John Jones and is not indorsed. 
C)  bearer and is not indorsed. 
D)  order and the last indorsement is in blank. 
A)  cash and signed by the drawer. 
B)  the order of John Jones and is not indorsed. 
C)  bearer and is not indorsed. 
D)  order and the last indorsement is in blank.

Question 17

Assuming a note made by Barbara payable to Carol Jones, which indorsement will limit negotiability?

Accepted Answer

A)  "Pay Carol Jones ." 
B)  "For deposit only, Acct. #602-043. Carol Jones ." 
C)  "Pay Claudia as attorney for John Jones. Carol Jones ." 
D)  "Pay Connie for Carol M. Jones ." 
A)  "Pay Carol Jones ." 
B)  "For deposit only, Acct. #602-043. Carol Jones ." 
C)  "Pay Claudia as attorney for John Jones. Carol Jones ." 
D)  "Pay Connie for Carol M. Jones ."

Question 18

Defenses that may not be asserted against a holder in due course are referred to as personal (or contractual) defenses.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a restrictive indorsement?

Accepted Answer

A)  "Pay only Jane Doe." 
B)  "Pay any bank." 
C)  "For deposit." 
D)  "For collection." 
A)  "Pay only Jane Doe." 
B)  "Pay any bank." 
C)  "For deposit." 
D)  "For collection."

Question 20

Any transfer for value of an instrument is a negotiation.

Accepted Answer

A) True 
 B)False

Exam 25: Transfer and Holder in Due Course

An indorsement "Pay Alice Adams" is an assignment rather than a negotiation since it lacks words of negotiability.

In a nonconsumer transaction, a holder in due course takes the instrument free from:

Opal had a check for $294 made out to her.She indorsed it with her name and gave it to Daryl who, in return, agreed to paint her living room the next Saturday.In this case:

"Pay to the order of Jose Dejesus" is a special indorsement.

Real defenses include all but:

An indorsement "for deposit" is a collection indorsement.

Time paper that states it is due on July 1, which is a Sunday, is overdue on:

Horst, a holder in due course, buys a note made out by Arthur to Superior Motors.Even though Arthur's debt was discharged through bankruptcy, Horst can collect on the note.

What is negotiation? How does one become a "holder" of an instrument?

An indorsement must be written on the instrument itself.

An executory promise, which is valid consideration to support a contract, is also the giving of value to support holder in due course status.

The two types of indorsements are blanket or partial.

If the issuer and the person paying an instrument subject to the impostor rule are both negligent, comparative negligence would apply.

The FTC upholds the preferential position enjoyed by a holder in due course of instruments concerning debts arising out of consumer credit contracts.

Federal Reserve Board guidelines for checks:

Delivery alone is insufficient to negotiate an instrument when it is payable to:

Assuming a note made by Barbara payable to Carol Jones, which indorsement will limit negotiability?

Defenses that may not be asserted against a holder in due course are referred to as personal (or contractual) defenses.

Which of the following is not a restrictive indorsement?

Any transfer for value of an instrument is a negotiation.

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

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 Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

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

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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