Question 1

If the instrument is order paper, how can a person become a holder?

Accepted Answer

A)  Transfer of its possession. 
B)  Its indorsement by the appropriate parties. 
C)  Both a t ransfer of its possession  and it s indorsement by the appropriate parties  are necessary. 
D)  None of these. 
A)  Transfer of its possession. 
B)  Its indorsement by the appropriate parties. 
C)  Both a t ransfer of its possession  and it s indorsement by the appropriate parties  are necessary. 
D)  None of these.

Question 2

A negotiation may be valid to transfer the instrument even under which of the following condition(s)?

Accepted Answer

A)  The negotiation is made by an infant. 
B)  The negotiation is made by a person without capacity. 
C)  The negotiation is part of an illegal transaction. 
D)  All of these. 
E)  None of these. 
A)  The negotiation is made by an infant. 
B)  The negotiation is made by a person without capacity. 
C)  The negotiation is part of an illegal transaction. 
D)  All of these. 
E)  None of these.

Question 3

Ella induces Tammy, by fraud in the inducement, to make an instrument payable to the order of Ella. She subsequently negotiates the instrument to Adam, a holder in due course. If Ella later reacquires the instrument from Adam, Ella will succeed to Adam's rights as a holder in due course under the shelter rule.

Accepted Answer

A) True 
 B)False

Question 4

A(n) ___________ is the voluntary transfer to a third party of the rights arising from a contract.

Accepted Answer

A)  negotiation of bearer paper 
B)  negotiation of order paper 
C)  assignment 
D)  negotiation 
A)  negotiation of bearer paper 
B)  negotiation of order paper 
C)  assignment 
D)  negotiation

Question 5

A qualified indorsement destroys negotiability.

Accepted Answer

A) True 
 B)False

Question 6

Identify the type of indorsement each of the following represents. 
a. Pay to Bill, for collection. 
b. Pay to the order of The American Bank for deposit only. 
c. Pay to Albert, without recourse. 
d. John Smith.

Accepted Answer

a. Restrictive, special. 
b. R

Question 7

A holder must actually have the instrument in his possession.

Accepted Answer

A) True 
 B)False

Question 8

An indorsement in trust creates a trust for the benefit of the indorser or others.

Accepted Answer

A) True 
 B)False

Question 9

The transfer of a nonnegotiable promise or order operates as an assignment.

Accepted Answer

A) True 
 B)False

Question 10

Indorsements with ineffective restrictions include which of the following?

Accepted Answer

A)  The indorser makes the rights of the indorsee subject to the happening or nonhappening of a specified event. 
B)  An indorsement "For Collection." 
C)  An indorsement stating "Pay to Melanie for Sharon." 
D)  All of these. 
A)  The indorser makes the rights of the indorsee subject to the happening or nonhappening of a specified event. 
B)  An indorsement "For Collection." 
C)  An indorsement stating "Pay to Melanie for Sharon." 
D)  All of these.

Question 11

Tina forges Vivian's indorsement on a promissory note and negotiates it to Ned. If Vivian subsequently ratifies Tina's act, both Tina and Vivian are liable to Ned on the note and Vivian's ratification relieves Tina from civil liability to Vivian.

Accepted Answer

A) True 
 B)False

Exam 25: Transfer and Holder in Due Course

If the instrument is order paper, how can a person become a holder?

A negotiation may be valid to transfer the instrument even under which of the following condition(s)?

A(n) ___________ is the voluntary transfer to a third party of the rights arising from a contract.

A qualified indorsement destroys negotiability.

Identify the type of indorsement each of the following represents. a. Pay to Bill, for collection. b. Pay to the order of The American Bank for deposit only. c. Pay to Albert, without recourse. d. John Smith.

A holder must actually have the instrument in his possession.

An indorsement in trust creates a trust for the benefit of the indorser or others.

The transfer of a nonnegotiable promise or order operates as an assignment.

Indorsements with ineffective restrictions include which of the following?

Tina forges Vivian's indorsement on a promissory note and negotiates it to Ned. If Vivian subsequently ratifies Tina's act, both Tina and Vivian are liable to Ned on the note and Vivian's ratification relieves Tina from civil liability to Vivian.

Introduction to Law

Business Ethics

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

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

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 Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

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 Wills

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